Milking the last mile

In the California gold rush of the 1840s, goes the story, the ones who made the most money were sellers of hovels and sift-pans. The hardware merchants could be a good proxy for Harsha Moily, who, if his business were to tick, could rake in the moolah by providing access to India's rural consumers and markets.

"We are in the business of setting up the last mile infrastructure,building relationships and teams in rural India that help connect them to upstream markets," says Moily, 38, founder of MokshaYug Access. MYA, in the last two years, "leveraged the microfinance platform to understand the key levers of the rural supply chain", rolling out its supply chain operations in December 2009.

MokshaYug Access FOUNDER: Harsha Moily INNOVATION: Rural procurement and establishment of micro-infrastructure for upstream market linkage. MODEL: Instead of the producers owning the last-mile infrastructure in cooperatives, MYA engages directly with farmers by owning it. SCALE: Has a footprint across 73 villages in Kolar district of Karnataka. Plans to cover 10,900 villages servicing 3.3 lakh dairy farmers by 2013.

Since then, he has focussed on milk and has a footprint across 73 villages of the Kolar district of Karnataka, services 419 dairy farmers through a network of 88 milk collection centres backed by bulk milk chilling centres and has so far procured 2.98 lakh litres of milk.

For this, he has a buyback arrangement with Heritage Foods. On the ground, Moily has bulk milk chilling centres that increase shelf life of milk resulting in better quality for upstream processors and better prices to dairy farmers.

"Our single-minded focus on only two components of the dairy supply chain—rural procurement and establishment of micro-infrastructure for upstream market linkage— is in itself an innovation in rural supply chain," says Moily. To build relationships on the ground, he hires staff from villages to man milk collection centres and the chilling plants and provides dairy farmers with inputs like cattle loan financing and veterinary services.

The MYA model, predicts S. Sivakumar, Chief Executive, ITC Agri Business, and the man behind ITC's e-choupal initiative, will find takers but he sounds a note of caution: "For the last mile to be cost effective, it needs to be optimised for a particular value chain, milk in this case. Leveraging the same platform for multiple value chains isn't easy as many people tend to think."

The bigger challenges for Moily, son of prominent Congress politician and Union Law Minister Veerappa Moily, are managing operations with low profitability—5-10 per cent net margins in the rural supply chain business versus double that in, say, microfinance—and the nascent nature of the business where there are no peers whose mistakes MYA can learn from.

Still, MYA has marquee backers in those like Silicon Valley investing veteran Vinod Khosla.

There are plans for a next round of funding to power MYA to 10,900 villages and 3.3 lakh dairy farmers by 2013. Moily may be far away from getting to Amul's scale but his real value lies in the supply chain he's setting up and the right of way he will eventually be able to charge for.