Our Investment Thesis:
India has the largest population of cattle 1 in the world, which forms 30% of the world’s inventory. There are ~80 mn dairy farms in the industry producing 191 MT of milk/ year. Even today, 85% of India’s dairy farmers are small and marginal 2 and own 75% of India’s cattle 3 as compared to other agrarian economies like Brazil where cattle ownership in concentrated in the hands of large farmers.

Majority of the cattle in India contributes to the USD 162bn 4 Dairy Industry which continues to grow at a CAGR of ~15%. This is a major source of livelihood for the small and marginal farmers. One would assume that digitization and scientific progress would have made this industry lucrative, unfortunately that has not been the case for the farmers. Quality and health of cattle is a major cause for concern leading to significant livelihood loss at the hands of these farmers. Shortage of vaccines and diagnostics and poor access to veterinary care lead to these losses. It is further found that timely medical intervention can help increase the milk output by 5-6%. This output in milk can further increase by improving the quality of feed and nourishment.

What are the challenges in this sector?
If we go back and study the cattle value chain, we find that traditional cattle trading is carried out in large trade fairs.The Sonepur Cattle fair is Asia’s largest cattle fair and traders from across India attend this fair to procure high quality local breed cattle to then sell in far off villages. Such fairs are concentrated in the States of Rajasthan, Haryana, UP and Bihar (“The Cow Belt”) and then traded across the length and breadth of the country. However, these trade fairs are riddled with problems that affect the quality of cattle and efficiency of trade, most often negatively impacting farmer income.

The unorganized nature of the sector attracts many middlemen in the cattle trade. This leads to inefficiencies, loss of value and rampant frauds. An average of three intermediaries are found to be present between two transacting farmers which results in a ~30% leakage in value.

Farmers are often misled by selling cattle to them with no assurance on quality of breed, age, milk output, lactation cycles etc. The selling farmer typically receives his payment 45 days after closing the transaction. The Buying farmer only gets to know the quality of cattle after the cattle has reached his door-step, thus leading to a huge trust deficit. Not all buyers can travel >100+ Km to attend such fares to ensure quality of trade, not to mention the loss in livelihood involved during such travels.

The unsanitary living conditions at such fairs further exacerbate the poor health of the cattle, and adversely impact the milk yield for the buying farmer. These cattle fairs are also a hotbed for contagious diseases like lumpy skin disease etc. which can result in large cattle populations being wiped out.

In summary, cattle trading has the least formal penetration with extremely fragmented supply and demand, information asymmetry, and transactional frictions. Furthermore, India’s average cattle milk yield is 1/6 th of the world average, largely attributable to improper cattle nutrition.

Can technology help?
Strengthening the Dairy value chain with technology interventions to facilitate seamless cattle trading will help meet the growing demand for dairy products, enhance farmers’ income, generate employment and empower women (large employer of women at farm level). With the higher penetration of smartphones in rural belts, information asymmetry is reducing and awareness among farm communities is improving. Mobile first platforms are gaining acceptance and prominence allowing disruption of traditional value chains.

There is tremendous scope to leverage technology to address the challenges discussed above.

The landscape of the opportunity is large. The cattle trading market in India is estimated to be USD 56 Bn given the huge cattle population in the country and dairy being a key source of income for the dairy farmers. The cattle feed business market is estimated to be USD 23bn owing to the huge demand for improved cattle nutrition to increase cattle milk yield.

MoooFarm Pvt. Limited (MPL) is one such digital first platform building “Dairy-as-a-service” solution to address most of the Dairy value chain challenges. The Company envisages using technology interventions at various levels to improve the quality of information shared (advisory services) with farmers with an objective to reduce frauds and loss of cattle. It aims to aggregate demand and supply via brokers, traders, and farmers and disseminate best practices in dairy farming through its digital application. The Company also provides instant cash settlement and by reducing the number of intermediaries has so far been able to improve farmer income by ~15%.

Mooofarm app, downloaded by 1.4+ million farmers, is a dairy farm management application designed for ease of use by dairy farmers in their vernacular language making buying of inputs (Cattle Feed and Cattle) more reliable, access to veterinary services more convenient. It also gives farmers access to relevant dairy farming techniques where they can calculate costs and revenue, access real time solutions, view learning options to critical problems, and allow farm level data to be available in one place. In a short span of time, the Company has seen a 2x increase in sales with expanding margins and has serviced > 200k farmers and traders while forging key partnerships with large dairy organizations to aid in procurement of high quality cattle.

Impact and 2X Thesis: MPL platform improves small dairy farmers’ livelihoods and income by removing inefficiencies in cattle trading and creating transparency in purchase of cattle. The Company promotes better cattle health by offering a host of services to these farmers such as access to veterinary services, verification of the health and yield of cattle, high quality and affordable feed and farm inputs etc. The Company is cofounded by four cofounders- Param Singh, Aashna,

Abhijeet and Jitesh each with complimentary skill-sets and passion to disrupting this age old business. This also meets the funds gender lens mandate of backing strong women founders.

At Aavishkaar Capital, we are excited to partner with the MoooFarm team to play a role in disrupting this traditional industry with the power of technology. We strongly believe in the four co-founders and their ability to create a strong value proposition for the small and marginal farmer.