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In 2014, ANIL KUMAR left a successful career in banking to become the founder and CEO of Samunnati. Inspired by ancient Indian principles, the Bhoodan Movement of Vinobe Bhave, the UN sustainable development goals and climate-smart agriculture, Samunnati has undertaken a new role in defining the way the smallholder farmers of India are able to do business and work together in their communities. Here Anil speaks with ELIZABETH DENLEY about how Samunnati started, how it has grown, and what are the next steps.

Q: Anil, welcome. You have been on a long and very inspiring journey, starting off in the mainstream business world and ending up somewhere quite different. Can you tell us about Samunnati?

AK: Samunnati is a Sanskrit word, made up of sam and unnati. Sam means “collective, together, all incompassing,” and unnati means “growth, elevation, prosperity,” so Samunnati stands for collective growth, collective prosperity, collective elevation. We have designed a model that we call a value chain financial model, focused on agriculture. In this endeavor, all the stakeholders benefit by what we are building, so that the activity grows collectively. Hence, the ultimate beneficiary is the smallholder farmer.

Samunnati has two objectives: One is to make value chains in which we operate at a higher equilibrium, which means we increase the throughput, the velocity of transactions. Thereby, the increased demand in those value chains make markets work for smallholder farmers.If you apply the principle of economics, we operate on both the supply side and demand side dynamics of the value chain. Rather than focusing only on supply side dynamics, increasing production, we first work with increasing the demand, and bring that increased demand to the suppliers. In other words, we have taken the market lead approach to agriculture.

Q: You have been doing this now for about five years. How is it working?

AK: We have had a great journey so far in these five years, and we are the only entity in India doing this at the moment. Being a pioneer, we have the first-mover advantage, but we also learn at our own cost. The best thing at Samunnati is that the team has the ability to adapt based on learnings. From were we started to where we are now has been a phenomenal journey, and, that too, in a space like agriculture which is considered to be very risky when it comes to funding.

Q: So tell us, how did you start?

AK: Well, I would say it started. I have been part of the journey, part of this flowing stream like a leaf that floats along in the current.

I started my career in banking in a rural branch. Rural and agriculture are two sides of the same coin. It was a government bank in rural Andhra Pradesh, Kurnool district, in a backward village called Belagal.

In 1996, I joined ICICI Bank as the 442nd employee. The bank was new, we all were enthusiastic, and in 2000 I became a branch manager and was involved in setting up three branches in various markets. In 2004 I took a sabbatical, and went to Manila in the Philippines to do my Masters, and that’s when I was exposed to financial inclusion. One of the modules I took was “Inspirational Leadership,” and that module touched me a lot. I realized that there was a reason I was exposed to rural and retail banking. Why not use my banking skills exactly as Professor Muhammad Yunus did to bring banking to people who don’t have access to banking services, to do something meaningful?

I returned to India in 2005, to help set up a new strategy team at ICICI’s head office in Bombay, the Microfinance Institution Development team, with a mandate to work with NGOs, co-operatives and microfinance institutions across India, so that they would grow and serve millions of people. During the two years the team was in place, ICICI partnered with around 240 microfinance institutions. In 2007, the bank sent me to Chennai to be the founding trustee of IFMR trust. IFMR had two major vehicles in financial inclusion, and one was small finance banking, now called Kshetriya Gramin Financial Services (KGFS), for which I was the group CEO. We set up six local financial institutions in the span of 6 years.

In 2014, I decided to go solo and focus on agriculture. While financial services are important, they are not sufficient in isolation. The households in remote rural areas are not operating in a vacuum but within an ecosystem, and that ecosystem is usually dependent on one or two major agri value chains. If the households are to be impacted positively, we have to go at least two levels above in the value chain and de-risk the economic activity they are engaged in.


Q: Can you please explain to us how that works, because it seems to me that it is the crux of why Samunnati has been so successful.

AK: As an example, take Tanjore in Tamil Nadu. 80% of the people are dependent on rice paddy as a crop. If the paddy crop fails, the entire economy will not have cash, whereas when the paddy does very well the entire economy is booming.

None of this is in the control of a small farmer. It is something that needs to be evaluated at the activity level. It is that which led us to look at the activity, and at the components of the value chain – the producer, the aggregator, the processor, the wholesaler – to see what makes this activity succeed and what are the weak links. Can we plug the weak links so that we can de-risk the farmers?

99.99% of people are honest and creditworthy. The only time they are not able to repay their debts is when their crop fails. As a banker, if I want my money back, I have to play a role in de-risking their cash flow. The risk management philosophy of Samunnati is to de-risk our customers’ risk. There lies our risk management.

We work with them. Unlike traditional lenders, we don’t take collateral, we don’t take financial statements, and we don’t look at past history. We look at the transaction per se. If the transaction is bankable, if the transaction is genuine, we fund. We have people who have borrowed from us for the very first time, and others who have borrowed from us without any hard collateral, because collateral is only a deterrent, it cannot create cash flow.

These are fundamental changes we have brought. We underwrite by working with the borrowers like partners.

Q: Most farmers in India don’t own land, so they don’t have an asset as collateral for the bank.

AK: There are two or three fundamental things that come in the way of agriculture attracting bank credit. One is the fragmented landholding, which is getting more fragmented by the day. The landholdings are really small, which means it is not economically viable to mechanize agriculture to reduce the cost of cultivation.

Second, 60% of Indian small farmers are tenant farmers, and there are no formal leases. They are oral leases. So the farmer cannot get a loan because he does not own the land.

So we work with farmer collectives. And these collectives, which are associations, societies, co-ops or farmer producer organizations, represent the collective interest. Our entire financing structure is around the activity called farming rather than the ownership of the farm.

Q: It’s a massive shift.

AK: Huge. I was actually ridiculed when I started Samunnati. People asked, “Will this entity focus only on agriculture and nothing else?” Because every investor had this Bollywood formula: you lend for agriculture, the farmer invests in the crop, the rain god fails, the crop fails, then the farmer takes extreme steps, and you lose money. But nobody realizes that agriculture is a sector. Crop loan is only one sliver of agriculture. Pre-harvest is a huge segment and post-harvest is also a huge segment. Once the crop is harvested, the rain god has no role to play. The risks associated with post-harvest are storage and price, both of which can be managed. There is no production uncertainty there.

So the first four or five months went into educating people that agriculture is a sector. The risk that everyone is afraid of is just one sliver, and we are not looking at taking that risk at this point in time. The real risk with agriculture is that bad loans are due to bad product design rather than anything to do with activity. Still today, 80% of the Indian population is directly or indirectly associated with agriculture. They are rational people. If it were so risky, why would such a huge population still do it?

Today we employ 315 people, and last year we disbursed close to 2,000 crores [280 million USD] in loans.

Q: In what parts of India are you working?

AK: We are in 14 states, working with around 500 co-ops, and around 2 million farmers. We also work with around 700 agri enterprises on the demand side. We lend around 200 crores [28 million USD] a month now.

Q: In India there are many suicides amongst farmers. Have you seen any change because of what you are able to offer people? Do you see a more hopeful economy?

AK: We see many changes in the economic activity in the villages where we operate. More importantly, we see changes at a psychological level. Incidentally, while it was not designed this way, 70% of our clients are women, and we see the huge psychological confidence that they bring to economic activities. And the confidence comes because they are doing what they are good at, whether it is adding one more cow to their backyard or starting vegetable cultivation. And some of the women are processing their produce. One essential ingredient that was missing, that we bring, is working capital.

If they are given the ability not to sell when they don’t need to sell, they can do wonders.

Q: This type of farming model has a very strong ethical base. Because you are working with co-ops, you are bringing farmers together, so there is strength and the ability to work with collective distribution, storage etc. What are the values behind this?

AK: They are integral to the business. It is not that I have to be conscious of being ethical. It is simply the way we do business. Samunnati exists to make the market work for smallholder farmers.

We have embarked on the AMLA approach. Amla is the Indian gooseberry, which is a fruit that has all six tastes, including bitter and tart. AMLA stands for Aggregation, Market Linkage and Advisory Services. Finance is an integral part of all three. We are a non-bank finance company, so the primary role that we play is finance, but finance is only a means for us, not an end. Unless we are adding value to the client, we don’t need to exist.

We have taken the approach of being an internal player in the value chain. We have clients who have not borrowed from us, but take market linkage from us. The starting point could be advisory services, for example, “You have pink bollworm in your cotton crop. You may have to spray this product to protect your crop.” That is one dimension. Another is, “Can you as a group of farmers come together for your collective benefit?” which is what aggregation is all about.

So finance is only a means; but an important means. Without finance, a lot of these initiatives don’t work. Time and again we keep reminding ourselves why we exist. What is the purpose of our organization? What is the way we do business? And we have worked very closely with the Adizes Institute. Every senior member of Samunnati has gone through Adizes training. Every Monday morning we have a half-hour meeting where we read the purpose statement of why we exist. The beacon light is: Do we love the objective for which we exist?

Personally, I feel that Samunnati as an economic initiative is part of a universal plan. I just play a role in it. People are coming together as team members, investors are coming together to support the initiative, we are stitching our partnerships with USAID, the Gates Foundation, and Rabobank. These are entities that want to do meaningful work. To give a philosophical twist, it’s a plan. It is happening.

Q: Looking at projecting this into the future, living in a world of uncertainty because of climate change and a lot of difficulties, how do you see Samunnati playing a role in bringing about sustainable agriculture?

AK: One of the biggest realizations for me in the last 11 to 12 years is that farmers are very rational and responsible people. They know the perils of irresponsible use of pesticides and fertilizers; they know what it takes to take care of their land; they know how farming needs to be done responsibly. But what comes in the way is the here and now requirements. If you apply Maslow’s hierarchy of needs, there are basic and safety needs. We can’t expect farmers to sacrifice putting a square meal on the table for their children. They cannot afford to compromise on their production.

Once you understand their needs, and bring in tools so that their needs are not compromised, farmers are open to taking up responsible agricultural practices like organic agriculture, integrated pest management, soil conservation practices, and water conservation. Otherwise they find it difficult because they are so vulnerable economically. One bad crop could push them back to poverty.

So we first have to understand empathetically that it is their need that is pushing them to these farming practices. Without value judgement or prejudice, we address that need and then help them to move over. We have seen many collectives looking at processing, moving from inorganic to organic, moving from one commercial crop to a bunch of crops, and moving to integrated farming.

We are working with multilateral agencies, for example, USAID on agroforestry. In this program, USAID guarantees our loans to those farmer collectives that maintain the green cover and plant more trees, in case they default.

We are also working on integrating the Sustainable Development Goals (SDGs) of the United Nations, as 9 out of the 17 SDGs fall under climate-smart agriculture. Agriculture is indeed is one of the biggest contributors to carbon emissions, so we can play an important role in reducing the carbon footprint.

Q: Because you are de-risking.

AK: Correct. De-risking the activity without putting the actors at risk, because they have the basic needs to survive.

Q: So does this have a ripple effect in rural communities, say in children’s education? You already mentioned the empowerment of women. What is the effect in the 500 co-ops where you are working?

AK: First and foremost, we see children going to school rather than working on the farms. We see youth remaining in their villages rather than leaving for work. We see more than one crop being cultivated.

At Samunnati, we have three impact metrics:

Can the cost of cultivation come down or not?

Can we increase productivity? There are three sub-dimensions: value per unit, number of units per asset, more assets under use.

What is the member engagement in our farmer collectives?

Once the collective becomes stronger, we look at the next step – the community connect initiative. Our community connect initiative teams run animal welfare camps, awareness programs on conserving water bodies, the importance of rainwater harvesting, the importance of primary health etc. In fact we have a center of excellence, a 40-acre experimental farm, where we have all the processes from cows to the processing unit for milk. We also have organic fields and variety trials.

This facility can train 100 students at a time, including entrepreneurial programs for youth. It has been running for the last three years and is associated with Acharya Vinoba Bhave’s Bhoodan Movement. We work with around 50,000 farmer families and we run entrepreneurial programs for them. The idea is: Rather than an external entity going into the village, can we create an entrepreneur from the village, who can work for the collective welfare of the farmers in a Samunnati way?

Q: Anil, where do you see this headed in 5 years time?

AK: Well, three or four dimensions aspirationally:

One, Samunnati becomes big and demonstrates to the larger finance world that agriculture as an activity, and the farmer as an actor, are creditworthy entities. It is a credible proposition to lend and many mainstream entities start looking at making their capital available to farming as an activity.

If we can inspire ten or twenty more Samunnatis to come to the Indian market that would be fantastic, because the unmet demand is so huge. Whatever we do, even if it is 10 or 20 billion dollars, is still a rounding error.

Three, how do we leverage technology to build multiple products that can change the way a farmer does farming?

There is a lot already happening. We have satellite imagery giving us real-time pictures of what is happening on the farm, and the ability to reach out to the farmer to take precautionary steps based on what is happening elsewhere with the same crop. We can work to change the behavior of what to grow, when to grow, and how to grow, depending on demand and supply dynamics.

Post-harvest is a huge universe again. Can we invite the commodity exchanges to play a role in hedging the price risk for farmers? Can we encourage larger players? Can we procure from the farm gate with traceability? And the nirvana moment will be when you and I eat, knowing what we are getting, knowing which person toiled to grow the food, and being grateful for it. That is when the entire continuum is complete. There are many entities playing a role in making this happen.

Also, we have been cashless and paperless from day 1. It lends us the nonlinearity to grow fast, to inspire many more Samunnatis to come.

Q: Finally, if somebody wants to contribute, even if they are sitting in an apartment in a city, or in another part of the world, what can they do?

AK: A lot. Share what they know of agriculture practices elsewhere; help with their understanding of how mainstream financial markets work; do an internship with us. Many universities are looking to send their students. We work with the agri universities, we have interns, and we do campus recruitment. We also run fellowship programs, which we want to expand.

Making sure that agriculture is as mainstream as possible is one of our core purposes. It is not just good to do it, it is a necessity. Anyone who is interested in contributing is welcome. Thank you very much.

Photographs courtesy of SAMMUNATI

Anil Kumar

About Anil Kumar

Anil is the founder of Samunnati, which offers financial, co-financial and non-financial solutions to marginal, small and medium holders, including farmers, agri enterprises, wholesalers and retailers. Anil has over 28 years of experience in Rural, Retail and Agri Banking, and over the last decade his work has focused on creating newer institutions across the country and operating in the financially excluded markets, with corresponding support structures for their capacity building. Anil has practiced Heartfulness Meditation since 1993. In particular, he works with several NGOs to bring Heartfulness programs to them and build their organizational capabilities.

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  1. Hats off to Mr. Anil. Remarkable thought and clarity about agriculture and rural finance. Samunnati has done great work and many farmers must owe them gratitude. Wish them lots of luck in this endeavor so as to help many more farmers and institutions working in the field of rural finance and poverty alleviation.

  2. Interesting model

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