Interviewed by Akhlaqur Rahman Sachee, MBR Team

bhalo is one of the leading farm inputs marketplace of Bangladesh, and a social enterprise. bhalo uses a network of digitally-equipped sales agents and retail outlets to connect farmers to leading farm input suppliers and financial service providers, and offer curated high-quality farm inputs (seeds, fertilizers, chemicals, etc.), customized advisory and financial services (buy-now-pay-later, insurance, etc.).

MBR: bhalo, a farm inputs marketplace and a social enterprise founded in 2019, has engaged itself into the business of connecting farmers to the leading farm input suppliers and financial service providers. Will you kindly share the story behind the idea with us?

Subrata Kumar: Between 2012-18, I managed a project for Swisscontact which supported leading agribusinesses (ACI, Metal, Renata, PRAN, etc.) and financial service providers (Dutch-Bangla Bank, United Finance, BRAC Microfinance, etc.) to improve smallholder farmers’ access to farm inputs, farm services, farm finance, and markets. The agribusinesses and the financial service providers, each specialized in their respective markets, hardly changed the way they operated, i.e., bringing innovation in their products pricing, distribution, promotion or cross-business collaboration, as they did not find enough incentive in serving the underserved (but huge in number) smallholder farmers segment. The project could do little without their buy-in, as its role was passive and temporary by design. I felt an ‘intermediary enterprise’ could harness the opportunity by aggregating and offering complementary products and services, and bridge the gap between smallholder farmers and agribusinesses and financial service providers in a more effective and sustainable way. As the realization grew, I decided to quit my job, and set up bhalo in 2019 with very limited resources.

MBR: Currently, the majority of farmers are not in touch with banks and NBFIs due to locational disadvantages. However, banks and NBFIs are expanding their geographical coverage through agent banking and sub-branches. What are the additional values that bhalo will provide to the farmers to stand out?

Subrata Kumar: It is not only farmers’ locational disadvantages but also their ticket size, higher costs of disbursement and collection of loans, and an interest spread not enough to cover the risks are the reasons why banks and NBFIs are not willing/able to serve smallholder farmers’ financing requirements. Many banks are therefore lending to the Micro Finance Institutions (MFIs) who are then charging higher interest (24% declining, ~13% flat) to cover the costs and risks of extending loans to farmers. MFIs, however, offer a very standardized product with little flexibility in terms of tenure and repayment terms which is not suitable for agriculture. This is where bhalo comes in.

bhalo uses a network of digitally-equipped sales agents (and retail outlets) to connect farmers to leading farm input suppliers and financial service providers, and offer curated high-quality farm inputs, along with farm services (customized advisory, cattle treatment, farm mechanization services, etc.), and financial services (buy-now-pay-later, insurance, etc.). bhalo sales agents dubbed as “Bhaijaan” are entrepreneurial and tech-savvy rural youth with experience of working in farm-input companies, microfinance, NGO or any in farmer-facing organizations. bhalo provides them with technology, training, logistics and working capital, and they take care of promotion, order collection, delivery, after-sales service, payment, and data collection. bhalo works as a one-stop solution for everything a farmer needs which increases production and income of smallholder farmers, increases revenue and margins for bhalo and its sales agents, and sales and market share of partner businesses.

bhalo uses a network of digitally-equipped sales agents (and retail outlets) to connect farmers to leading farm input suppliers and financial service providers, and offer curated high-quality farm inputs, along with farm services (customized advisory, cattle treatment, farm mechanization services, etc.), and financial services (buy-now-pay-later, insurance, etc.). bhalo sales agents dubbed as “Bhaijaan” are entrepreneurial and tech-savvy rural youth with experience of working in farm-input companies, microfinance, NGO or any in farmer-facing organizations. bhalo provides them with technology, training, logistics and working capital, and they take care of promotion, order collection, delivery, after-sales service, payment, and data collection. bhalo works as a one-stop solution for everything a farmer needs which increases production and income of smallholder farmers, increases revenue and margins for bhalo and its sales agents, and sales and market share of partner businesses.

• Offer credit cards to farmers which will be only honored at bhalo sales agent points.
• Offer working capital financing for bhalo sales agents through arrangements with bhalo and its suppliers.
• Additionally, offer financing for capital investment (cattle purchase, etc.) to selected bhalo farmers who already have a purchase and repayment history. bhalo has recently launched a pilot with Shadhin Fintech to offer such financing facilities to selected bhalo farmers.

MBR: bhalo has already collaborated with some of the renowned agri-input suppliers/ producers to ensure the supply of quality agri-inputs to the farmers. Why do you think the farmers will pick bhalo’s service over the traditional distributors and retailers the agri-input suppliers/producers have deployed all over the country?

 Subrata Kumar: Farmers prefer to buy from bhalo sales agents as bhalo offers the best available farm inputs and reliable services at a reasonable cost (transparent price and flexible payment plan). Farmers find the bhalo sales agents as a reliable partner for farming, as the agents visit door-to-door to provide services and follow-up to ensure higher production and income of the farmers Farm inputs retailers often stock and push lowgrade farm inputs to farmers, taking advantage of the latter’s lack of awareness, and know-how. Low-grade farm inputs come with higher profit margins and longer credit facilities compared to high-quality farm inputs. Retailers do not provide reliable advice and charge a very high markup to cover costs and risks of extending credit. This increases overall costs, and results in lower production and income for farmers, affecting their livelihoods and wellbeing Leading farm input suppliers work through nonexclusive distributors and retailers, and they have little control on sales/delivery of farm inputs and credit offered to farmers. They find it difficult to reach smallholder farmers due to higher costs of promotion, distribution, and credit recovery from retailers. As bhalo is solving one of their pain points, and helping them to increase their reach and market share, they are extending support in the form of better prices, delivery, training, and promotion so that bhalo could establish and expand an alternative channel of distribution.

MBR: Formal lenders often perceive the agriculture sector as riskier from the aspect of credit risk. How does bhalo ensure smooth credit recovery while operating in a riskier sector?

Subrata Kumar: Formal lenders do not have the capacity and required resources to ensure credit fund utilization and reduce the risks of production. Moreover, they do not have the credit (purchase/ repayment) history of the farmers. bhalo is reducing these risks by offering best quality farm inputs in required amounts, and ensuring higher production through proper usage of those farm inputs and reliable services. For reducing the risks of cash finance, bhalo is carefully selecting farmers from its customer base with excellent payment history, and tagging along with its existing offers.

MBR: bhalo has recently won the SDG Impact Accelerator Program. Will you kindly share how bhalo is aligning its operations with sustainable development goals?

Subrata Kumar: bhalo is a business that has been designed keeping the requirements and benefits of smallholder farmers, therefore ‘impact’ is central to the business and its mission. Through the business and its offerings bhalo contributes to,

• Improving the livelihoods and well-being of farmers (SDG 1, SDG 2, SDG 3) by increasing their production and income.
• Creating access to farm inputs, farm services and farm finance for women (SDG 5).
• Creating income earning opportunities for rural youth employed as bhalo sales agents (SDG 8).
• Improving awareness and farmers capacity on climate change mitigation, adaptation, and impact reduction, i.e., making the communities more resilient to climate change (SDG 13). 

  MBR: Could you please share with us bhalo’s current geographical coverage? How do you plan to expand?

  Subrata Kumar: bhalo started its operation from Ulipur Upazilla, Kurigram. It currently operates in three Upazillas of Kurigram (Ulipur, Chilmari, and Kurigram Sadar), and three Upazillas of Jhenaidah (Jhenaidah Sadar, Horinakundu, and Shailkupa). We plan to expand our operations within and around these districts by setting up new sales agents, and logistics hubs to support the sales agents.

  MBR: What are the entry barriers and the challenges prevailing in the agrotech sector? What do you suggest for the newcomers in the industry?

  Subrata Kumar: Agricultural sector in Bangladesh possesses unique challenges and opportunities, but unfortunately, we do not see many innovative enterprises coming out of agricultural universities or the agricultural industry. The understanding of potential entrepreneurs and investors about the agricultural sector is also limited. We need a lot of cross-sectoral collaboration among academia, industry, financial institutions/investors and government agencies to identify and support innovative ideas. We can also foster exchange with countries like India or Indonesia which have thriving agrotech startups and a supportive ecosystem.