Sameer Mehra helps farmers grow organic crops—so that their profits increase.
orty-two year old Bhima Bhai has been growing conventional cotton, bajra and the like for almost half his life. But two years ago, this farmer from Lakhchokhiya village of Suren-
dranagar district in Gujarat, made a break from the past. He carved out half of his six-acre patch for organic cotton in a contract farming deal with the Mumbai-based Suminter India Organics. The latter helps him with know-how, seeds with an extended credit period, and also buys produce at his doorstep at a 10-15% premium. His organic farm costs less to maintain and produces less yield, but still earns more money.
Dressed in the traditional Gujarati folk costume kedia and a turban, Bhima explains the economics. On the old farm, he spends about Rs 4,000 per acre on chemicals and urea for the crops. “In the organic tract, my only investment is a kilo of jaggery per acre,” he says pointing to an earthen pot containing a solution of cow manure, jaggery and roots of the banyan tree. “I now make a profit of close to Rs 2,000 per acre (from the organic patch),” he says. Adds 35-year-old Virji Bhai of nearby Tramboda village: “Suminter gives us money in advance due to which we don’t need to make distress sales to buy seeds.” He started by setting aside an acre for organic farming in a deal with Suminter, increased it to two acres, and is now ready to convert his entire eight-acre holding into a Suminter organic farm. Like them, about 10,000 small farmers across Gujarat, Maharashtra, Kerala, Uttaranchal and Rajasthan have shaken hands with Suminter and have seen earnings grow.
But the company’s 34-year-old founder and Managing Director, Sameer Mehra, is hardly the farmer activist you would expect to encounter. He is a smart, hard-nosed businessman. He is honest enough to admit that he did not start this business out of love for society. “It was purely an idea to build a profitable business model,” he says. Mehra is part of the family that was associated with Enercon India, a well-known name in wind energy. He took a break from the family business in 1998, got an MBA from the Emory University in Atlanta, and worked in a hedge fund in New York. While in the US, he sniffed out a big business opportunity in organic products. Already, he has built Suminter India into a multi-million dollar firm.
Mehra returned to India in 2003 and set up Suminter India in 2004 with a Rs 50 lakh investment. He partnered with the Agha Khan Foundation, which was already training farmers in sustainable agriculture. But Mehra made it even better for the farmers. Virji Bhai, for instance, was first introduced to organic farming by the foundation, but had given up because he didn’t find buyers. “Now, Suminter buys my produce and gives me a better price,” he says.
In the last five years, Suminter has tied-up around 50,000 acres of contract farming land and has around 10,000 organic certified farmers. But that’s only the first half of the Suminter India story. The second part lies in the way it sells its produce to organic vendors in the US and Europe, who in turn sell to leading retailers such as Tesco and Wal-Mart.
Global consumers are willing to pay a premium for organic produce, but only if they are getting the real stuff.
That means Suminter has to get its products tested at the labs of the vendors and get it certified by Control Union, an agency in the Netherlands that complies with standards of the US Department of Agriculture and the European Union. It took three years of intensive work with farmers and entails an annual spend of Rs 20 lakh to get the certification. That done, the first consignment of the company’s produce, organic sesame seeds, was shipped in 2005. “But we faced huge pest issues,” recollects Mehra. This prompted Mehra to invest €1 million in an organic pest fumigation technology called Eco2 at Indore in partnership with a Dutch company, Bergwerff Organic. Now, it is investing in a steam sterilisation unit, likely to become operational this October.
All this was funded by $3 million raised from Nexus India Capital, a venture capital fund. Sandeep Singhal, CEO Nexus India Capital, says that Suminter India’s business model, which benefits its customers, suppliers (the farmers) and stakeholders, is what excited them to invest.
Finally, Suminter India’s cotton project in Gujarat got a fair-trade certification. The benefit: Suminter India gets a 15-20% higher price on the produce it sells, and farmers get a fair-trade minimum price, or, the market price, whichever is higher.
Suminter India has also helped the farmers form an independent organisation called the Gujarat Sustainable and Organic Farmer’s Association (GSOFA). Fair Trade rules say that the premium earned by the farmers is to be used only on community development projects. The GSOFA has the authority to decide how this is spent.
Bhima Bhai, who is also the President of GSOFA, says that the association got Rs 14.33 lakh as fair trade premium last year. This was invested in 21 community development projects including bus shelters, crematoriums and hand pumps.
After touching the lives of 10,000 farmers, Suminter’s Mehra says he has learnt to be sensitive to social needs. He is waiting for a second round of funding that will help him expand and make himself, more farmers and their communities prosperous.