Home-grown in more ways than one

New Leaf Dynamic is providing farmers with an alternative chilling system that uses farm waste

Sometimes, the smallest detail can make you think and act. A few years ago, Akash Agarwal, 25, noticed a problem dairy farmers in his hometown, Saharanpur in Uttar Pradesh, faced. The farmers would get Rs 12 by selling a litre of milk to local sweet shops and others, whereas they would have earned Rs 26 a litre if they could take it to processing units, which were (60-70 km away).

Most of them couldn't manage this, as the milk would spoil without the required cooling facilities. The existing chilling systems require electricity, invariably erratic and in short supply in many rural areas.

The concept

Akash Agarwal's knowledge of the area gave him an idea. If farm waste - cow dung cakes, rice husk, etc - could be used to operate a chilling facility, it could dramatically alter the economics of the small and marginal farmers.

While the idea sounded good, a technology needed to be developed that could use available waste, chill to the same capacity and level as of diesel or electricity-run systems and yet be affordable for small farmers.

That's when Akash's father, Anurag Agarwal, 57, who had spent his career with HCL and Hero Honda, stepped in. After leaving his corporate career, he started a software company, which he subsequently sold. The father-son duo set up a company called New Leaf Dynamic Technologies in 2011 to take forward their plan.

A mechanical engineer from Indian Institute of Technology-Kanpur, the junior Agarwal started working on GreenChill, a technology that uses a vapour absorption machine to run the cold storage without grid power. The system first heats the water to 120 degrees Celsius and it is then fed through the vapour absorption machine to condense the refrigerant. The refrigerant is condensed in a condenser and then expanded through an expansion valve, to produce cooling. No diesel, petrol, electricity or any other fuel is required to run the system. Only farm waste is used to run GreenChill. It took four years to develop and design the machine (with a manufacturing facility in Noida) and by 2014, a prototype was ready for testing.

A patent has been applied for.

The cost of developing the technology, approximately Rs 3 crore, has been borne by the founders, including proceeds from sale of the software firm.

Though the idea had started with milk farmers in mind, it has so far worked only with farmers of fruit and vegetables. The initial prototypes were installed at two institutions - the National Institute of Science and Technology to run their canteen and at an institution in Jodhpur.

Revenue model

GreenChill costs the farmer Rs 12 lakh without subsidy and Rs 6.5 lakh with subsidy, of which he pays Rs 1 lakh upfront and the rest is financed through a bank loan. GreenChill has been approved by the Union agriculture ministry for a 35 per cent subsidy to farmers in the plains and 50 per cent in hilly areas. In addition, the Uttar Pradesh government has given a tax exemption.

Existing electric chillers cost lower than green chillers, at around Rs 9 lakh. But, the operating cost of GreenChill is lower, as it uses no grid electricity or diesel gensets. New Leaf says the break-even for a farmer with GreenChill would happen in 2.5 to three years, whereas it would take up to four years for break-even from the farmer's perspective with an electric chiller.

New Leaf has eight firm orders from individual farmers. A farmer in Rajkot in Gujarat would be the first individual farmer to receive its machine. By the end of this financial year, they are targeting 50 installations in Haryana, Gujarat and Uttar Pradesh. The total number of farmers eligible for the government subsidy would be 500,000-600,000. This group is New Leaf's target group, as of now.

OVERVIEW

• Product: GreenChill is a biomass-based chilling solution to run systems for cold storage for fruits and vegetables and milk chillers
   
• Advantages: It uses no grid electricity; it is simpler and cheaper to run than chilling systems that require diesel gensets; it has a zero carbon footprint; it is CFC (chlorofluorocarbons)-free
   
• Cost: Rs 12 lakh without subsidy and Rs 6.5 lakh with govt subsidy

FACT BOX

Founded in: 2011
Area of business: Bio waste-based chilling system
Founders: Akash Agarwal and Anurag Agarwal
Funding: Self and angel-funded
Investments: Rs 4 crore so far
Revenue target: Rs 4 crore by March 31, 2017
Break-even target: End of 2016-17

EXPERT TAKE: Jiten Ghelani

Jiten Ghelani

It is encouraging to see more companies focused on developing alternative energy technologies to cool fruit and vegetables directly at the farm level. New Leaf Dynamic is able to address one of the biggest barriers to cooling at the source, availability of power. In most rural villages, power supply is unreliable for preserving highly perishable items.

Further, the initial capital cost of equipment and the cost of running diesel generators as a back-up makes it expensive for farmers to install cold storages. A completely off-grid solution, such as the one New Leaf has developed, could be suited for areas where power is very limited and biofuel sources are easily accessible.

In areas where some grid power is available, it might be more efficient and practical to have a solution where energy can be stored whenever there is electricity and subsequently utilised for cooling, which could make it easier to operate, require less maintenance, and reduce the effort required for collection of biofuel sources such as biomass or cow dung.

In terms of adoption, there are some barriers that could inhibit scaling of New Leaf's cold storage installations at the farm level, including high capital cost, difficulty in maintaining proper temperature of produce in transport from farm to market, and feasibility of collecting the required quantities of bio fuel.

In terms of capital cost, unlike other sectors such as dairy, there are multiple stakeholders in the typical fruit and vegetable supply chain, which can be a disincentive for any one player to invest in a cold chain. Further, efficient cold storage during transportation remains a challenge in many cases where transit time is lengthy.

As major food retailers focus more on direct procurement of fruit and vegetables rather than through middlemen or as farmers begin to sell directly to consumers, the investments in farm-level cold storage solutions could expand rapidly, especially as more consumers show willingness to pay for higher quality produce.

Jiten Ghelani, chief executive officer of Promethean Power