/Agriculture storage in India wants simple technology at affordable prices

After its first assignment for India’s largest snack manufacturer, Omnivent, a global specialist in Agriculture storage technology-based in Zeewolde, quickly discovered that some of the company’s high-tech products did not directly align with Indian farmers’ traditional methods or the Indian climate.” We have therefore developed a special low-cost system for India,” says director Errol van Groenewoud. “This allows even the smaller farmers to store more efficiently without a thick price tag. That’s the key to success.”

During a 2005 job in Pakistan, van Groenewoud’s attention was drawn to Southeast Asia. “On my desk, I found various research about India’s traditional agriculture storage methods. Storage losses, or the deterioration of an agricultural product during agriculture storage owing to mould or rot, were exceedingly high there, ranging from 20 to 30 per cent. Furthermore, the farmers had significant operating expenditures, which offered us fascinating opportunities.” Omnivent, on the other hand, took its initial steps in India three years later. “Several large potato chip factories required modern agriculture storage facilities that could handle the continuous supply of potatoes, only that knowledge was not yet available in India.” The assignment offers van Groenewoud a fascinating glimpse into Indian fertile agricultural methods. “What we had already read about in the studies, we could now see up close. Our client works through contract farming with small, local farmers who only know the traditional ways of agriculture storage. That was the moment for me to delve into the Indian market.”

A longer return is not a good selling point in India

For a year and a half, the Omnivent director has been travelling to India almost monthly to gain knowledge of the country’s agricultural methods. But precisely also to share knowledge. “We give workshops all over the world to arable farmers and other key players in the supply chain. We don’t just talk about our agriculture technology, but about how to properly bring the product to the end of its agriculture storage. In meetings like this, we also learn a lot from the stakeholders again. This is how we concluded that we needed a specific product to become successful in the Indian market and started developing this system Indian style.”

According to van Groenewoud, the cost of agriculture technology played a big role in this. “In India, they think in a shorter-term and they are used to an investment lasting a maximum of three to five years. The argument that your product might last 15-20 years is therefore not convincing. They will still choose the lower price of the competitor, even if it costs them four to five times as much in the long run. You have to adjust your strategy accordingly.”

Being able to pay in rupees is essential for your Indian customer

As Omnivent began to sell to more and more small farmers with their specific products for the Indian market, it became clear that making a payment to a foreign-based company was a considerable task for these small businesses. “It became very clear that we had to start offering our customers the option of being able to pay in rupees,” says van Groenewoud. “The smaller companies often had to go through all sorts of hoops, such as going to the Reserve Bank of India with a bunch of paperwork, just to get money into our account. So, it was time for us to start an Indian entity.”

“At that point, we had already started working with a business associate,” says van Groenewoud. “The frequent travelling back and forth was no longer tenable for me and it is difficult to win a deal in India every time in a short period. What happened to me more often than not was that the Indian customer only started negotiations on my last day in the country, hoping that I would agree to a deal that was advantageous to them under time pressure. So, my tip for other entrepreneurs is to say that you are leaving a day earlier than the actual date. That way negotiations start at the right time for both parties and you don’t get stuck.”

‘Without a good relationship, you don’t do business in India’

Meanwhile, Omnivent has a well-run Private Limited in India with a two-person local team that focuses entirely on new sales. “Doing business in India requires building good relationships with your customers. Having a dedicated team that can fully focus on this is essential. If you can’t make that connection with your customers and have a cold, business-like relationship then you will never do business successfully in that country. This is a cultural trait of the Indian that you have to embrace.”

The local team is also essential for the 30 projects Omnivent carries out in India each year. “When we install a new system, we send a European specialist to India and ask the customer to put together a team of ten local, technical engineers. We provide a complete list for this purpose to ensure that there is no misunderstanding about who and what is required. However, it still sometimes happens that there are not enough qualified personnel available when our specialist arrives, or the warehouse is not quite ready for installation. In India, people sometimes find it difficult to raise such issues honestly, preferring to say that everything is in order rather than admit that more time is needed. Our local team can now maintain close contact with the customers and also often visit them to see how the preparations are progressing. This allows us to plan much more effectively from Europe.”

Indian agricultural sector wants to innovate, but step by step

Even though the Indian agricultural sector is showing increasing interest in low-cost technological solutions such as fertigation (fertilization and irrigation), automation, substrate growth, and modern cultivation techniques, van Groenewoud does not expect an unprecedented leap in the next ten years. “If we look at the agriculture storage of soil fruits, our expertise, you see that in India that is still often stored in bags. That is now slowly modernizing a bit, for example, more and more conveyor belts are being installed, also because hand labor is becoming more and more expensive in India. But it is simply the first step; it will not be done in massive numbers in ten years according to our European model, which will take longer. You have to take that into account if you, as a European company, want to hitch a ride on that growing demand for smart solutions. Traditional agriculture is not looking for high-tech, but for accessible, efficient technology with minimal extra costs.”