In 2017, after reading about the horrific practices behind mass-manufactured dairy and a short-lived stint of veganism, I began to look for alternatives. My goal was to find a reliable supplier of milk from cows treated humanely. But the options that came up during my research were hopelessly vague (“We provide quality fodder, cattle feed, and nice shelter”) or gimmicky (“We play classical music all day so the cows develop happy hormones,”) not to mention expensive. I remember buying Rs.110 per litre tetra packs of free-range milk imported from Ireland and watering them down to make them last!
A nutrition-enthusiast friend who was on a clean eating journey suggested Akshayakalpa. “They seem to be a small local brand,” she told me. “My mother got a free sample outside the Ragigudda temple in Jayanagar, tried the milk, and loved it.”
Organic, antibiotics and hormone-free milk. Grass-fed, free-grazing cows. Calves allowed their daily feed and not separated at birth. A surprisingly affordable price tag. Akshayakalpa seemed to check all my boxes. So I made the switch.
During the early days of the pandemic, our apartment complex did not allow delivery personnel inside. All deliveries – including morning milk – were left on tables near the security office. As I went down each morning to collect my milk, I discovered just how many others were buying Akshayakalpa. It seemed to me that every second household was a customer. Perhaps the brand wasn’t as small or niche as I had imagined?
I was intrigued, more so because I had never seen an ad for the brand on any digital or TV platform. So, when Meeta pinged to ask if I wanted to write this story, I jumped at the chance.
First, Some Background
Consumer interest in organic, clean-label food is on the rise. India’s organic food market is expected to grow at a CAGR of 25.25% from 2022 to 2027. But Akshayakalpa, well-known in Bangalore and Chennai for its organic, antibiotics and hormone-free dairy products, was born long before organic became a buzzword.
Founded in 2010 by Shashi Kumar and Dr.GNS Reddy, Akshayakalpa serves 60,000+ customers daily through their app, 2000+ retail outlets, and e-commerce platforms such as Bigbasket, FTH, Swiggy Instamart, etc. Bootstrapped for 9 years, they raised a Series A of $6Mn in 2019 from impact investor Lok Capital. Last month, they raised a Series B of $15Mn from British International Investment, Rainmatter Foundation, and Venture Dairy.
The Goal: Make Small Farms Financially Viable
Agriculture is the primary means of livelihood for a vast proportion of Indians. 54.6% of our workforce is engaged in agriculture and allied activities. Of these, 80% are small and mid-sized holdings of 3-5 acres, which give the farmers an income of just ₹2000-3000 per month. This is way below the poverty line in India.
The challenges faced by farmers are manifold apart from the vagaries of the monsoons. Many farms are off the grid and receive less than 4 hours of electricity per day. This limits mechanisation and increases their dependence on manual labour. Banks are reluctant to provide loans to farmers because of the high default rate, leaving them vulnerable to debt traps by private moneylenders.
Unsurprisingly, the suicide rate among farmers is also on the rise: in 2021, 15 farmers died by suicide every day. Others give up farming entirely and migrate to the cities, working as daily wage labourers. Over 30% of urban migrants today were originally farmers.
Though he came from a farming family, Shashi was not encouraged to take up farming. Instead, he was pushed towards engineering, a booming sector in the 90s. Dr.GNS Reddy started his career as a veterinarian and thereafter, moved into the impact sector. For over three decades, he worked with the NGO Bharatiya Agro Industries Foundation (BAIF), exploring ways to uplift rural communities through improved agriculture and animal husbandry practices.
When the two eventually met, they realised they had a common goal: to make agri-entrepreneurship a profitable, lucrative career path so that rural youth would be able to make a good living off the land. Akshayakalpa was the result.
The Akshayakalpa Farm Engagement Model
Akshayakalpa follows a hub-and-spoke model for production and distribution. Farm networks are created in rural, agricultural areas strategically located near an urban hub. Over a 2-3 year timespan, Akshayakalpa works on developing these farms and scaling up their production capabilities.
Once the farms get ready, Akshayakalpa begins to generate demand in the urban hub through promotional activities. They then supply fresh, local produce in the hub from the surrounding farm network. Currently, they work with 750 farmers from 900 villages in and around Tiptur, Karnataka, supplying Bangalore, Chennai, and Hyderabad.
Step 1: Leasing Farmland
Any farmer interested in working with Akshayakalpa needs to have access to ~3 acres of farmland. Around Tiptur, most of these farms start out with a coconut plantation and 1-2 cows. Only about 40% of the farmers own the land outright. The rest need to lease it. “Agricultural land is plentiful and cheaply available for lease,” says Shashi Kumar, “given that very few youngsters in the region are staying on to farm their land.”
To help leasing farmers, Akshayakalpa creates a tripartite agreement with NBFCs. Initially, Akshayakalpa finances the farmer at 7-8% per annum. In 4-6 months, once the farm begins to make money under their guidance, Akshayakalpa’s loan is repaid by the NBFC who then takes over the loan. Akshayakalpa also arranges microfinance for farmers through campaigns on P2P lending platforms. Their recent Rangde campaigns have been very successful, raising ₹3.69Cr for 289 farmers from 2116 retail social investors.
Step 2: Introducing Dairy
“Our development model typically starts by introducing dairy production to the farms because it generates a cash flow from Day 1,” says Shashi. “Once some cash starts coming in, the pressure is lifted off the farmer who is then able to focus on mid to long term initiatives.”
Akshayakalpa encourages farmers to grow their own cattle fodder, treat the cows and calves humanely so that their overall wellbeing and yield improves, and use dairy farming by-products to create biofertilisers. All of this brings down the cost of cattle rearing. They currently pay their farmers ₹35 per litre of milk, which is higher than most other co operatives.
Rearing cows also solves for the energy needs of the farm. Akshayakalpa helps the farmers set up biogas plants to which cow manure is fed. The resulting electricity sustains the mechanisation needs of even off-the-grid farms, turning them self-sufficient.
Step 3: Generating Multiple Cash Streams
“We create multiple cash flows on a daily, weekly, monthly, biannual basis, so that the farming venture becomes fail-proof.” Shashi tells us. Akshayakalpa does this by helping the farmers establish small staggered revenue streams. Apart from dairy, which brings in cash on a daily basis, they encourage backyard free-range poultry rearing for eggs, cultivating fast-growing local herbs such as curry leaves, methi, amaranthus, etc., growing bananas, mushroom farming, etc.
With these interventions, farms that start out earning ₹3000/month see their income double within a matter of months.
Within 2-3 years, the groundwork is complete and they are ready to become Akshayakalpa farms. At this stage, the interventions become deeper.
“A British survey from 1903 says that coconut trees in the Tiptur area yielded 185 nuts per tree. When we did a baseline survey in 2010, we discovered that yield has dropped to 55 nuts per tree.” Shashi tells us. “This steep drop in production is due to unsustainable farming practices. One of our key long term interventions is soil quality management so that farming continues to be sustainable and profitable. ”
To this end, Akshayakalpa helps farmers with end-to-end farm design and crop planning. They introduce pollinators and crop diversity, and practice intercropping to replenish soil fertility. Within 2-3 years, the income of Akshayakalpa farms rises to ~₹1,00,000/month on average.
By creating real-life farming success stories locally, Akshayakalpa inspires rural youth to take up agriculture as a career path.
Step 4: Linking To Markets
For the first ten years of their existence, Akshayakalpa focused only on the Bangalore market. They spent zero rupees on marketing, relying on personal networks, word of mouth, and tie-ups with local milkmen to create a loyal customer base in the city. Even today, they do not spend on digital channels for customer acquisition.
Instead, they run BTL events, giving out product samples and narrating their story to potential customers. They do infomercial-style radio campaigns with local RJs. They also run a popular Farm Visit program where families, corporations, and schools can visit or even stay in their organic, self-sustaining farms and get glimpses behind the scenes. During the pandemic, they had also organised Work From Farm programs.
This, Shashi believes, helps people appreciate the challenges farmers face and gives them newfound respect for the food on their plate.
“I remember standing with Dr.Reddy at Krishna Rao park in Jayanagar on February 11, 2012 and selling 18 litres of milk and subscriptions to joggers.” Shashi laughs at a memory. “Today, we deliver 70,000 litres of milk per day. You can imagine how 750 farmers have scaled in these 12 years to meet this demand.”
Akshayakalpa tries to keep their prices constant. They pay farmers a fixed price including a generous margin, protecting them from market fluctuations. On the buyer side, consumers also get to see a consistent price and quality from Akshayakalpa.
For this reason, Akshayakalpa also stays clear of trading (“We don’t source and sell from outside”) and take to market only those products created on their farms. For instance, dairy products such as curd, ghee, or paneer, eggs, honey (“The real goal is pollination with the positive side effect of cash flow”), tender coconuts, etc.
The Way Ahead
Today, Akshayakalpa has a topline revenue of ₹16Cr/month, 50% of which comes through their own app, 40% from e-com channels, and 10% from offline retailers.
After raising their Series A, they decided to expand, taking on 100 farms in villages around Chengalpattu, one of the most rural parts of Tamil Nadu. For the past three years, they’ve been implementing interventions and readying these farms. “Until now, we’ve been seeding the Chennai market with Tiptur products. But from January 2023, the Chengalpattu farms will be ready to supply the Chennai market.” Shashi tells us. They have also recently expanded to Hyderabad.
Shashi is very clear that production networks must be seeded at a regional level to supply nearby market hubs. He does not imagine a future in which milk produced in Tiptur will supply consumers in, say, Gurgaon. “Imagine the carbon footprint we would be creating and the terrible impact on local ecosystems. We will always produce locally and distribute locally—we honour these systems.”