Backstory: We wanted to invest some money into social causes. One such organization that we found is Rang De (www.rangde.in). The way it works is: Rang De is a platform and partners with local Impact Partners. These Impact Partners train farmers, artisans, craftsmen on small businesses or trades to improve their lives. So, let’s say you lend money via Rang De and the Impact Partner to a farmer. The farmer then uses the money to buy a cow and sells the milk and with that income he improves his livelihood. He also pays your loan with interest from the same cash flows. He pays a low rate of interest of say 8%; you would receive 4% return on your money. The Impact Partner (and Rang De) takes say 4% to run their own organization, conduct trainings, for collections etc. (Return %s are for illustration. Actual numbers may vary.)

As an investor, you will receive lower rate of interest than even a Fixed Deposit. But you will earn some satisfaction and some good karma because your money is now helping somebody poor to earn a livelihood. It’s like Microfinance meeting peer-to-peer lending.

One of Rang De’s impact partner in Karnataka is Akshayakalpa Organic. Akshayakalpa is into a sustainable and organic dairy farming and is making a positive impact to about 700+ farmers and their families. My family and I visited the Akshayakalpa facility to see firsthand the work that they are doing.

Here are my brief notes of the visit.

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Akshayakalpa is into organic dairy. I had studied dairy companies and I knew a little bit about how they operate but I didn’t know what is organic dairy and the difference. So here is how Akshayakalpa does it:

Akshayakalpa trains farmers for 2 days on it’s way of organic farming. The farmers have to unlearn some old ways of dairy farming and learn some new tricks such as feeding only organic fodder, leaving the cows untethered and milking the cows by machines and not by hand. The farmers are to construct sheds at their homes in a specific way only that allows maximum sunlight and free circulation of air.

The famers are to use machines to milk the cow and the milk is collected twice daily from their doorstep by Akshayakalpa and sent to a nearby chilling center. From the chilling center the milk is sent by larger trucks to the factory for processing.

We were given a tour of their processing facility too and even there they have tried to minimize use of plastic, focus on high quality (freshness, fat content, taste etc). They don’t use chemicals and instead use only organic products. For example, to make Paneer they use organic milk and curd (also made by them). Long ago, a friend was raving about ITC’s Ashirwad ghee. I was pleasantly surprised to find that the Organic variety of Ashirwad ghee is contract manufactured by Akshayakalpa.

Their in-house vet gave us a tour of the cow shed. The shed was open allowing light and air circulation. The cows were untethered and were free to roam around. Apparently cows eat for 16 hours a day and the organic fodder was always available to them to eat when needed. The facility had an automatic milking facility and the cows were milked twice a day. They also had a facility to use the cow dung and generate bio gas out of it which was used as a cooking fuel in their own canteen. The remaining cow dung could be converted to organic manure. The cow shed is used in the farmer training to show them what it needs to look like and to train them on how to tend to the cows etc.

Finally, we were taken to an Akshayakalpa affiliated farmer’s house. The farmer ( a young lady) had about 6 cows. Her cow shed was similar to the shed at Akshayakalpa. She did receive funding through Rang De which allowed her to buy her 6th cow. She was also of the opinion that despite being a dairy farmer for generations, the Akshayakalpa way of tending to cows was better. When the cows need attention, the vets from Akshayakalpa visit and treat the cow. The cow treatment methods also try to avoid antibiotics and focus more on traditional medicinal methods. But if a cow is vaccinated or given antibiotics then it’s milk is not taken by Akshayakalp for a couple of weeks till the antibiotics in the cow’s system runs off.

All in all, she was happy to do business with Akshayakalpa; she received payments in her account and on the whole have some control over her destiny.

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Let me share what were some of the highlights for me:

1. It’s difficult to convince farmers, especially if they are used to doing things in a certain way for generations. So Akshayakalpa worked with 1 farmer and used that success to prove it to others. Today 700+ farmers are associated with them and another 800 are in the pipeline that want to work with them. Akshayakalpa wants to start a similar movement in Tamilnadu and there too they are starting with a small set and proving themselves before scaling up. This reminds me of Eicher Motors that sets up 1 dealership in a new country and focusses on making that dealer successful. Once that dealer is successful automatically more dealers come forward to partner with Eicher. Eicher doesn’t believe in push marketing neither with consumers nor with dealers.
2. Daily payment through bank transfers. If you want the small, humble farmer to be loyal to you, you have to show loyalty to him or her. Therefore Akshayakalpa has focused on transparency; every day the farmer receives an sms informing him of the quality of the milk he/she delivered. He or she receives the payment for that 10 days later, without fail. So, every day they receive payment into their bank account for the milk that they sold 10 days ago. A daily payment creates a habit loop for the farmer to do repeat the same process. When there is regular payment, that too into a bank account, financial institutions, especially NBFCs will come forward to offer loans. These loans would be much cheaper than what the moneylender would charge and therefore more people come into the financial mainstream.
3. Incentives to rear more cows. As farmers see their incomes grow, they are incentivized to add more cows which would lead to higher incomes. Youth are less likely to migrate to cities and are instead likely to stay and earn in their villages. (Did you think I could write a blog without pointing out the incentives?)
4. More Incentives. Long ago I used to wonder why the middleman like Akshaykalpa and Rang De take so much cut. Then it dawned on me that these organizations have to train farmers or artisans and so have to hire trainers. They have to have some collections department to collect the payments back from the farmers. They need to have a functioning website and staff to show people like us around. They have to hire managers to run the operations smoothly. That is, even to disburse and collect money smoothly, you need money. Therefore, profit is a good motivation. And more importantly just to deny the middlemen their commission I should not deny the farmer his livelihood. (Contrast this to our politicians. We pay them almost nothing and they deliver almost nothing.)
5. Disincentives to cheat. Humans are wired to look for short cuts or arbitrages. If a cow has received antibiotics, then it would show up when the milk sample is tested. And it could lead to rejection of all the milk from all the cows. Therefore the farmer has a disincentive to be dishonest. ( Other dairy companies, collect milk and don’t bother about the antibiotics etc. So the farmer is incentivized to produce more milk through methods such as injecting the cow with artificial hormones. )
6. The villain test. I heard this somewhere that if you come up with something radical like organic dairy or say plant based meat, it should be as good if not better than the original in taste and texture etc. Only then can you pass the villain test. All this win-win, good for nature and good for consumers would be lost if the organic dairy product was not much better than the regular dairy product. My friends tell me that Akshayakalpa’s products are indeed much better and so it passes the villain test.
7. Women empowerment. About half of the Akshayakalpa dairy farmers are women. And the money from Akshayakalpa goes to their bank account. When money is placed in the hands of women, she has more say in how the family is run, men are more disciplined, children get education, families eat better and live better. You educate a man, you educate a man. When you educate a woman, you educate a generation.

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What differentiates Akshayakalpa from the others was their focus on organic. Their entire business model works on win-win for nature, for the farmers, for the consumers and for Akshayakalpa too. Because of their focus on organic, there is no chemical fertilizers, pesticides or insecticides go into the soil and no hormones or antibiotics go into the cows. The farmers see improvement in incomes and therefore their lives and livelihoods improve. On the other side, consumers get high quality, organic milk and dairy products. Happy farmers spread the word to other farmers; happy consumers spread the word to other consumers and with them Akshayakalpa grows.

In Sanskrit, Akshaya means unlimited; Kalpa means possibilities and together Akshayakalpa means unlimited possibilities. True to their name, they are not limiting themselves to dairy. Their R&D team is working on organic vegetable farming and organic bee keeping. They plan to train farmers on these methods so that they can supplement their dairy farming income with these in the near future.

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I love business models which have a philosophy of win-win. In these business models, every incremental unit of transaction creates incremental social good. Like here we saw that as more consumers buy Akshayakalpa’s products, the more it benefits the farmers who in turn say no to harmful chemicals and antibiotics. Compare that to a cigarette business where as more cigarettes are sold, there is more misery in the society. When more people play poker online, more people are likely to lose money. So the business doing well hinges on somebody else losing money. There are many ways to get return on your investment. Does it have to be at the expense of somebody else? Instead, what if there were business models where everybody is better off?

As Charlie Munger would say, Costco is another such win-win business model. Employees receive above market average salaries. Vendors sell large volumes through Costco and therefore give bulk discounts to Costco which are passed onto Customers in the form of lower prices. Vendors receive their payments on time and hence are incentivized to deliver higher volumes at cheaper prices to Costco. Everyone wins.

As these businesses get bigger, the positive karma or momentum only gets bigger. Lawmakers, regulators would want to work with you rather than against you. On other hand, businesses with negative karma will attract regulators who would want to be a hero by fighting against them. Think cigarettes, think fast food, think greedy drug makers, think online casinos etc. Think Niti and Nyaya.

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Finally, an appeal. Please share this article so that more people become aware of Social Investing (Akshayakalpa or any other initiative close to your heart; Rang De or any other platform you find trustworthy). Your small investments can help somebody receive a better livelihood.

-Cheers!

PS: You can find more information on Akshayakalpa-Rang De at https://rangde.in/akshayakalpa

PPS: Just so you know, I have not been paid by either Rang De or Akshayakalpa to write this. I have written this out of my own free will and this is my own interpretation of what I saw and heard.