Daybreak - India's farmers got faster loans. Then the prices crashed

Episode Date: November 23, 2025

Arya.ag helped India's farmers escape the grip of moneylenders. They could now store their grain in proper warehouses, get loans in seven minutes, and wait for better prices instead of selling at harvest-time lows. But there's a problem: agricultural prices have crashed to five-year lows. Wheat that sold for Rs 4,000 per quintal two years ago now fetches just Rs 2,600. For farmers like Himanshu and Neetu, the math is brutal—saving Rs 18,000 on interest means little when revenue has dropped by Rs 70,000. So, what's happening?Tune in.Take this survey to share your best prompt.  Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, before we get into the episode, here's a quick update. I have some great news for all premium subscribers of the Ken. You can now listen to all of our Paywold podcast directly on Spotify. By the way, we at the Ken are the first organization in India to launch our premium shows on Spotify. And unlocking them is super easy. Open any logged episode of one of the Ken's podcasts on Spotify. Tap the lock icon, link your Ken Premium account, and that's something. It takes about 30 seconds, maybe 20 if you're a pro-tapper.

After that, the entire library opens up to you. Two by two, zero shot, first principles, 90,000 hours, make India competitive again, everything. And if you want a step-by-step guide of how to do this, check out the link to a guide in the show notes below. Now, back to the episode. Anandh Chandra has spent 21 years in agriculture. But he says the last year and a half has. have been the worst he's ever seen for the sector.

Chandra is the co-founder of ARIA, an agri-tech company. The company's business model is simple. They store grains for small farmers and use that as collateral for loans. It's supposed to ease farmers' dependence on local money lenders. Aria has been running this model successfully for 12 years now. In fact, it handles about 2 to 3% of India's total grain across 22 states. But this year, both Chandra and the farmers have been hit by price crashes. Agricultural prices are currently at five-year lows, with no end in sight.

Two years ago, wheat used to sell for $4,000 per quintal. Right now, it's just about $2,600. It's the same story for rice and soybeans, and all the grains in aria's warehouses. With each price drop, all the stored grains low. value. One of the farmers who uses aria is wheat farmer Himanchu Upadhyay. My colleague at the Ken Pranati met him earlier this month. He told her that he got nervous every time he had to visit the money lender. Moneylenders generally charge an interest of 36%. If a farmer misses a payment, the interest compounds. Or worse, the money lender could seize his land. On the other hand,

traditional banks wouldn't touch a customer like Himanshu either. But Aria still bet on him. Whenever Himanchu deposits his wheat, money hits his account. There's no paperwork, no weight. The interest is 12 to 14%, which is higher than a bank's average charge of 9 to 10%, but still lower than what money lenders demand. Arja is now valued at over $300 million. It's raising from investors like Omni-Wore and Blue Earth. Last year, revenue rose by nearly 40% to almost 6,000 crore rupees. Net profit also jumped by 70%. But the price crash in agricultural commodities has raised a larger question.

How will Aria, which calls itself India's largest integrated grain commerce platform, manage profits? Welcome to Daybreak, a business podcast from the Ken. I'm your host, Rachel Virgins, and every day of the week, my co-house. host, Sinktha Sharmanai, will bring you one new story that is worth understanding and worth your time. Today is Monday, the 24th of November. In Madhura, Pranati visited Aria's warehouse. It's filled with bags, a total of 2,000 metric tons of grain. Each bag represents a farmer who chose to wait for better prices instead of selling at harvest time.

The 13,000 square foot warehouse is stacked with wheat bags to the ceiling, which is a deliberate choice to prevent moisture. The temperature inside is noticeably cooler. Pavan Sharma is the warehouse manager. He told Pranati that he checks every stack for dampness daily. He said that it could take just one mistake to destroy a farmer's entire harvest. Arya has three divisions. Aya Dhan is the lending arm.

Aria Tech handles technology. And Aria collateral manages the warehouses. Back in 2013, the co-founders, Chandra Prasana Rao and Chattana Devarajan acquired Aria Collateral, which was then a dormant company. The challenge was to build something that banks couldn't. They wanted to serve small farmers with tiny loan amounts in remote locations and at speeds that matched local money lenders, all while maintaining bank-like asset quality. Warehouses like the one Pranati visited are at the center of this model. Instead of building warehouses, ARIA simply leases thousands of underutilized ones.

The playbook, partner, formalized, digitize and manage. Right now, the company directly runs 4,000 warehouses while another 7,000 are listed on its platform. Co-founder Prasanna Rao got the idea from his time at ICICI Bank, where he headed the Ari Commodity Finance business. Rao was part of the team that launched warehouse receipt financing back in 2004. Large traders would buy crops at super cheap prices and then store them in bank warehouses. Then they would take loans averaging 2 to 2.5 crore rupees against them. But Rao was not satisfied. He wondered why only a third of India's agricultural produce reached the urban markets.

What about the other two-thirds sold in primary markets? Sellers there are small farmers, not large traders with established credit histories. Ticket sizes drop to 20 lakh rupees in these markets. That's only a tenth of what banks offer, which means banks weren't interested in this market. So that's where ARIA Aege steps in. The company has partnered with about 30 banks including ICICI, HDFC and Axis. ARIA dispersed $14,000 croreepie in loans last year. Out of this, 10,000 crore rupees came from banks.

The rest came from its own lending arm. Aya is first and foremost a services platform. About 55% of revenue comes from services like storage and platform fees. Only 25% comes from lending. For farmers, this model has brought quick commerce to villages. Not for milk, vegetables or soap, but for loans. More on this in the next segment. I'm pausing this episode to ask you a very quick question.

What's your best AI prompt? One you're actually kind of proud of. It saves you time and it does exactly what you needed to do. Why do we ask? Well, let's be honest. There's a learning curve with AI. And most of us are still figuring it out. So, we are running a short survey to ask you to share your tried and tested hacks.

You share your prompt, you get a chance to be featured in one. of our episodes and you get to hear from others like you. All the productive, efficient folks out there who are making AI work for them. The link is in the show notes. It will take you just five minutes. We can't wait to hear from you. Now, back to the episode. Remember Himanshu, the farmer we met earlier?

He told us that the whole process takes less than seven minutes. AI enables scanners as its grain quality. They also measure moisture and foreign particles to determine market value. Then they calculate a loan worth 60 to 75% of the grains value. Money soon gets credited to the farmer's account. It's all digital. Aadar based and OTP verified. This speed isn't a gimmick. It's a necessity. It's why farmers go to money lenders despite having to pay 36% interest. They need the money immediately, not in the weeks or months that banks take. This seven-minute process triggers three separate revenue streams for ARIA.

First, storage charges of $70 to $80 to $80 per metric ton per month. Second, a loan interest of 12 to 14% if it is dispersed through Aria's lending arm and a fee of 1% if it's through partnered banks. Third, a fee of 0.75% when partners sell directly through Aria's platform. Over the years, Aria has gotten smarter about reaching farmers. Instead of approaching individuals, they work with 2,000 FPOs or farmer-producer organizations across the country. Each represents about 500 to 800 farmers. This is convenient for both ARIA and the farmers.

It lets them pool costs and increase bargaining power with potential buyers. Banks, on the other hand, have reportedly covered only 8 to 9% of India's 45,000 FPO's. Nitu, a 42-year-old farmer, used to sell immediately after harvest because she needed the cash. Traders would often lowball her. They'd offered $2,400 per quintal even though everyone knew prices would hit $2,800 in a month or so. But Nitu had no choice but to sell. She had to pay for her kids' school fees and buy seeds for the next season. Now, her FPO aggregates 750 women across 30 villages.

They take a loan from ARIA and pay farmers immediately. Preeti Sharma, another FPO member, said it works almost like a salary. They don't need moneylender loans anymore. Each woman has bought shares in the FPO. When the produce is sold, profits are divided equally among members. Mathura Month, an FPO, has made over $2 crore in profit in just six months by storing when prices are low and selling when they rise. The system lets farmers earn 5 to 10% more than selling to local traders.

The head of Mathuramant, Pooja Sharma, said post-harvest losses have dropped to almost zero, from the usual 16 to 40%. When farmers are ready to sell, Aria's platform connects them to processors in cities like Delhi and Mumbai. Rao told us that when the money comes to Aria's account first, the loan gets settled automatically. Then the rest goes back to the farmers. It means they're no longer dependent on the farmer's cash flow. That explains why the company's non-performing assets are at just 0.5%. But this model is now being stress tested by the cut-throat agricultural commodity pricing.

Stay tuned. Agricultural prices have hit record blows over the last year and a half. After a brief spike in 2022 over the Russia-Ukraine war concerns, prices fell and then kept falling. Strong wheat production in Russia and Australia, plus India's excess rice stocks, have brought down global prices. And India is not immune. Aria's overdue accounts have tripled from 3% to 9%. Co-founder Chandra said that recovery cycles that were 60 days have stretched to 90 days now. The company had a profitable year in FY25.

But the real test comes this year in FY26. Some decisions are up to the farmers. Like when to sell. Aria only adjusts the loan-to-value ratio at storage time. If commodity prices are at 80 rupees instead of 100, they'll loan 56 rupees instead of 70. But if prices fall too far and loans exceed collateral value, Aria's team nudges farmers to sell faster.

But farmers aren't always able to weather crises. And here is where Aria doesn't quite live up to the hype. Trashant, a wheat farmer, said that farmers using aria save about 15%. A farming household's monthly income is around $14,000. After expenses, farmers typically save about $2,000. That comes up to roughly $65 per day. During good times, this works. Loans get repaid, a little money is made, and the cycle continues.

But four farmers told us that during the last year and a half, savings have dropped to almost zero. In fact, Prashan said that farmers are actually renting out land just to afford cattle for milk. Ramesh Kumar is another farmer who owns five acres of farmland. He said that while the lower interest does help, he doesn't see the point. Instead of paying the money lender $30,000 rupees,

he pays Aria $12,000. But when the revenue has dropped by $70,000, he wonders what difference $18,000. rupees makes. With or without Aria, farmers get fewer loans during price crashes. And unless prices rise, many will be forced to sell at these low costs. So farmers like Himanshu do have a semblance of agency now. But without any solid fixes in sight for the tanking agricultural prices, it remains to be

seen whether that agency is actually of any help. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription offers daily long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the ken.com and click on the red subscribe button on the top of the Ken website. Today's episode was hosted and produced by my colleague, Rachel Vargis and edited by Rajiv Sien.