Helping farmers by removing middlemen – Origo Commodities

Helping farmers by removing middlemen – Origo Commodities

Tuesday March 24, 2015,

4 min Read

Origo Commodities was started in 2010 by Sunoor Kaul and Mayank Dhanuka. Both Sunoor and Mayank have known each other since school, and even graduated from the Indian Institute of Technology (IIT) Delhi together. Talking a little bit about their backgrounds, Mayank Dhanuka says, “It was after IIT did we go into different fields. I got into the fields of finance and investment banking. I was a banker for about eight years. I started my career in India, and spent over a year here., after which I moved to Hong Kong and went to business school in Columbia. I worked in New York for a couple of years, and came back to India in 2009. Sunoor’s career path is slightly different. After IIT he joined General Electric (GE), after which he did his MBA from Michigan and became an investment banker as well.”

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While both Mayank and Sunoor have lucrative careers in New York, they’d discuss coming back to India, and starting something of their own. “We wanted to do something that was close to our hearts and something that was impactful,butwe weren’t sure of what that was. We weren’t looking at any particular community or a particular set of people. We wanted to be in a business that was impactful,yet be a profitable business, which could be scalable and become really large one day,” says Mayank.

Unlike most entrepreneurs, Mayank and Sunoor began brainstorming on the idea after they came back to India in 2009. The plan was to come to India, do adequate research and digging around and find an idea that matches their criteria of an impactful, yet profitable venture.

“We wanted to get a feel of the market conditions and a feel of the area. I had been out of the country for over 10 years, whereas Sunoor had been out of the country for over five-to-six years. So we wanted to understand better what industries are interesting and what would be lucrative for us. We got a lot of ideas in education, healthcare and other such areas. However, it did not excite us, as there were a lot of people who were in these fields,” says Mayank.

Elaborating further, Mayank says, “We were looking for a differential factor and something that can be really large. During those days,we’d meet everyone we could to get a sense of what the country is like. We got the idea of Warehouse Receipt Finance, which is financing of commodities in agricultural warehouses, particularly for farmers. This idea intrigued us, so we dug deeper and found out that not only did it meet our criteria, but also was a space that was non-existent. It was scalable, profitable, a high growth industry and was impactful.”

Beginning with several clients in the warehousing side, the business expanded to collateral management. The most recent expansion has been procurement on behalf of people who buy agricultural commodities to create order process.”One initiative that has become successful is where we recently tied up with National Bank for Agriculture and Rural Development (NABARD) to support and educate farmers in different parts of the country to realise better pricing for their harvest by pledging their produce under Negotiable Warehouse Receipt financing,” adds Mayank.

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So far they’ve educated farmers in Andhra Pradesh, Telengana and Rajasthan. “We would now like to call ourselves a post-harvest management solutions company. Our ultimate aim is to connect the processor to the producer, completely removing the equation of the middleman. Right now, in India, from the producer to the processor, there are close to six or seven middlemen, which creates a lot of inefficiency in the system. While we will be fighting several huge vested interests and it is a challenge, but if you can cut those middlemen out everybody benefits,” adds Mayank.While Origo Commodities today operates over 350 warehouses and has its presence in over 16 states with different clients, it has its own set of challenges. “It’s a fairly challenging business, which is an agricultural logistics business. Like any logistics business, it needs to be tackled with a strong operations process in place. We are always fighting vested interests;you’re trying to do the job of four other people and make the system efficient. Fighting against these interests is always challenging. If you try to make a change in the system it is a long and tough journey,” says Mayank.

Talking about their future plans, Mayank says, “We’re looking to create the perfect conduit, the perfect supply chain from the processor to the farmer. It can be done by creating the right infrastructure where farmers can avail the services that they need, be it storage or finance or any value added service. Once this system is in place,it automatically removes the middlemen. However, there still is a long way to go!