The company also sources and delivers the crops, benefiting local farmers.
S4S buys crops for drying from 6,500 smallholders, usually through local co-operatives as well as women-led collection centers in villages.
This often saves the farmers the trouble, and expense, of organizing delivery themselves. Sometimes the cost of taking the food to market can wipe out any profits farmers make, especially for perishables like tomatoes.
Lower-value damaged or misshapen produce, which typically accounts for around 20% of a harvest, is used for drying. The rest is passed on to S4S’s channel partners.
“We used to sell maize, cotton, tur, sorghum, millet and ginger outside the village but S4S started buying our goods in our village, saving on our transportation costs,” recounts Baban Narayan Ghait, a member of the Farmer Producer Organisation collective in Narla village.
“They buy goods from us at market price and send the money to our bank account within two days,” Ghait adds.
“From these profits we get good quality seeds, seedlings and agricultural inputs so that the farmers can produce in a more efficient way.”
Ingredients for restaurants and food firms
S4S takes this dehydrated food to its own factory for further processing, so it can be used by restaurants, packaged goods firms and other companies.
More than 850 customers buy S4S’s finished goods, including large corporates such as Marico, Capital Foods, Sodexo and Indian Railways.
The women and farmers in S4S’s network are paid the market rate.
The company earns a margin on its finished products, making money by cutting out the network of intermediaries that are common in Indian agriculture.
Tidke also emphasizes the quality and nutritional value of S4S’s products.
Sales and distribution teams work in eight cities in West and South India.
“This was our basic hypothesis,” Tidke says. “We can really create margin in this business, if we can cut out all the middlemen and the logistics costs, and do the food processing at the farmgate.”
Tidke now intends to raise Series A funding to scale up the business.
These new funds will be used in three ways: to expand the network of women smallholder farmers; to diversify its product range; and to optimize core business systems as a foundation for future growth.
The seven-year-old company has already raised just under US$1.7 million in seed and pre-Series A funding from Acumen, Factor[E] Ventures, Shell Foundation, DBS Foundation and Yunus Social Business.
The company generated US$2.3 million in revenue in its 2020 financial year, and employs 60 people.
Room to grow
S4S founders are also mulling a pilot for expansion beyond India in the medium term.
The low maintenance and operating costs for its technology could make its offering attractive to nearby markets where agriculture is a significant part of GDP, such as Central Asia, Pakistan and Thailand.
“Their biggest opportunity and challenge are closely interlinked,” says Joshua Soo, CEO of agri/foodtech accelerator Grow, which is backing S4S as part of its impact accelerator program.
“They have ample room to grow still within the Indian market alone; what remains to be seen is for S4S to replicate their successful business model in other countries,” Soo adds.
“Ultimately, S4S has the ability to become a significant player in the international ingredients market while delivering a strong impact story to its partners.”