Weather Risk Management Services (WRMS), an agriculture and dairy risk management company that is working
towards risk-reducing strategies. The company leverages data, technology and financial innovation to develop risk management solutions that help farmers enhance productivity, gain a secure income, and practice sustainable farming. Headquartered in Gurugram, WRMS is a pioneer in smart and sustainable farming in India. It was founded by Sonu Agarwal, Anuj Kumbhat and Ashish Agarwal as an endeavour to empower farmers in overcoming the most daunting agrarian challenges. The company has received investments and grants from luminaries like UPL, ILO and the Ford Foundation. Foreseeing the immense potential in this sector, Anuj Kumbhat, Founder & CEO, WRMS, shared his insights on numerous strategies and opportunities in the farm risk management sector. Edited excerpts;
How farm risk management strategies can make the agri industry profitable?
Risk is an integral part of the agriculture sector. Each day, farmers are confronted with different types of risk, like production risk, price or market risk, financial risk, institutional risk, etc. In India, agriculture risks are exacerbated by a number of factors, ranging from climate variability and change, frequent natural disasters, uncertainties in yields and prices, weak rural infrastructure, imperfect markets, and lack of financial services. Risk-reducing strategies are often used in combination with one another, because no single strategy can cover all of the risks likely to be encountered. Farmers need to consider the risks simultaneously and adopt an integrated approach for better farm management. They need to recognise the advantages and disadvantages of each risk management option, both individually and in combination. Individual farmers should select an appropriate strategy based on their goals, attitudes towards risk, and their personal and financial situations.
5 farm risk management strategies that can make the agri industry profitable:
1. Enterprise diversification: It is a self- insuring strategy used by farmers to protect against risk. Income from different crops and livestock activities does not move up and down in perfect connection, so a low income from one activity is likely to be offset by a higher income from another.
2. Financial leverage: It is the use of borrowed funds to help finance the farm business. Debt levels that are higher than net worth are generally regarded as hazardous. The best amount to be leveraged is determined by a number of criteria, including farm profitability, loan costs, risk tolerance, and income uncertainty.
3. Vertical integration: It maintains ownership or control of a commodity throughout two or more stages of production and/or marketing, lowering the risk associated with the quantity and quality of
inputs and outputs.
4. Hedging: It means using futures or options contracts to mitigate the risk of a negative price shift before a cash sale or purchase of a commodity.
5. Contracting: By ensuring pricing, market outlets, or other terms of trade in advance, contracting can reduce risk. Marketing contracts, or simply forward contracts, define the price, quality, and quantity of product to be provided. Production contracts are contracts that outline the production procedures to be employed and/or who delivers the inputs.
What are the opportunities in farm risk management in India?
Access to data-driven, digitally-enabled agriculture ecosystems is leading to a revolution in the agritech sector in India. The incorporation of farm management software, drones, smart irrigation systems, predictive data analytics, integrated warehousing, and marketplace platforms in Agritech are addressing some of the key challenges faced by growers, financers, and governments. Despite the multitude of technological advancements in the sector, smallholder farmers do not seem to prosper. They remain unable to take full advantage of the tech solutions provided to them, and as a result, these solutions fall short of their envisioned impacts and outcomes.
With farmer digital adoption increasing, the option of evaluating credit scores on the basis of data available, the setting up of a federal agri stack, and the introduction of the government-launched Pradhan Mantri Fasal Bima Yojna (PMFBY) have been important steps towards the evolution of the insurance landscape. However, the accumulation of large-scale data also calls for appropriate privacy and security regulations, which are currently a work in progress in India. While federal initiatives like the proposed agri-stack are a great start to collecting farm-related data in one place, the long-term impact also needs to be factored in by agencies and the government working in the agri sector. The need of the hour is the digitisation of the agriculture sector. The sector needs multiple startups, intermediaries, and agencies who can build interesting and viable solutions. We need more data, more digitisation, more risk assessment models and delivery channels that can reach out to farmers efficiently at an affordable cost.
What are your contributions in farm risk management?
Through our services, we improve farmers’ confidence and improve income stability through the adoption of practices that can minimise farmers’ risk and ensure a higher yield. By optimising agriculture processes and providing market access to the farmers, we are playing a role as a catalyst in increasing their income. The impact of our services is very positive, and a large number of farmers have benefited so far. WRMS has left an indelible footprint on the lives of a number of farmers till date by minimising their crop loss risk to a large extent. Also, WRMS through its smart and sustainable farming platform, SecuFarm offers a smart and sustainable farming solution that provides a guaranteed income to the farmers. When farmers enroll in the SecuFarm service, they receive timely weather-related nformation on the SecuFarm app to plan their crop protection and irrigation based on crop health and soil condition, which helps them optimise water use. Also, they receive customised solutions for the optimised use of agro-chemicals. The app also educates farmers on various crop diseases through vernacular audio-visual content and connects them with agri experts who answer all their crop-related queries, besides providing them solutions within 24 hours.
Through the SecuFarm app, farmers can access real-time data about their farm and crop conditions that is generated through IoT sensors, automated weather stations, satellites, and drones, and get real-time responses to tackle pests, diseases, and weather risks. WRMS is the only company that offers farm level risk management using Risk Pricing Models and provides integrated risk management and regulatory services that help financial institutions, insurers, input farming companies, and corporates understand, quantify, and manage their risk associated with weather— earthquakes, hurricanes, floods, and other weather events—and crop yields.
How can WRMS bring revolution in the agri industry?
WRMS is on a mission to revolutionise the farming sector by allowing farmers to dive into the world of latest technology in the agri space without worrying about the risks involved as the company offers them 360-degree income protection. With our flagship platform SecuFarm, we offer farm-level yield assurance to smallholder farmers and bring them on the path to sustainable farming. The app helps farmers achieve more productive and sustainable farming, thus uplifting their socio-economic status. With the help of SecuFarm app, smallholders get secured incomes as the process involves land analysis and further classification of sustainable agriculture practices to adopt in order to enhance the produce quality with well calculated data analytics backed with high-end technologies.
In case a farmer doesn’t get the expected and predicted produce result, he’s compensated as per the land area. Such a smart initiative ensures that smallholders have enough finance to support their livelihoods no matter the post harvest results. SecuFarm leverages its multi- disciplinary capability across smart farming, modern data science, and insurance solutions. The idea is to drive smallholders towards digital farming practices. We are also an industry leader in Climate Outlook and Weather Forecasting Services and build resilience against vagaries of weather. WRMS helps farmers foresee weather-based risks within a smaller time frame and adopt the right practices to mitigate the risk. We foresee & estimate long-term climate-related risks and identify the markets/geographies exposed to minimum risks. WRMS identifies business models vulnerable to climate risk in a time horizon of the next 10 to 25 years.
What are your plans for the next 5 years?
The company is seeking investments to expand WRMS SecuFarm to a million farmers in a 3–4-year timeframe. Our mission is to secure 1 million farms by the year 2026. We will continue to focus on technology implementation and risk management advisory services. Along with this, we will work towards enhancing the quality of our offering, which includes multidisciplinary capabilities spanning data analytics, technology, and finance, to address and resolve complex agrarian challenges. We are also seeking partnerships with like-minded organisations working with smallholder farmers and FPOs so that we can reach the deepest pockets of the country where a farmer is sowing a seed in the hope of a good yield.
How is SecuFarm, a one-stop platform for all the farmers?
SecuFarm is the world’s first smart and sustainable farming solution that provides a guaranteed income to the farmers. It enables farmers to overcome the most difficult agrarian challenges, such as insufficient rainfall, acidic soil, insufficient soil nutrients, and traditional farming practices. SecuFarm is created by leveraging our multi-disciplinary capability across smart farming, modern data science, and insurance solutions. When farmers enroll in the SecuFarm app, their farm is geo-tagged for farm level monitoring. Our team monitors their farms using drones, satellites, and IoT sensors to give them accurate and timely information on the weather forecast, crop health, pest attack, soil nutrients, irrigation requirements, and more. Through the SecuFarm app and SMS,
farmers receive timely alerts and advisories. As farmers follow our Package of Practices, they get a higher benchmark yield, which is also better in quality. This increases the market demand for
their product and gets them good returns. And if their yield is below the assured yield, they get timely compensation. Thus, the farmer is never at risk with SecuFarm.
Using satellites and IoTs, WRMS monitors the situation on the ground and responds in real- time, with the goal of helping farmers overcome the most difficult agricultural obstacles. The WRMS Automatic Weather Station (AWS) helps in generating weather forecasts using grid-level data. The Automatic Pest Monitor (APM) helps monitor all kinds of pests and provides the pest density remotely by attracting the pest and capturing the image. Whereas an Automatic Soil Moisture (ASM) sensor provides real-time analysis of the soil health (soil moisture, physical properties, structure, and nutrient content of soil) of a particular area. AI technology and deep learning are applied to historical data of weather, yields, etc. to provide estimated values of present data wherever other sensors are unable to capture real-time data.
Pooja Yadav
pooja.yadav@mmactiv.com
