The total world population is expected to grow to 9 billion by 2050, that is one third more mouths to feed by 2050. According to these projections the food produced globally will have to increase by 70 percent.
Food products can be classified into two types, products that are more responsive to higher incomes (such as livestock and dairy products) and the ones that react to lower disposable incomes (grains, fruits and vegetables). The production of livestock and dairy production can be increased by starting more production facilities or introducing artificial substitutes. On the other hand, increasing production of grains, fruits and vegetables by nearly 70 percent can be challenging as the arable land is expected to increase by only 190 million hectares (or less than 8 percent) some of this will also be offset by a decrease of about 50 million hectares in the developed countries.
To combat this more efficient cultivation methods need to be introduced or the losses sustained in the distribution need to be reduced, as the losses currently stand at a whopping 40-50 percent of the total food produced.
Developing economies need to cut down on losses in the supply chain or look at importing 300 million tonnes of grain by 2050, a threefold increase from 2009. This would then account for around 14 percent of the total consumption up from 9.2 percent currently The direct method to cut down on these losses is to increase the investment in warehousing and cold storage facilities. The alternate is to promote food products with significantly lower storage requirements, an example of this is dried fruits and vegetables. Dried fruits and vegetables have a much higher shelf life of up to 11 months and also do not require a cost intensive cold storage set up.
Kyra has performed a comprehensive study of the end to end supply chain to understand the challenges we will encounter at every step.
We've identified five main stakeholders within the supply chain:
1. Fabricator (Manufacturers)
2. NGO (Distribution)
3. Farmers (Customers)
4. Transportation, Collection and Distribution
5. Retail Customers
In an effort to understand each part properly, we interviewed people having expertise in each of them.
Kyra aims to make solar dryers accessible to all farmers and to see this become a reality we are proposing multiple financial options for the farmers. Farmers in rural India don’t have enough capital to self finance the solar dryers we aim to sell to them. The 8 kg model of the solar dryers will be sold a cost of INR 7985 ~ $120 (more details about the financials of the product will be shown in the upcoming blog posts).
The first and the most attractive option is a revenue sharing model under which Kyra proposes to have an EMI option for the payment of solar dryers. The farmers would have to pay INR 360 per month for 2 years under this scheme. Kyra will sustain an initial loss on this but will take a cut of the revenue generated by selling dried produce to cover the operational costs (transport/distribution + marketing + administration) and pass the rest to the farmers. The percentage of the cut will never be higher than the operational costs sustained, but at low volumes Kyra would ensure that enough revenue passes down to the farmers to cover their costs.
The second option is to form cooperative society of farmers with small land parcels who don’t have enough resources on their own. These cooperative societies can then pool their resources to buy solar dryers by either paying upfront or using the first option. Another option is to put them in touch with Microfinance Institutions (MFIs).
We are helped in our cause to the make these solar dryers affordable to the farmers by the grants and subsidies offered by the Government of India. Grants that we have identified to benefit the farmers are:
25% to 35% subsidy from KVIB (Khadi and Village Industries Board) on the total project cost.
Subsidy available from NABARD (National Bank for Agriculture and Rural Development) under post harvesting scheme.
50 % subsidy under the NADP (National Agricultural Development Programme). The minimum area required for setting up the solar drier is 400 sq ft.