Origo Commodities begins to buy loose agri produce stocks from farmers

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In its efforts to make the trade in agri commodities more organised, agri fintech firm Origo Commodities has come up with an initiative to set up shops for buying loose stocks with growers at farmer procurement centres (FPCs) in coordination with farmer producers organisations (FPOs) and infrastructure firms.

“The shops at FPCs will allow farmers to bring in their loose stocks. FPOs will help in buying the (agricultural produce) stock that will be assessed real-time through cloud-based methods for quality by Origo. The stocks will be purchased and stored in a warehouse. Once the stock of a specified commodity makes up a batch of 25 tonnes, it will be auctioned on our e-auction platform,” said Sunoor Kaul, Co-founder, Origo Commodities Pvt Ltd.

On the e-auction platform, the batch of the commodity put up for sale will be bid by any of the 5,000 buyers registered with Origo Commodities for bidding besides the agri fintech firm, he said.

Helping stakeholders

The e-auction was launched by Origo in May this year to help stakeholders such as farmers, traders and agro-processors to procure and sell commodities. The platform offers options such as price discovery, price risk, trade settlement, forward and reverse auction.

Kaul said the bidding on the offers will be made by FPCs since they would procure the loose stocks from growers. The process will be transparent as Origo will also make a bid. “Once the auction gets completed successfully, Origo will again carry tests for the quality of the produce that is being loaded for delivery. We send all details to the buyer digitally,” he said.

The amount due from the buyer will be deposited in an escrow account before being given to the FPOs, which will, in turn, be distributed to the growers. “For this, farmers need not come to the FPCs. There is a 4-5 per cent gap in the price of commodities traded on the platform. Growers get at least 1-2 per cent additional money for their produce, while buyers get the commodity at a price lower by at least one per cent,” the Origo co-founder said.

‘No intermediaries’

Farmers get more for their commodities and buyers buy at a low price since no intermediaries are involved in this process. “FPCs get 0.5 to one per cent as transaction platform fee,” he said.

Origo Commodities has tied up with infrastructure firms for the storage of commodities. “We have a revenue-sharing understanding with the infrastructure firms,” Kaul said.

Over 20 FPOs have joined hands with Origo for the e-platform trading and about 25,000 farmers are involved in this. “These people have aligned with the platform in October itself and we also keep building the FPCs across major commodities belts,” the Origo co-founder said.

Warehouse capacity

All the FPCs have warehouse capacities to store between 150 and 3,000 tonnes. Farmers can keep their produce in these warehouses until they get the right price for it. “In case there are no bids on the e-platform, Origo offers to buy the produce,” Kaul said.

One of the FPCs is a private mandi from where agri produce is graded and processed at feed mills. “A complete process has been set up at this FPC and FPOs deal directly with them. This also makes the supply chain efficient. In the past few years of our operations, everyone involved has earned a good share of the profits,” he said.

The additional income also benefits farmers since their expenses remain unchanged. For now, arrivals of commodities are lower at the three FPCs which are witnessing an inward movement. Live auctions at the private mandi, in particular, have not begun, though.

Arrivals to pick pace

Arrivals are expected to gather momentum after a fortnight since the moisture in commodities such as maize is high at 16-17 per cent currently. Once the moisture drops to a reasonable level of 14 per cent and below, arrivals would pick up.

While Origo is present at the front-end offering trade and procurement finance, it is now strengthening the back-end by signing memorandum of understandings with infrastructure firms, FPCs and FPOs.

Farmers in Maharashtra, Madhya Pradesh and Uttar Pradesh are showing interest in Origo’s e-platform with one FPO in Uttar Pradesh being active. Eight more FPOs will join the platform from the northern State by December, Kaul said. Many mid-size traders are showing interest in the e-platform from different parts of the country.

Trading in maize is showing signs of picking up, while buyers were hesitant to pick up soyabean stocks due to high bean prices. “Paddy (Pusa-1121 variety) prices are also ruling high,” he said, adding that the volume was expected to pick up over the next six months.