With government and business fleecing apple for votes and notes, nobody thought of any intervention that could take it even closer to the larger market. A grower’s son worked for eight years to improve post-harvest and is now investing to replace the rootstock. The success of the initiative can help Kashmir overtake the US in production. The idea has already made Khuram Shafi part of Harvard Business School classroom, reports Shams Irfan
At 34, Khuram Mir is dreaming big and pushing for a bigger change; a change that he believes would significantly alter the way Kashmiris perceive their 3,500 crore apple industry. “I want to make farming more attractive and sexy too,” he says quite confidently.
In fact, Mir is in the middle of reviving the apple industry of Kashmir and has achieved great success, nationally and internationally. His long-term goal is to put the Kashmiri apple on the world map. Many young men and women believe in Mir’s vision and have embarked on this journey with him. Some have returned from overseas, leaving behind lucrative jobs while others joined his team right after graduating from world-class universities. Mir’s team of passionate individuals makes a tiring journey to Lassipora every day, in the middle of South Kashmir’s apple belt, where his 10,000-ton Controlled Atmosphere facility is located. Throughout the years, his team has succeeded in coaching and mentoring growers about how cultivation and management of apples can be better and smarter.
So when Mir says he is inducing a change, it is his eight years of firsthand experience talking – an era in which he has done the ground-work. He started his initiative with post-harvest management but the primary objective was the pre-harvest. Experience suggested that the farmer community required a top-down approach rather than the bottom-up. “I wanted to show farmers that cultivating apples can be profitable too,” says Khuram. “But in order to do that I had to win their (farmers) trust first so I started with post-harvest.”
But somebody talking of such a big change has transformed his life as well. Leaving behind a lucrative career in the United States, Mir packed his bags eight years ago and decided to take the plunge and help the farmer community in Kashmir. After returning to Kashmir with a degree in Industrial Engineering and Operations Research from Purdue University, making “it” bigger was never on Mir’s mind. The crucial case giving him sleepless nights was how to halt the gen-X exodus from apple farming. “I always knew no change was possible without winning the trust of growers,” he said. To build trust, he needed a bridge and an idea.
A son of a farmer himself, Mir understood the real issues on the ground and felt that he was well equipped with the knowledge and experience gained in the United States to implement best practices in Kashmir. In fact, he implemented his ideas so well that his venture was selected by Harvard Business School as a subject for a case study.
Mir, along with his business partners created his first joint venture called Harshna Naturals – an enterprise that offers automated grading, sorting and packaging of apples. In addition to this, this venture also provides a 10,000-ton Controlled Atmosphere Storage facility to the farmers. Within a year of the inception of this organization, Mir succeeded in building a consortium of around 2,500 farmers – some seeking storage space, some knowledge and some handholding. That was a quick start and Mir ensured that he did his best to cater to the needs of his clientele.
The facility set up by Mir emerged as a prime solution for some of the problems that the apple-growers faced. Unfortunately, every harvest would coincide with political disruptions in the valley and pushing produce outside the borders of Kashmir would prove to be a nightmare. Freight-forwarders used to take advantage of this and logistical costs would be exorbitant. This, in turn, used to result in huge losses to the farmers. Mir’s storage facility not only reduced the quantum of panic but showcased an opportunity for others to invest. Instead of spending huge amounts on transportation, farmers selected the option of storing their produce in Mir’s facility. “It helped farmers increase shelf life of apples, and fetched them an edge over exploitative traders who would take advantage of their vulnerability and pay less,” says Khuram. “It marked the beginning of kicking out the middle man.”
This change in the business model generated enough income for farmers to keep the show going. But, the best outcome, Khuram says, was the trust of farmers that he earned.
Even though much progress was made in the post-harvest part of the apple supply chain, the challenges still existed in the pre-harvest part. The average age of orchards in Kashmir is more than half a century and the varieties that are cultivated are apparently out of fashion. This, in turn, leads to a poor harvest and low-quality fruits.
“Even in 2008, I knew that the poor apple quality and low yield are eating farmer’s profits and the only way to correct both was to invest in pre-harvest,” says Khuram.
Of the entire apple production in Kashmir, only 25 per cent of the produce is considered as high quality. However, in the United States and across Europe, about 80 per cent of the produce is considered to be export quality. Even yield suffers the same crisis – a hectare (20 kanals) of a Kashmir orchard produces between 10-15 metric tons of apples but the same area fetches about 100 metric tons in the US and Europe.
“The percentage of waste in Kashmir is highest by all standards – about 25 per cent of the total produce,” claims Khuram. “Otherwise our apples are amongst the best in the world.”
To manage quality and the quantity, Khuram knew there is only one solution – replacing traditional varieties by high-density orchards.
In 2012, four years after his Harshna Naturals initiative, Khuram started talent-hunt to fit his dream project – to use the same land for designing new futuristic and competitive orchards that will pay for the hard toil growers put in. He wanted to create a model, showcase it and encourage farmers to copy, obviously with his support.
Months later, Khuram roped in Dr Abdul Ahad Sofi, former Sher-e-Kashmir University of Agricultural Sciences and Technology (SKUAST) faculty. Kashmir’s first doctor in Pomology, Sofi has also headed Central Institute of Temperate Horticulture (CITH). Sofi picked a team of 20 experts and for the next two years, they engaged in two exercises – to identify the best soil for new plantations and the best variety that suits Kashmir.
“We first looked for places (in Europe) where land prices are high like Kashmir. The idea was to see how they get maximum output in terms of return on their investment from their orchards,” says Khuram. The hunt stopped in Northern Italy where land prices go through the roof, every season. “They had very high land prices and a successful history of high-density orchards.” Dr Sofi visited Italy and after days of research selected eight varieties suiting Kashmir’s agro-climatic conditions.
By 2014, Khuram and his team had finally set up their model orchard. Spread over two hectares of land in a scenic Kokernag village, the model high-density orchard houses eight different varieties of best quality apples. By the fall of 2015, the team is expecting their first harvest, albeit small. Italian rootstock takes six years to produce to full capacity unlike traditional delicious variety that has a decade-long gestation period. “Farmers can visit our orchard, see what kind of results they are going to have once they opt for new varieties using modern scientific methods,” says Khuram. The model orchard is designed in such a way that farmers can actually see everything, right from the planting the rootstock all the way to the actual produce.
The buzz has spread like wild-fire already! Though he is yet to sell the first crop, demand for rootstock is already for lakhs of trees. “We are in a position to supply around 60,000 trees at present, not more,” says Khuram.
But Khuram says he is not a salesman but a social entrepreneur. He wants his model orchard to become a one-stop-shop for farmers and is willing to handhold farmers until they copy the in-thing totally.
Khuram is actually reviving a process that lays buried underneath. In the eighties, the government introduced the Bulgarian apple variety in Kashmir. It still exists but it failed to trigger the change it was designed for. Lack of required technical support and limited expert advice reduced its impact in the farmer community as the proletariat continued to stay on the margins. With abysmal follow up, the endemic disease took over.
“For me, the Bulgarian variety is history now. We cannot spend our energy and resources on something that fails to even fill our bellies,” says Khuram. “In the long run, I want to revive Kashmir’s indigenous varieties.”
The beauty of Khuram’s imported rootstock is that these can be grafted with Kashmir’s indigenous varieties.
The idea is to first demonstrate that high-density orchards fetch more money – one lakh bucks a kanal, at least. Once the farmer understands that, replicating the model is easier. As he continues investing in the ‘change’ and showcasing it simultaneously, it will reach a point when the market will be ready to engage with him. “By then, we would have created plants which are cheaper, needless look after, have better results and produce best quality apples,” Khuram says. Soon, he is getting into nurseries.
Traditional orchards are very different from the high-density plantations. Unlike canopy style growth in traditional varieties, high-density orchards get sunlight from all directions, helping apples to ripe uniformly. “You won’t have apples that are red from one side and yellowish or green from other sides,” says Khuram.
With 1.4 lakh hectares of land under apple cultivation in Kashmir and a minimum requirement of 2,000 trees per hectare, the market requirement for such plants is going to be huge. “It is going to be multi-billion dollar industry in next decade,” says Khuram. “Remind you, I am opening an opportunity fully knowing that I cannot manage it solely. It would require an entourage of enthusiastic people with fire in their bellies to get their pie out of it.”
High-density holds key to the yield-mess and to the turnover which can cross a five-digit figure. Traditional orchards have 20-40 trees in a kanal but a high-density orchard requires 200 trees for the same land. Consumption of pesticides and fertilizers will drop by one forth. So will the intake of water, a natural resource on which probably World War III will be fought. High density requires sprinkle irrigation.
“Once these high-density orchards replace the traditional ones, the yield will quadruple instantly,” says Khuram. “And I won’t be surprised if the quality of A-grade apples will jump from current 25 per cent to 80 per cent.” He is confident that the success at the pre-harvest level will help Kashmir bypass America in apple production in less than a decade. “We may not beat China producing 36 million metric tons a year but I am confident that we can surpass America easily because it produces only four million metric tons,” insists Khuram.
Precisely, this dream took Khuram’s story to the Harvard Business School’s classroom. In 2013, during a private visit to Harvard University, Khuram was talking to a professor and it led to a lifetime experience. After steering from one topic to another, Khuram opened his “apple box.” “He was instantly impressed by what I was doing and by what I had in mind for Kashmir’s horticulture,” recalls Khuram.
Khuram was instantly put in touch with Prof José Alvarez in Harvard Business School. A couple of meetings later, Alvarez decided to do a full-fledged business case study on Khuram’s venture. A team of three researchers visited Lassipora. In their maiden visit, Khuram says, they did a basic study – visited the facility, and met farmers. In the next visit, Prof Alvarez visited personally. Once the on-ground study was done, the case study was sent to Harvard Business School for final approval.
“After the case study was approved, I was invited to an agribusiness seminar at Harvard Business School where top 200 executives from the horticulture world were given a chance to study 10 cases. Our case was selected as well,” says Khuram.
The other companies that were selected included, JBS (the largest meat processing company in the world), Heineken (a world-renowned Dutch brewing company), Simplot (one of the largest potato producing companies in the world) etc. Khuram’s case was studied by all the participants in the seminar. “They ripped it apart and gave me important feedback,” recalls Khuram.
“They gave me an opportunity to stand in front of these 200 executives and defend my case,” recalls Khuram. After Khuram was done with his keynote, the first reaction from the executives was, “Where is the money?”
“Not everything reflects in the balance sheet,” Khuram recalls reacting. Khuram assured them that there will be lot of money in future which he intends to share with the rightful stakeholders i.e. farmers. “I told them that it’s the farmer who does all the hard work. So how can they be excluded from the profits,” Khuram adds.
After Khuram was done, one of the executives walked up to him and said, ‘this is the right thing to do’.
Another top-notch executive came and told him, “thanks a lot for coming to Khuram. Because now I know what I want to do in life, I was wasting my time all these years.”
“It felt good. It only vindicated that whatever I was doing was the right thing.”
Khuram is a trained statistician and a tech-savvy too. He traces part of apple’s future in technology. That is why he introduced Farm2U – a traceability concept driven by an in-house ERP that connects the consumer to the producer. “The idea is to be transparent in business. Let the consumer know how much the apple grower has made on a kilogram of apple he is buying from a store far away from the orchard,” says Khuram.
The software operates just like other FMCG systems in which unique identity on the packaging leads to the producer with all their details. He has created multiple IDs that link up a particular lot of produce from its entry to its movement out of the facility. “It boosts a consumer’s confidence in our product and helps him in knowing the farmer instantly, at a touch of his fingers,” says Khuram. This innovative way-out was one of the key factors that attracted Harvard Business School.
But what sets Harshna Naturals apart from all other Controlled Atmosphere Storage facilities is Khuram’s idea of taking cold storage business to the next level. “There are no quick bucks around because in this business you will get good returns if you set your goals for a longer-term – let’s say for at least 15 years,” says Khuram.
Making money from the business we are in is difficult unless you innovate and think constantly. “It is really hard to survive on just controlled atmosphere storage. You have to keep your options open. The best way is to put farmer’s interest first and then money will automatically flow,” feels Khuram.
Khuram’s venture works on a three-tier model to sustain in the market and pay-off the financial dues on time. “It involves operations, front-end and the marketing of the produce procured from the growers,” says Khuram. “We make money by buying farmers produce and then selling it on our own in the market. We have tie-ups with leading retail and supermarket chains such as Walmart, Easyday, Reliance Fresh, etc.”
But a good business does not always see inwards. In 2014 floods when apple exhibited an early fall and the road to Delhi was blocked, farmers were desperate for space. It would have been a huge kill for anybody encouraging distress sale.
“There was not even a single client interested in selling his produce to us,” Khuram remembers. “Those were difficult times and we simply preferred their bread-and-butter and concerns over ours and let them use our facility.” It was a momentary loss but a long-term investment in credibility. “I am a businessman, but the one with a heart.”
It is the heart controlling Khuram’s mind or is he really onto something big? Otherwise, why would anybody get emotional with apples?
“I see significant opportunity in both pre-harvest and post-harvest activities”
In this e-mail interview, José B Alvarez, senior faculty of the Harvard Business School (HBS), details the reasons for the study, its outcome and its utility in the HBS curriculum
Kashmir Life (KL): How was Harshna Naturals identified to be the subject matter of a special study in this remote part of the world?
José B Alvarez (JBA): One of the Professors at Harvard Business School, John Macomber, was doing research in India for his course on Sustainable Cities. He was introduced to Mr Khuram Mir during a research visit by members of our research centre in Mumbai. Ms Anjali Raina runs this research Centre for Harvard Business School.
KL: Was the study satisfying?
JBA: The study was a great success. There are some very important managerial and leadership issues in the case that make for a wonderful classroom discussion.
KL: How was the experience of the researchers in Kashmir with Harshna Naturals and outside the CAS that he runs?
JBA: The people of Kashmir were very hospitable. We had a tremendous visit. We were able to visit and research not only Mr Khuram Mir’s facility but also many farms that are part of his network and the Mandi in Srinagar as well. We met with a number of farmers, scientists, bankers, technicians, facility workers, and retailers who are developing a new, vibrant value chain for Kashmir apples.
KL: With study in black and white, what were the issues that Khuram Shafi Mir tackled during his interactions with the invitees and the faculty?
JBA: The key issues that the participants grappled within the case are those that Mr Khuram Mir himself is tackling. How does the leadership of the company steer the business towards a sustainably profitable future? What is the best way for the enterprise to grow: pre-harvest through an expansion of extension services to farmers and/or acceleration of the model orchard concept; post-harvest through additional capital investments or the creation of a consumer brand; by entering new product markets (e.g. pears or nuts); by entering other geographies using the same model?
KL: What was the response of the invited executives after they interacted with Khuram?
JBA: The executives were inspired by the case study and the subsequent talk by Mr Khuram Mir. It was a highlight of the programme.
KL: Since you studied Khuram’s initiative and the market in which he is working, how do you foresee the fate of his pre-harvest initiative which has a larger spread than the post-harvest?
JBA: I see significant opportunity in both pre-harvest and post-harvest activities. I believe this can be a profitable business that also creates significant increases in the standard of living of farmers and facility workers. Mr Khuram Mir is creating a movement that can have profound consequences for business and social development in Kashmir. This enterprise is creating opportunities for Kashmiris and developing much needed skills in the local population. His branding and traceability ideas also create the opportunity for customers all over India to make a connection back to the actual farmer who has grown their apples.