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Calling Bullshit

Samunnati: Collective Growth & Collective Prosperity

Calling Bullsh!t November 30, 2022 515 1


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Our guest

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Anil Kumar

Founder & CEO of Samunnati 

How is one company working to change India’s massive agriculture industry from the inside? 

Stated purpose: Create better markets for smallholder farmers across every state in India. 

Think it’s hard to get a mortgage in the United States? Try getting a loan for a new tractor as a tenant farmer in India. Banks won’t even consider you unless you own land. 

Many farmers buy supplies on credit, further raising their overall operating costs and squeezing their margins even more. 

Samunnati began solving this problem in 2016 by issuing loans designed specifically for small farmers, but they soon realized they needed to be more involved to make a lasting impact. 

Today the company acts as an intermediary between everyone in the agricultural ecosystem – banks, seed suppliers, wholesalers and small farmers.

“Being led by heart has been a hallmark of my journey so far. When I look back, the decision of setting up Samunnati by taking a loan on my house and my private funds at the age of 42. I think there is one significant factor that enabled this journey, which is the investment that I made in myself as a person.”

– Anil Kumar

Samunnati’s BS score is

Show Notes

Episode Transcript

Samunnati

 

ANIL KUMAR

I believe the purpose-led business has to be more aspirational and bold in thinking than being driven by Excel sheets and numbers. If purpose-led businesses apply logic, then we don’t go anywhere. The purpose-led business has to be driven by passion. 

 

TY MONTAGUE (VO) 

Welcome to Calling Bullsh!t, the podcast about purpose washing- the gap between what companies say they stand for and what they actually do. And what they would need to change to practice what they preach. I’m your host Ty Montague and I’ve spent over a decade helping companies define what they stand for- their purpose. And then help them to use that purpose to drive transformation throughout their business. 

 

In this special episode, we’re sharing a positive case study where we speak with the CEO of a purpose-led company who we think is getting it right

 

Today I’m speaking with Anil Kumar, CEO of Samunnati. He shares how humble beginnings eventually led him to refinance his home in order to start what would become India’s largest agricultural enterprise. 

 

TY MONTAGUE (VO) 

Farming is a notoriously difficult profession, high risk, and often low reward. Harvests are subject to unpredictable factors like climate and weather. And access to capital tends to be limited.

 

And for families who grow and sell crops on a small scale– known as smallholder farmers– things get even more daunting. 

 

Their size prevents them from buying equipment in bulk, and when you’re paying retail prices for seeds and fertilizer, machinery, and pesticides, things add up fast.

 

Most don’t grow enough to make their money back.

 

In India, a lot of people are familiar with this struggle. Agriculture supports roughly two-thirds of the 1.6 billion person population. 

 

And the majority of the growers are tenant farmers – meaning they don’t own the land they work on.

 

You think it’s hard to get a mortgage in the United States? Try getting a loan for a new tractor as a tenant farmer in India. Banks won’t even consider you unless you own land. So many farmers buy supplies on credit, further raising their overall operating costs and squeezing their margins even more. 

 

To complicate matters further, often farmers are unbanked, which means that even if they DO receive a loan, they get the whole lump sum in cash. And when life happens, the money is used for household needs. Many wind up owing money they can’t pay back.

 

This economic struggle for farmers can become all-encompassing, leading many farmers to suicide. In 2019, India saw an average of 28 farmer suicides a day.

 

TY MONTAGUE (VO) 

But one company is working to change this system from the inside: India’s largest agri-tech enterprise, Samunnati. Their purpose is to create better markets for smallholder farmers across every state in India. 

 

They began pursuing this purpose in 2016, by issuing loans designed specifically for small farmers, but they soon realized they needed to be more involved to make a lasting impact. Today the company acts as an intermediary between everyone in the agricultural ecosystem – banks, seed suppliers, wholesalers and small farmers. 

 

Getting this all done is complicated, so Sammunati takes a three-pronged approach. 

 

First, they focus on aggregation. They facilitate the formation of Farmer Producer Organizations, (FPOs) or co-ops, where individual farmers with similar needs can use collective bargaining power to access better prices and better markets. Currently, Summanati has four thousand FPOs in their network, each made up of roughly 300 – 500 individual farmers

 

Second, they facilitate Market Linkages – connecting farmers directly with the markets that will give them the highest price or market share. They also lend farmers the money they need to get things done, offering multiple types of loans all structured with farming households in mind. 

 

Third – they offer Advisory Services, helping their customers transition to more sustainable methods, create business plans, and implement Standard Operating Procedures 

 

They call their strategy AMLA, and it’s highly effective. Today Samunnati is valued north of a billion dollars and has touched the lives of 7 million farmers and counting. Their current goal is to impact 1 in every 4 farmers across the entire country by 2027.

 

TY MONTAGUE (VO) 

The mastermind behind this organization is my guest today, Samunnati CEO Anil Kumar. 

 

He tells us how they weave the needs of farmers directly into the fabric of everything they do and emphasizes the importance of leading with heart. 

 

That conversation – after the break.

TY MONTAGUE 

Folks. I am very excited to introduce the founder and CEO of Samunnati, Anil Kumar. Anil, thank you for being here, and welcome to Calling Bullshit. 

ANIL KUMAR 

Thank you, Ty. It’s my privilege as well, to be part of this, , uh, program.

TY MONTAGUE 

So Let’s start right at the beginning. Um, can you talk a little bit about where you’re from and what your life was like growing up in India?

ANIL KUMAR 

Well, I’m a, you know, I’m a small-town boy, so to say, I’m born in a place called Kolar, which is, uh, known for its gold fields. and, uh, brought up in, uh, places, that are close by called, Anantapur and Ballari both belong to two different states.

ANIL KUMAR 

So Ballari is part of Karnataka and Anantapur is part of Andhra Pradesh, so what that meant for me is, I grew up in a confluence of two different, uh, languages. Uh, both became integral to my growing up. so schooling happened there. and, and then, uh, I joined mechanical engineering as an 18-year-old boy and during my plus two holidays, I had taken the Banking Services Recruitment Board Exam, And, I was selected to a government bank called Canara bank.

So, so I, I, I, I joined Canara Bank as a typist com clerk in a rural branch of Canara bank, and that’s how my baptism into banking happened in the rural and agri space. Little did I realize what all would manifest or the next 30 years of my life in, in, banking? But, uh, that’s how, my journey started, as a professional

TY MONTAGUE 

And just, just to draw a line under something, because I found this very inspiring you come from very humble beginnings. And you’ve come very far being the CEO of, you know, a, an extremely successful organization today.

So I wonder if you could just talk a little bit about what your experience was like growing up in a lower-middle-class, Indian family.

ANIL KUMAR 

Well, we are a family of, uh, six, I, I have, three elder siblings, all sisters, and, as a professional, uh, my father used to earn quite, handsomely, but then when I was eight, he lost his job, and the family crash landed, so to say, on the economic ladder

And that’s when my mother took over the charge of the house. And then she started building, the entire family from the scratch. So I got to learn a lot in this transition of building rebuilding, so to say. because people around us were all doing well. They were all neighbors when we were doing well, but you know, when we were not doing well, my mother stitched the entire ecosystem to support our family through engagement with the community, her engagement with the neighbors. so I realized what is social capital,

Each of our, you know, sisters started working when they turned 18. but the entire family was pinning their hopes on me because I was the only male child in the family. and they wanted, uh, me to, you know, to redeem the entire family.

It was tough. There were days that I still remember where we did not have even a penny at home. And I, I made it a point to record that day in my head

TY MONTAGUE 

And so then it sounds like you, made your way into the banking business with a focus on, agricultural, banking, or banking for the agricultural industry. Is that correct?

ANIL KUMAR 

Actually, no, I, I was posted in a rural branch, which meant it is agriculture and rural, but I was a typist come clerk, you know, and, and banks in India usually post youngsters in rural areas, So it is, it is my good fortune that my baptism into banking happened in an area that would become so relevant to my journey.

TY MONTAGUE 

I have an instinct that because of your background and because of your experience working in banking in a rural environment, you have an empathy for small family farmers, in a way, in other words, you understand them and their lives better than a typical, banking person would. Would you agree with that?

ANIL KUMAR 

Absolutely. In fact, one of the reasons why this entire space looks so home, natural for me is. I have been there. I have lived that life of, of challenges from access to markets and and challenges that the external environment presents you on, which you have, you have no control on.

I have lived that for about, 13 years of my, you know, my, my life from the age of say seven to about, 18, 11 years

TY MONTAGUE 

Okay, so for listeners who, who might be unfamiliar with the agriculture industry in, India, can you just paint a picture of what that industry looks like? What are the major challenges that Indian farmers face today?

ANIL KUMAR 

Well, uh, on the statistics dimension, Ty, agriculture constitutes about 20% of the country’s GDP.

TY MONTAGUE 

Right.

ANIL KUMAR 

While about 60% of the population is either directly or indirectly dependent on agriculture, which means there is a vast majority of the population dependent on agriculture in that a significant portion is smallholder farmers

You know, farmers who are owning less than, you know, less than two hectares of land. and there is another large majority of people who take, uh, land on lease, uh, and are tenant farmers. So if you combine the tenant farmers and, you know, smallholder farmers that constructs about 80 to 85% of the total, you know, uh, total farmers into farming, uh, majority of, uh, formal financial institutions are still not in the reach for the smallholder farmers.

Either on account of, uh, you know, not being able to fulfill the criteria that the smallholder farmers are supposed to for accessing the formal financial institutions or the definition of, uh, a farmer is the one who owns land, not necessarily the one who does farming. And this requirement of an ownership has fostered the fragmentation further. say if my father had nine hectares of land and we are three brothers for, for me to avail of alone from a formal financial institution, The land has to be in my name, which means my father has to split this into three and gimme the three hectares.

And if I happen, if I happen to have another three boys, I will have to split that into three. So within two generations, the nine hectares will become one hectare. 

TY MONTAGUE 

Right.

ANIL KUMAR 

Second, from a sector perspective, agriculture is a huge sector, you know, it’s, it’s, it’s massive in terms of scale and scope.

So let us look at what are the major categories in agriculture. you have inputs as a category where everything that goes into cultivation as a process, this includes, the seeds includes crop protection chemicals, and it includes the farm equipment. Now we have the output where the post-harvest services happen, whether it is sale or store and sell or store process and sell, what, what have you, then you have financial services for this. Then you have the advisory services. Then you have the research institutions.

Now, if you look at each of them, each of these categories are massive. Again, you know, the inputs have seeds, double click on seeds. Then you have, you know, the genetically modified hybrid seeds, then open-pollinated seeds and you then double-click on them. You have individual companies around that.

TY MONTAGUE 

Right.

ANIL KUMAR 

Now on the crop protection chemicals, you have fertilizers which facilitate the growth and you have, you know, pesticides and herbicides, which kill. They both are again, two different categories. you don’t have the same company which works on both sides and double click on that. Then you have individual manufacturers for each of these products.

TY MONTAGUE 

Right.

ANIL KUMAR 

Farm equipment. You have minor farm equipment and major, you know, major ones like tractor and the thresher, and, and this kind of things. These are two different entities. You know, you have to click on that again, all of these Ty would want to reach out to these smallholder farmers on their own, and this smallholder farmer has less than two hectares of land. How were they engaged now? You know, that was what inspired us to get into this collectivization, which I will talk later. But the context is smallholder farmer, not being able to engage with the ecosystem on, on the, on the dimension of strength, but on the dimension of being at the receiving end.

ANIL KUMAR 

Now,

TY MONTAGUE 

Right. very fragmented.

ANIL KUMAR 

Value chains very fragmented. The market is fragmented. Land holding is fragmented. So each of these, again, when a farmer goes to buy their inputs, they have to go to the retail most part of the value chain because that’s what he can afford or she can afford. So the manufacturer, dealer, distributor, retailer is where the farmer would go. And when they buy their small quantities, that price is loaded of all the, you know, layers of, the, the product moving in to the farmer.

Provided the farmer has cash. If it is on credit, then the cost of credit also gets loaded on it. Now, then what happens soon after harvest? Most of these farmers, on account of being smallholder farmers, don’t have the capability or infrastructure to, to take the produce to larger markets to sell because you need to have a threshold volume of commodity, right?

Because the cost of transportation would kill, if you have a small quantum and you have to hire a large truck. So the local large farmers are local, aggregators who basically buy out the produce, from the farmers. They aggregate and then they take it to the next, market to sell, which means there is hardly any scope for primary processing or storage. Because they need liquidity immediately.

So if you just combine these two dimensions, I think farmer is the only person who buys retail sells

TY MONTAGUE 

And sales wholesale. yeah. I think that’s a great insight.

ANIL KUMAR 

Which is like the entire margin is squeezed.

TY MONTAGUE 

Yeah.

ANIL KUMAR 

You pay more for your inputs and you hardly get anything for your, for your output.

TY MONTAGUE 

So, so let’s, let’s pivot then to, to Samunnati

And, again, just for listeners’ benefit, what does the name Samunnati mean?

ANIL KUMAR 

Samunnati is a Sanskrit word. It’s a combination of two words, you know, summer and uny Sam is collective, all-encompassing, everyone, right? Uny is growth, prosperity and elevation. So the word Samunnati means collective growth, collective prosperity, and collective elevation.

TY MONTAGUE 

It’s a great name.

So, I’d love to hear the story of, what made you decide to start it and a little bit about what Samunnati does.

ANIL KUMAR 

So first I’ll tell you what Samunnati does and then, you know, come to you on how, how it’s happened because it, it happened accidentally, I would say.

TY MONTAGUE 

Great.

ANIL KUMAR 

Samunnati is, a value chain enabler. It’s an open agri network in the agri value chain space, engaging with the entire spectrum of agriculture players, starting from the input manufacturers to the, farmer collectives to the farmers, to the output aggregators all the way to the large processors.

You know, we are presenting the entire value chain, with the principle expectation and vision that how do we make markets work for smallholder farmers? Because in the narrative that I gave you of how the markets are fragmented, most of these markets are working off the farmer. Can we change the narrative and bring in a dimension of making markets, work for smallholder farmers?

TY MONTAGUE 

Right.

ANIL KUMAR 

The levers that we believe would facilitate this journey are one increasing the throughput in the agri value chains.

And also how do we bring in the dimension of making, the smallholder farmer access, the larger agri ecosystem, and making the agri ecosystem access the last mile through a digital connector that Sammunati is building in. So there are three filters that we look at in terms of how do we engage with the players in the agriculture ecosystem.

One is the vision of making markets work for smallholder farmers by making the agri value chains operate at a higher equilibrium, increasing the throughput with all the players, which also means We work with everyone. And, and then thereby harmonize the engagement between the farmer and the agri ecosystem, right?

These are the three things that we are working towards. and, and, at this point in time, we are presenting about 23 states in the country on the FPO gateway that we have, which is the entry point for all the farmer collectives, which are referred to as FPOs we have about 4,000 such FPOs,

TY MONTAGUE 

And an FPO. Could you, could you unpack that

ANIL KUMAR 

So FPO is a,

TY MONTAGUE 

Is an FPO?

ANIL KUMAR 

FPO is a farmer-producer organization. It’s like a cooperative. It’s like a collective.

TY MONTAGUE 

Co-op right.

ANIL KUMAR 

Right. it is member-owned, member-operated, and, uh, about, you know, 300 to 500 farmers come together to be part of an FPO. To be

TY MONTAGUE 

Hmm.

ANIL KUMAR 

Part of a farmer collective. Now that is where they unlock their collective bargaining power.

TY MONTAGUE 

Right.

ANIL KUMAR 

And that unlocking of collective bargaining power is how we engage with them in a framework that we are refer to as AMLA approach: aggregation, market linkage, and advisory services. And AMLA is also, Ty is also Indian gooseberry. it is the only, fruit which has all the six tastes, including tart. Okay.

TY MONTAGUE 

That’s very interesting.

ANIL KUMAR the way we look at it is when a set of people doing the same economic activity come together, their requirements are homogeneous. Their requirements are similar. If a hundred sugar can farmers come together, their requirements are similar. When 300 patty growing farmers come together, their requirements are similar in terms of what they need to buy and what set services they need to access.

ANIL KUMAR Now, this aggregation is meaningful only when there are market linkages, right? And the moment you bring in market linkages, two things would come into picture: one your local retailer may not have the kind of quantity that you require at an aggregated level. And hence, as a FPO, as a collective, you may want to go one or two steps above,

TY MONTAGUE 

Right.

ANIL KUMAR 

Which also means that the cost of your procurement would come down. Because now you are, you are jumping two, three levels above,

TY MONTAGUE 

Right.

ANIL KUMAR 

It also means is you need to have access to liquidity because in the retail most part, when you went as an individual farmer, you had that social capital to take inputs on credit. But now in, in, in the aggregated one, you are not an entity that is known.

You are not an individual that is a collective. And hence you may not be able to get these inputs on credit. You have to put cash on the table.

TY MONTAGUE 

I think you, you referred to something called a bullet loan that a traditional bank would make to a farmer. And there was downside to that form of, of loan. I wonder if you could just explain that, like sort of the way that you changed the way money is, is being made available to smallholder farmers.

ANIL KUMAR

So there are two ways of engaging with the smallholder farmer. One is actor, which is the household, in the farmer and the activity, the farming, right in, in, in agriculture, the actor and activity are intertwined. You know, there are two sides of the same coin

TY MONTAGUE 

Yes.

ANIL KUMAR 

And you cannot de-link yourself from the actor and engage only in the activity because it’s a household enterprise. The entire household is engaged in the activity.

TY MONTAGUE 

Right.

ANIL KUMAR 

So the way most of the traditional lending models focus on is, “Hey, I would look at your activity in isolation.” 

TY MONTAGUE 

Yes.

ANIL KUMAR 

I structure a loan or a financial product to, you know, to deliver for the activity. And the actor will have to manage, you know, the actor’s cash flows that household to suit the activities requirements now. And two, these are smaller loans and, and there is also the provider’s Opex that comes into picture in terms of how do I engage on this product?

If you take farming as an activity, the way cash flows accrue are you invest, invest, invest, harvest. In other words, you put smaller monies over a period and you get the entire return when you harvest.

TY MONTAGUE 

Right.

ANIL KUMAR 

So the best way to engage in a financial structure for that is, you know, you disburse, disburse, disburse, and ask for repayment.

TY MONTAGUE 

Right,

ANIL KUMAR 

That would mean multiple disbursements for a smaller loan, which means more Opex on the provider side.

So what providers usually do- or used to do, now technology is helping them to structure it differently- is to give, you know, the entire money in one go and expect this smallholder farmer to keep aside the money and keep using it at regular intervals for the activity so that the provider’s Opex does not get inflated on account of multiple transactions for a small loan.

ANIL KUMAR 

But what happens, in reality, is given the multiple demands on the carpus, it gets consumed for something else, you know,

TY MONTAGUE 

In the family, some other family need, right?

ANIL KUMAR 

Okay. And, and it usually results in either they compromising on one or two steps in the cultivation or going for higher cost liquidity options,

TY MONTAGUE 

Yes.

ANIL KUMAR 

Take care of those one or two dimensions in cultivation, both of which have a negative impact on the income.

Because if you compromise on, on one or two steps in the cultivation, your yield gets, you know, reduced,

TY MONTAGUE 

Sure,

ANIL KUMAR 

You take higher cost borrowing, then, you have to repay that and you are, income gets reduced to that extent, right? So the best way to engage is engage with the actor as a household and then provide multiple requirements.

You know, the household also requires insurance. The household also requires, you know, liquidity support during cultivation. The household also requires, um, you know, other, other financial products, advisory services, so on and so forth.

TY MONTAGUE 

So, so you saw this problem and other problems like it and you, and obviously you saw some kind of an opportunity, but I’d just love to hear, What made you decide to make the leap? Because becoming an entrepreneur is, a non-trivial decision in one’s career.

ANIL KUMAR 

I, I, realize the enormity of it now, but when the decision was made it, I have never done farming, but the way I took to agriculture was like fish taking to water. So on a lighter note, I keep telling maybe I would’ve been a cow or a buffalo in my previous life. I don’t know. That’s why it’s so natural. Or maybe I would’ve been a farmer. If I can be gentle to myself.

TY MONTAGUE 

(laughter) Very funny.

ANIL KUMAR So, you know, Canara Bank, I moved to ICICI Bank and continued my studies. And then within ICICI bank in, 2004, I took a sabbatical, went to Manila to do my masters is when I got inspired by the financial inclusion and Dr. Muhammad Yunus’s life, and then I thought, Hey, I have got so much of exposure. God has been kind to give this exposure of the rural and agri to me, why, why don’t I do something in agriculture is what made me to get into the rural micro banking and agri business group of ICICI Bank.

TY MONTAGUE 

I  see.

ANIL KUMAR

Two years in ICICI Bank, and then the bank debuted, couple of us who were with him to set up a new initiative called IFMR Trust. And I was given the responsibility of setting up a local financial institution model, which designed and deployed an in-depth engagement with the household.

So this actor dimension, the household dimension, and as part of that engagement with the household through a branch-led approach, we used to do the asset-liability income expenditure of the household in a scientific manner. In a structure that is called wealth management approach for low-income households.

Cause usually wealth management is associated with people who have, who are right.

But one decision going wrong in the life of a low-income household would, would mean a

TY MONTAGUE 

Is a disaster, right?

ANIL KUMAR 

So it is much more critical for them to manage their wealth. And hence we, as providers should have a framework of managing their wealth because a $200, expenditure could be a rounding-off error for a wealthy individual, but this could be a life-changing one.

That could push them into poverty, back to poverty.

TY MONTAGUE 

Yes.

ANIL KUMAR 

So that, that is a kind of understanding of the household that we did for about seven and a half years, where as a group CEO, we had set up about 222 branches.

We had about, 1100 people in this initiative. We had 1.8 million insurance policies, all of that, the far end of this, initiative, I started realizing that while an in-depth understanding of the household is important, the household is not operating in vacuum. The household is operating in an ecosystem, and that ecosystem is dependent on one or two major agri value chains.

So if you have to engage with the household in a constructive manner, you have to go one or two levels above because a volatility of that value chain would have an impact on the household

TY MONTAGUE 

Right.

ANIL KUMAR 

Household incomes because they’re intertwined. There, there is a positive correlation between both of them, right? Is when the idea of Samunnati as a value chain enabler germinated, that’s when the idea came in.

And, then I, I, I, I said, why not I take a leap of faith because I have had the benefit of, setting up an entity from scratch, understand this space. And, my wife permitted me to take the entrepreneurial plunge. So I took a loan on my house and my entire PR Provident fund money from my previous employer and Samunnati that they started as, as a, as a journey, as an entity, as you rightly said it now, I feel, how did I make such a big leap of faith?

But at that point in time, Ty it felt natural. It, it felt so

TY MONTAGUE 

That’s great.

ANIL KUMAR 

Peace.

TY MONTAGUE 

So when you talk about Samunnati and it’s purpose, how do you talk about it? How do you articulate the purpose of Samunnati?

ANIL KUMAR 

So there are two dimensions of how, you know, we engage while the core purpose remains. Markets working for smallholder farmers. You know, that is the, you know, the reason for our existence. so we thought while our goal is to impact smallholder farmers, the way to achieve it is through the value chain. And so we engage with agri enterprises. We engage with the processors. We engage with small-time dealers and distributors. We engage all the way with, you know, multinational procurement agencies, you know, everyone. we are working with the entire value chain.

And hence you also see in our, in our numbers and balance sheet, there is a significant portion that is with the agri enterprises, not with the small holder farmers, not with their collectives. But that, that is the, you know, that is the highway that we are building. so that we bring the demand side of the, you know, value chain towards the supply side.

TY MONTAGUE 

Right. and how old is the company? When did you found it?

ANIL KUMAR 

It was founded in 2014. November 2014 is when we started our journey. we got our, first investor in 2015. So once we started lending that happened in May, 2016. So I would say scaled operations happened from May 2016 onwards. And within one and a half years of that we realized that, in agriculture, the best way to engage with the players is by being an internal player by being a partner, not just paying a lender on the fringes.

An internal player in the value chain is embedded in the activity, you know, is part of the highs and low of what happens in the value chain.

And external part in the value chain is someone who is sitting on the fringes on, on the edges and takes collateral and, you know, property as, as security to protect, but is not part of the, activity per se.

So we also looked at the entire informal markets in agriculture. Most of them are internal players. The ones who are lending in agriculture were actually ones who are part of the agri ecosystem. So that’s when we got into market linkages and set up someone at the agro as a subsidiary within one and a half years and, our customers are talking about market linkage as being equally important, if not less, you know, in addition to the financial services,

ANIL KUMAR 

Finance is important, but not sufficient. Finance is a lubricant. It, it can facilitate things happen. It cannot be the, you know, end. It is a means.

TY MONTAGUE 

Right.

ANIL KUMAR 

Market linkages are much more critical.

TY MONTAGUE 

Ah, very interesting. Yeah. And, can you describe the dimensions of the business today? How big have you grown so far?

ANIL KUMAR

So between both these engines, we have done about 1.7 billion dollars of throughput.

TY MONTAGUE

Wow.

ANIL KUMAR 

You know, finance is about, 60% of it. The 40% is the commerce side and, and, the aspiration is, how do we take it to. About, 15 billion in the next, five years. Uh, what, what we are also looking at is in these 4,000 farmer collectives that we work with on the FPO gateway there, collective membership is in the range of about, 7 million smallholder farmers has about, hundred million smallholder families. So how can we touch one every four farming families in the next five years is the goal that we are pursuing so that we are about 25% of this cohort, this universe and touching does not mean we lend to them or buy from them, because at a collective level, Ty, we also engage in their institution building. We do their digitization, we build their teams, we train them on the business activity.

We, we also conduct training programs for the CEOs. We, we bring in the SOPs for the risk and audit framework. All, all these are not charged. We do it from two dimensions because one dimension is as a lender I’m as strong as my borrower right? If the borrower is strong is when I get my money back.

Second, I can only grow if my partner is strong. So by building capability in them as an institution, their ability to grow gets accentuated and hence, I will grow with them.

TY MONTAGUE 

Yes.

ANIL KUMAR 

Which is what collective growth is, which is what Samunnati is.

TY MONTAGUE 

Yeah. when I hear you say those words, they sound extremely obvious, but it’s also, if you look around the business world, how rarely those words are practiced in business. It makes me reflect that if we could foster more of that kind of thinking in business, particularly in the states, the better off people would be because, you know, in- and I know you know this- in traditional capitalism it’s very, I guess the, the phrase here would be dog eat dog, or there are winners and losers, and this idea of building an ecosystem where there is collective success is very rarely practiced, I would say in traditional capitalism.

ANIL KUMAR 

It it’s perhaps also a dimension of the sector where we are operating, Ty. Y’know agriculture is humongously large, uh, mean a humongously large that we don’t need to compete. And if I can just borrow the phrase it’s, it’s like a blue ocean, you know, you, you, you are insignificant as a player, in relation to the potential of the sector.

So I keep saying even after five years, Samunnati from a quantum perspective, 15 billion is still rounding of error. Uh, that’s why we also engage with large number of agri startups and ecosystem players, because there is so much to do collectively. We work with, about three to 400 startups in, in the agri space in terms of being their lender, you know, in terms of giving our distribution network to them for their proof of concept, and then structuring their product for our customers, whether it is quality assaying, or whether it is storage or whether it is, uh, drone monitoring or satellite imagery, what have you.

TY MONTAGUE 

Yes. So

ANIL KUMAR 

You collaborate and collaborate.

TY MONTAGUE 

I love that. And so in the states, my observation would be there used to be many, many small family farms here also and we took a very different path. It appears that we decided to actually aggregate at the ownership level. And so there are these giant agriculture businesses, these giant industrial farming operations in the states. And I guess I have a couple of questions underneath that observation. One is why has that not happened in India? it feels to me like you got to the market just in time to make sure that that actually, and your focus on helping small family farmers go it alone and continue to be independent, has been a real, aspect of your success, but has there been a movement to aggregate farmers, to buy out, buy up all the farmers in India.

ANIL KUMAR 

The dimension of collectivization has been around for centuries in India, Ty, the farms have changed, but the principle of collectivization has remained

TY MONTAGUE 

Yeah.

ANIL KUMAR 

I agree with you on the timing part because, uh, a lot of things are coming together. One is the dimension of technology, India is a large country with a huge, population.

And, the majority of them in a remote and infrastructure, was a challenge. Now you see last, last, you know, 10 years, the amount of, development that has happened on the physical infrastructure, like, you know, roads and, rails and, and transportation on the communication infrastructure in terms of, the optic fiber and, the wireless, and most importantly, the entire smartphone dimension where, the tools that are required to bring markets and people closer are available now. Number one, right?

ANIL KUMAR 

Number two, we stumbled into this space in 2015 accidentally, uh, you know, into this FPO space collectivization, you know, In 2019, the government made an announcement of setting up additional 10,000 new collectives as an initiative. And that gave a shot in the arm for the entire, you know, ecosystem, uh, where everybody started looking at, how do we participate in this dimension?

So the entire policy framework and the policy environment has, has got a huge. In the last 10 years. Uh and, and one of the things that we are also, witnessing here is the entrepreneurial energy. Many youngsters are now taking up to agri startups and tech companies and, and, and the entire startup world is abuzz with, youngsters trying out. and every other day, ACON germinating from this lot, there is a lot that is happening, which was not the case, you know, about 30 years ago when, when I was a youngster. At that point in time, it was like, you studied to get a job and you settle down in a job and you don’t take risk. Cause the entire dimension on Maslow’s hierarchy of needs is basic and safety. Nobody looked at self-actualization and esteem the, the millennials. are not that, you know, they, they are ready to explore. They’re ready to take risk.

ANIL KUMAR 

So many things are coming together for the Indian agriculture, to unlock the potential. And given the component annual growth rate that we are witnessing agriculture would be a trillion dollar dimension in India in the next five years. Imagine that that would be fantastic. Two, from a food deficit nation, as late as you know, the late sixties now India is actually exporter and the largest producer of several agri products. You know, we are a surplus nation, which also exports to many countries. And I suddenly believe that, we can work with many smaller countries, which don’t have, land mass to cultivate, you know, for their food security.

India can play that role. okay. So there is a lot that that is coming together You know there is a confluence of technology, private capital flowing in mind. You not all is being funded by grants and donations. You know, these are private capital flowing in, and entrepreneurial spirit backing the capital infusion. It’s this wave. 

TY MONTAGUE 

That’s very inspiring. And I hope we can uh, learn a bit , from, the Indian culture of cooperation and collaboration and also of your success at Samunnati here and apply some of that, how do you, how do you think about, climate change , and the potential effects of that on both the smallholder farmer and on your business.

ANIL KUMAR 

So it’s, it’s a very important aspect that we cannot ignore anymore. It is moving from, I would say, an important bucket to the urgent bucket, uh, is something that needs attention. and, and, one of my, my key takeaways when I started working very closely with farmers is they are aware of what is sustainable agriculture Ty.

But how, how can you handhold the transition from traditional farming methods, which are not climate resilient, art, climate smart

TY MONTAGUE 

Right. Fertilizers and pesticides,

ANIL KUMAR 

Pesticide, also, you know, flood irrigation to drip irrigation, you know, choices of, crops, mono-crop to multiple crops.

All of that, there is awareness. What they don’t have is the handholding, because the vulnerability of a failure would mean losing one season. That would mean, you know, family starving. So food on the table today to retaining that piece of land for the next generation, the, the choice is obvious.

So the way Samunnati and, you know, some of us who have been part of this journey believe is we have to convert this awareness into an action by handholding them and, providing a safety net to them for the fall. 

ANIL KUMAR 

We have to bring in the dimension of insurance, we have to bring in the dimension of market linkages and, uh, the forward linkages in the agri chain so that the farmer can, can confidently work. And, uh, Samunnati has taken baby steps in that, you know, we, started working with Rabobank on a guarantee program along with, uh, USAID and US DFC on climate smart agriculture and agroforestry, where they provide a guarantee and we provide the, market linkages and finance.

Fifteen percent of our overall engagement so far in this 1.5 billion has been, climate-smart complaint assets, Uh, We also have issued, uh, green bonds now, and the idea is how can we bring in the dimension of green? And, and that, again is a category. The, the moment you unwrap that you have prevention of food loss as one efficient use of energy as the, you know, second one and responsible usage of, you know, pesticides and fertilizers or chemicals to retain the vitality of the soil. Well, retain the vitality is, is an aspiration, but how do we infuse life into the soil? That’s an important one. And, We have a dedicated team of about, 15 people working exclusively on that.

So it it’s, it’s not, uh, a good to have debate anymore. climate patterns have changed. The rainfall patterns have changed. so we need to address it.

TY MONTAGUE 

Agreed. So I wanna pivot and just talk a little bit about you as a leader, and hopefully share some of your wisdom for entrepreneurs or other CEOs of even non-purpose led businesses who are beginning that transition. So,-

All purpose-led businesses tend to have, or consider the needs of many more stakeholders than shareholders alone. and, one of the things that I wondered about is how do you think about all of the stakeholders that you are serving at at Samunnati as the leader and do any of those stakeholders needs ever come into conflict?

ANIL KUMAR 

Right. So, uh, I, I don’t know if I have an advice for the new entrepreneurs, but all that I would say is I can share, my journey, how, how that has been. Being led by heart has been a hallmark of, you know, my journey so far. When I look back, you know, as I mentioned, the decision of setting up Samunnati by taking a loan on my house and my private and front money at, at the age of 42 did not appear to be a crazy decision, That agriculture, because everybody were, were surprised that somebody’s looking at lending to agriculture, because lending and agriculture was considered to be an oxymoron, uh, that at that point in time and then going back to my own life, you know, leaving a government job and joining a private sector organization when I was doing well, I left there and went to college, uh, because I never had a college life, I was a school dropout. Then from college dropout coming back and then being a, you know, founder of a, you know, financial inclusion initiative called IFMR Trust. And when I was a group CEO were leaving that and setting up Samunnati, I think there is, there is one significant, you know, factor that enabled this journey, which is, uh, The investment that I made in myself, I, I got into a system of meditation when I was 21, that was in 1993.

ANIL KUMAR 

I stumbled into a system called heartfulness, which is a 20, 25 minute, you know, investment that I made every day in meditating on myself in terms of how do, how do I, you know, build my life you know, it was not about how do I become rich.

It was not about how do I, compete with others at the cost of, you know, others. This investment for about now for about 30 years now has helped me immensely. To decide things based on what the heart says, not what the mind says. Because if I had done some financial calculation and analysis, you know, no, no one would want to risk the entire family, you know, wealth.

So, one thing that I certainly would tell the fellow entrepreneurs is when you are a purpose-led business, it is important that you are anchored inside. And that it’s important to have an investment in yourself so that, you make right choices.

So on the stakeholders dimension, we have been fortunate to have an aligned set of people all through, starting from Elevar, which believed in, in the story of agriculture and not because somebody spoke to them, they have invested in 2012, they actually went around seeing agriculture and the farmer collectivization. And in 2015, when I spoke about collectivization, it was not new to them. You know, they, they knew the space and why this has so much of potential. So an investor who understands the impact space is an important dimension.

And then, you know, we got Axel, we got responsibility. We got, uh, all of them fundamentally interested in impact from a scale dimension with the customer unambiguously being the one that we have to work with. Uh, these are not two different vehicles saying, “Hey, you do business, but also take care of impact.”

No, you are in the business of impact, impact defined us. Who is your customer segment? Who do you work with? And when that is clearly defined, the scale happens because the primary customer segment that you are working with is the same.

ANIL KUMAR 

So are our, you know, customers, you know, the, the way we engage with our, you know, smallholder farmers in their collective, we don’t directly work with them. We work always with their collective. We don’t take collaterals. We don’t believe in collaterals when engaging with them. There is a lot of the commitment to them is when you are united, we are committed with you.

So a lighter note, I keep telling people that, how do you lend? So we say, no, we believe look into the eye lend and then pray. Right?

TY MONTAGUE 

Well, it seems to have worked out so far. It seems to have worked out so far.

ANIL KUMAR 

The cost of risk in our business is about 2%. That’s it. 98% has come back. So prayers do work, but on a, on a, on a serious note, the risk management philosophy in Samunnati how do you address the risks of the customers?

TY MONTAGUE 

Yes.

ANIL KUMAR 

When their risk is addressed is when my risk is addressed. And the risk of not having the institution capability to handle the business is a risk to me. So how do I address the business? So the risk management philosophy for us is manage the risk of your client and hence your risk is automatically managed. so that’s how we engage with the stakeholders.

We have a wonderful team at Samunnati about 700 people, you know, all aligned to the purpose. So every meeting that we have, whether it is a smaller, important meeting or a town hall on zoom these days with all 700 people, we start with, what we call as a connection. we, we offer a, you know, a minute prayer, which basically says all of us pray that whatever we discuss, whatever we do, we do for the larger, good of the humanity.

That is a ritual, nothing to do with any particular form of faith or religion or caste, we say, may there be a larger, good for the entire humanity.

ANIL KUMAR 

Those reiterations help us ground it.

TY MONTAGUE 

I love that answer and, um, It also gives me a, a little view into the culture at Samunnati which I appreciate. Do you think that being purpose led as a, as a for-profit business means that you have to have more modest financial goals as a business?

ANIL KUMAR 

Actually no. If you see the, the, the audacity with which we are talking about numbers, I, I believe the purpose-led business has to be more aspirational and bold in thinking than being driven by Excel sheets and numbers. I, if purpose-led businesses apply logic, then we don’t go anywhere. The purpose-led business have to be, have to be driven by passion. And passion my view is not, is not limited by numbers.

TY MONTAGUE 

That’s that’s a beautiful answer. I love it.

Okay. So my last question for you today, sadly, cuz I’m so enjoying this conversation, but, but I realize that you have a business to run and a life to lead.

So on calling BS on this show, We define BS as the gap between word and deed. And we have a tool called the BS scale, zero being the best, zero BS, and 100 being the worst- total BS. And taking into consideration the fact that, no business is perfect, right. Every business is on a journey. Where would you rate Samunnati on that scale today?

ANIL KUMAR 

Ty, I would say about 30. We have covered significant distance in terms of what we have to pursue. There is clarity of direction. Then there is scale that we have, demonstrated the, the team is in place the, the, the tools that we have to impact are on place.

But it is still a journey. and this is a moving post, you know, after five years, if we talk and I would still say, we are still about 30, right. That aspiration would’ve changed because we are looking at farmer as an actor, I would say in activity, we have, we are zero, but you know, still the household needs to be impacted. So I will still have about 30, I would say about 30.

TY MONTAGUE 

Yeah. you may be even being a little hard on yourself, which is totally, totally fine, but, you’ve certainly proven the model and, it’s incredibly impressive what you’ve achieved. So thank you for being on the show today and thank you for the work that you’re doing.

Um, it has been a pleasure to, uh, spend time with you.

ANIL KUMAR 

Thank you. It has been my privilege, to have, interacted with you and, shared my journey. thank you for the opportunity.

TY MONTAGUE (VO) 

 

Alright folks, it’s time to give Samunnati a BS score. 

 

The company’s purpose impacts millions of people in a positive way. Samunnati looks beyond their immediate customers. They exist to change the entire agricultural ecosystem, which makes things better for everyone.. 

 

It’s an enormous job, full of ambition. And the vast scale of their aspirations is evident in the score of 30 that Anil gave himself. That score shows just how much more potential he feels there is yet to fulfill. But I think a lower score is fairer in this case, not because there isn’t upside for Samunatti, but because I think their words align so well with their deeds they just deserve a better score. So I’m going to cut Anil’s score in half and give Samunatti an extremely impressive 15. 

 

TY MONTAGUE (VO) 

And if you’re starting a purpose-led business, or you’re thinking about beginning the journey of transformation to become one, here are three things that you can take away from this episode:

 

  1.  Lead with your heart. Empathy and understanding for all of your stakeholders is a key aspect of building a successful purpose-led business. Empathy doesn’t appear in many MBA programs and it’s hard to find it in any spreadsheets, and yet it is the secret sauce that is driving the success of conscious capitalism.
  2. Pick a problem you understand and really care about! Anil’s humble beginnings in India gave him a unique perspective on the plight of smallholder farmers, one that traditional bankers couldn’t see or understand. Your personal experiences and struggles are where you’ll find your own purpose-led unicorn. 
  3. It’s not a zero-sum game. The best purpose-led businesses don’t create winners and losers.  They create win-win win scenarios in which a complex web of stakeholders improve each other’s lives and finances. They create Samunnati – collective progress. 

 

I want to thank Anil Kumar, the team at Samunatti and the team at Elevar Equity for helping to make this episode possible.  

 

And If today’s episode inspired you to lift up our ecosystem, subscribe on the Calling Bullshit Podcast on the iHeart Radio app, Apple Podcasts, or wherever you listen to people speak into your ears. Please rate and review us as well.  It helps other listeners find us! 

 

Thanks to our production team. Hannah Beal, Amanda Ginsburg, DS Moss, Haley Paskalides, Parker Silzer and Basil Soper. 

 

Calling Bullshit was created by Co Collective and it’s hosted by me, Ty Montague. Thanks for listening.

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  1. John Wisdom on December 28, 2022

    Anil is a genuinely a nice person, very articulate and a great guy. But Samunnati’s business model is a big-time bullshit without focus on achievement of their so called purpose. 80%++ of Indian farmers are smallholder farmers and claims of Samunnati on working across the value chains are at a very primordial stage. The funny part is there are very few professionals who really understand Agriculture operations in Samunnati. It is a Non Banking Finance company run by bankers and traders who masquerade with the mission that they are transforming lives of smallholder farmers. It is a good narrative for clueless investors and pension funds who want to funnel funds into Agri sector in India. All the best to Team Samunnati !! My Bullshit score is 75%.

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