The Agriculture Industry in the Lockdown Economy
Article by Kelly Chen
The agriculture industry has been relatively less affected by the lockdown since many agricultural products are considered essential during the pandemic. Among other great stories shared on the Lockdown Economy, here are four small business owners from the Philippines, United Arab Emirates (UAE), India, and Nepal. These interviews revealed how they took effective strategies to grow their business during this pandemic.
The first interview is with Carlo Sumaoang from the Philippines. Carlo is the founder of MNLGrowkits, an urban agriculture business based in Metro Manila since 2015. The company’s original goal is to change the perspective of young millennials living in urban areas towards agriculture; this is something that has been noted globally as more young adults are becoming ‘plantitos’ and ‘plantitas’ these days. Carlo’s business is growing very well, their products have been bought by families, schools, and companies for the purposes of farming, educational, or human resource activation.
Due to the lockdown, many people have decided to grow their own plants to avoid purchasing from stores or simply to kill their time at home. This becomes an opportunity and a challenge for the company as well. On one hand, the demand is surging, but on the other hand, the supply chain is lagging and a lot of additional coordination with suppliers is needed to secure various supplies such as coconut pots, seeds, soil, and fertilizers.
While many new competitors showed up during the pandemic, Carlo is expecting an exponentially increasing amount of business in the near future as evidenced by unexpected business collaborations with soap and facial wash companies. However, he is not worried about the competition since his products are backed by a real agricultural company with real technical know-how which many competitors are lacking. Moving forward, Carlo is planning to develop “Instagram-able” grow kits for the customers of the next generation (Gen Z’s and Edgers) in an increasingly image-centric market.
The second interview is with Nikita Patel from the UAE. Nikita is the founder of Oasis Green, a hydroponics vertical farm in Dubai established in January 2020. The company is using hydroponics technology to grow vegetables in a controlled environment for 30 to 40 days before harvest. One major advantage of this technology is reusing and recycling water. Due to the harsh climate in the UAE, many types of food have to be imported. Therefore, during the pandemic, it becomes a big challenge for the government to maintain a stable food supply. This opens up a great opportunity for foods provided by local companies like Nikita’s.
Compared to the traditional B2B business model targeting restaurants, hotels and catering companies, Nikita found a substantial growth of the online individual grocery business under the B2C business model. This is noted worldwide since people are trying to avoid going to grocery stores and are paying more attention to healthy foods. Nikita believed that this shopping and consuming habit may stay even after the pandemic. To be able to manage the production and to avoid wasting, she is going to sign agreements with big customers with regular demand. For marketing, she is relying more on digital means these days and is expecting to expand fourfold by February 2021. Nikita is very optimistic about this promising business in the UAE.
The third interview is with Arvind Chawla from India. Arvind is the co-founder of Darima Farms, an Artisan Cheese Making Farm in the Kumaon hills of Uttarakhand established in 2016. The company aggregates milk collected from cows raised in villages located in the Kumaon Himalayas areas. It has strict control of the cheese production process to ensure the absence of any chemicals, preservatives, emulsifiers, and fillers. The cheese product is currently priced to target only 1–2% of the Indian market. The lockdown only had a temporary effect on Arvind’s business and the sales volume has completely recovered by now due to a stable customer base and close relationships at local farmer’s markets, etc.
The lockdown has caused people to become more concerned about their health, including aspects such as what they eat, how they eat, and how they source. Arvind believes that there will be a big shift to organic food in the next 4 to 5 years. Due to the large size of the Indian market, he is not worried about competition. With the b2c business model, he is expecting wider acceptance of their product in the near future and a 2.5-fold growth next year.
The fourth interview is with Shristi Shrestha from Nepal. Shristi is the co-owner of Prithvi Agro, a family-run organic farm that has been in business for about four years in Mahottari, Tarai. The company has around 300 lemon trees and 300 mango trees. Before the pandemic, their major clients were restaurants in Kathmandu. However, due to the transportation restrictions during the lockdown, they had to sell their perishable products to the local market quickly for less profit.
Luckily, there was a high demand for lemons during COVID-19 because people were intaking extra Vitamin C every day by drinking lemon tea or lemonade; people even went to the farm to pick up the lemons. The farmers and the field managers also learned to use digital platforms to communicate with Shristi who had to stay in Kathmandu during the lockdown. Now that the lockdown has been eased, their business in Kathmandu is up and running like before. In the future, Shristi plans to invest more in this business. For example, she wants to use innovative technology to save water and improve the quality of the soil. She also wants to help farmers get access to financial aid provided by the government.
In summary, we see that the impact of the lockdown on agricultural businesses was temporary and less severe than other industries because food is very essential during the pandemic. One temporary disruption was related to transportation restrictions which forced companies to target local and individual customers. Another disruption was related to the overall supply chain that could prevent businesses from keeping up with the surge in demand for your products. To be able to secure the supplies, by all means, becomes very important. The pandemic and the subsequent lockdowns have changed customers’ behaviour in at least three aspects:
- Ordering groceries online — a potential growth under the B2C business model.
- Choosing healthy, fresh, and local foods — potentially increasing acceptance of organic foods.
- More interest in growing plants at home — a potential new market in the near future.
Though no one knows how long these changes will last, all four small business owners are very optimistic and plan to expand their business with increased investment in R&D or marketing.
If you are interested in individual interviews, click the full video for Carlo, Nikita, Arvind, Shristi, respectively for more details.
Lockdown Economy: Interviews by think tank AlterContacts.org with real entrepreneurs sharing insights, challenges and successes during the COVID19 global pandemic to inspire, motivate and encourage other entrepreneurs around the world.