Despite COVID-19, the agri-tech startup sector has remained profitable across the country. As per the data revealed by the Ministry of Finance in its recently tabled Economic Survey, India’s agricultural sector has shown to be resilient. The Agriculture and Allied activities grew 3.4 per cent at constant prices during 2020-21 (first advance estimate). There are more than 450 agri-tech startups (figures revealed by the Ministry of Agriculture & Farmers Welfare) in India across the value chain, leveraging the use of technology and innovation. India’s agri-tech revolution is experiencing an exciting digital transformation. It intends to expand the use of emerging technology and innovative solutions throughout the value chain. Farmers no longer need to go anyplace because everything is available from the comfort of their own home via a smartphone app. This is the new face of agriculture in India. With wider-than-ever penetration of mobile networks, Internet data plans at economical cost, reliable transaction systems, and evolving processes that are linked with real-time data, and real-time supply and demand monitoring, Indian agriculture is all set to grow like never before.
Over the last decade, the educated youth have made a beeline for the Indian agriculture sector, armed with ideas, passion and innovations to unleash new technology and business models. This renewed interest evinced by the youth has transformed Indian agriculture from primitive to hi-tech. Startups are providing missing links in the agri value chain and delivering efficient products, technologies and services to the farmers on the one hand and the consumers on the other. Innovations and technology-driven startups are set to revolutionise the food and agriculture sector. From Information and Communication Technology (ICT) apps to farm automation and from weather forecasting to drone use and from inputs retailing and equipment renting to online vegetable marketing; and from smart poultry and dairy ventures to smart agriculture, protected cultivation to innovative food processing and packaging, all are poised to boost the agriculture sector.
Elaborating on the rise of agri-tech companies in India, Nishant Mahatre, Co-founder & COO, Gramophone said, “The reality is that agri-demand in India has grown considerably more than supply, and to solve Indian agriculture problems use of technology solutions has become inevitable. Traditional solutions are no longer effective, and farmers have been struggling to earn more for a long time now. Post 2015-16 Indian agriculture has seen the entrance of many startups which started with the goal to solve the problems in Indian agriculture with the help of modern technology.”
He further said “Today more than 450 startups have been operational in the Indian agri-tech sector. Some of the leading names are Gramophone, Agrostar, Dehaat, Cropin and Ninjacart. Few startups like us nowadays are offering full-stack technology solutions to the farmers, and are developing plus redefining market linkages. Right from making agronomy intelligence accessible in farmer’s language, taking Agri-input commerce to farmer’s doorstep, allowing farmers to connect with others via social features to establishing digital output marketplace.”
Gramaphone is an Indore-based startup that provides farm advisory services, and inputs like seeds and marketing support to farmers. This venture was started by IIT and IIM graduates Tauseef Ahmad Khan, Nishant Vats Mahatre, Harshit Gupta and Ashish Rajan Singh. Currently, the company is rendering its services to the state of Madhya Pradesh and Rajasthan. It has tied up with Godrej Agrovet and Dhanuka on the crop protection side and with Rashi and Nunheims for seeds.
Agreeing to Mahatre’s views, Rajeev Jha, Founder, Yuktix Technologies said, “Indian agri-tech market potential is close to $25 billion with just 1-2 per cent penetration. There are close to 450 agri-tech startups as per NASSCOM. With Government of India’s vision to double the farmers’ income, there is a huge scope of many more agri-tech startups across the agriculture value chain, namely, pre-harvest, post harvest and processing. Yuktix is a Bengaluru-based Department of Industrial Promotion and Policy (DIPP) recognised startup and a registered MSME working to create indigenous remote monitoring and sensor analytic solutions. Yuktix GidaBits is a next generation agri intelligence platform powered by Internet of Things (IoT) and Artificial Intelligence (AI) to provide farm level disease and insect forecast to growers. This is backed by advance irrigation advisory, package of practice, soil testing, and agronomist advisory. The best part is that farmers don’t have to do upfront payment to avail the service. It’s purely ’pay-as-you-go’ mode. They just need to call the company’s support department and the firm will install the device and commence sending advisories to them.
Impact of COVID-19
Amid the ongoing COVID-19 situation, the Government of India (GoI) has been proactively supporting the agri-tech startup sector. The Department of Science and Technology, GoI, had organised a food and agri-business accelerator in association with Association for Innovation Development of Entrepreneurship in Agriculture (a-IDEA), a Technology Business Incubator (TBI) of the National Academy of Agricultural Research Management (ICAR-NAARM). The focus area of this programme was accelerating agri-business startups by providing mentoring, industry network and investor pitching guidance.
As reported by the India Brand Equity Foundation (IBEF), a wing of the Department of Commerce, Ministry of Commerce and Industry, Government of India, the government is also planning to grant Rs 2,000 crore ($ 270 million) for computerisation of the Primary Agricultural Credit Society (PACS), with the primary aim of benefitting cooperatives through the digital technology. All these steps have been taken as the COVID-19 has taught one rule to the entire world that digitisation in any business is the key for its future. Apart from that, the government is also witnessing strong potential revenue output in this sector and also its implementation will enhance the agriculture produce as well which is the need of the hour.
“All the businesses were impacted by COVID-19 but agriculture was comparatively less impacted and agriculture will see tremendous growth. The demand was never down and it was always on the higher side. In fact, India is expected to have highest ever horticulture and floriculture production.VC firms have started treating agriculture as a mainstream vertical which otherwise earlier was neglected,” said Jha.
“Despite a lot of businesses facing a hostile situation and finding it very difficult to survive in the market, the agri-tech startup sector is getting strong support from its investors. The investment scenario is favourable and is inclined towards the potential agri-tech startups. Our expectations from investors are to invest for growth. We are looking for partners who help us expand and grow exponentially,” informed Arvind Godara-Founder, AgriBolo.
AgriBolo provides an umbrella of services under a single roof as per season, relevance, supply and time. Also, an opportunity to partner along a business solution is available on the AgriBolo platform which empowers towards rural and social empowerment. The company alsotakes care of last-mile connectivity and delivers inputs and procures outputs from farm gates. The Mumbai-based startup is currently working with over 2.5 lakh farmers.
Farmers are not afraid of transacting online now, which is a great advancement and COVID has pushed this behaviour much faster than it was expected. They have been adopting digital channels to purchase agri-input products, accessing farming knowledge on farming apps like Gramophone, Ninjakart, Agribolo, video portals like YouTube, leading to stronger digital connect between brands and farmers.
“We have been very aggressively focusing on connecting with farmers digitally and post COVID-19, we experienced the adaptation of digital channels has also grown exponentially. Our focus has been to engage with farmers via our App, Social Media Channels, SMS, using features such as Facebook Live, YouTube Live, Live Classes etc. to connect on a real time basis,” said Mahatre. In contrast to other industries, the gricultural sector is showing a distinct V-shaped recovery, as farmers are more willing to accept new technology and techniques to keep their farming cycle running. Arindom Datta, Executive Director, Rural & Development Banking/ Advisory, Rabobank said that COVID-19 has positive impact on the agri-tech startup sector. The way people are showing their interest in these budding tech companies is commendable.
“The kind of interest that India agritech startups have generated is something unprecedented and this is mainly because these tech firms are addressing some of the real problems faced by the farmers in their daily agricultural operations. The ability of technology to link farmers and markets on both sides and make a very efficient connection along with other players, like the financial institutions, the input players, advisory infrastructure that is leading toa huge interest,” said Datta.
“COVID-19 has also demonstrated that agriculture is a key sector. People need to eat, food needs to be grown then it needs to be moved. At this point of time, last year, the tech companies played a very significant role. My call is that the Indian agri-tech sector is going to go northwards. It’s going to attract a lot of funding. There’s already so much interest and by the end of this year, in the last quarter, in the first quarter of next year, we are going to see some mega deals in the market on the investment,” he added further.
Gaining investors’ confidence
It has been more than one year since the entire country went into the shell because of the outbreak of pandemic. Many investors who were earlier actively investing in the country’s startup sector are now plugged off from the sector because of the fear of losing their investment as the market situation is very volatile. On the contrary to other sectors, India’s agri-tech startup sector is gaining a lot of trust from the investors. The COVID pandemic which led to nationwide lockdown, posed challenges for agri-tech startups especially in ground operations like every other ndustry. This has slowed down the growth against the expectations, but it also propelled many positive changes for the industry. To revive the growth, it’s crucial to ride on positives which have been brought by this lockdown.
Like every other sector, Indian agriculture is experiencing exciting advancements as a result of the technology solutions introduced by new age startups, and farmers’ rapid digital adaptation, which has been accelerated further, by COVID lockdown.
“Agritech has come into the mainstream. In 2020, India received investments worth $ 329 million from PE/VC firms and registered a staggering CAGR of around 53 per cent from 2017 ($ 91 million) to 2020 ($ 329 million),” informed Jha.
“From an investor perspective, there are different investors who put on different lenses, depending on their strategy. Investment thesis, from a RaboBank perspective, in India, we have done only one investment and we may look at more. But we are looking at strategic investment where it helps to bring in efficiencies in the food and agri business sector. Secondly, we are very interested in the access to finance problem of technologies which are addressing the access to finance issues not only for the smaller farmers, but also for the supplier side,” said Datta.
As per data shared by IBEF, India’s agri-tech startups have been growing at 25 per cent year-onyear. The startups have raised more than Rs 1,840 crore ($250 million) in venture funding in 2019. This was three times the amount of funding raised n 2018. The sector is forecast to attract more than Rs 3,680 crore ($500 million) in the next few years. Aavishkaar, Accel, Ankur Capital, Beenext and Omnivore were early investors in the sector. More recently, the sector witnessed funds such as Blume, Nexus, Sequoia, Tiger Global and RTP investing in the sector. In 2020, more than 20 agri-tech startups have cumulatively raised more than Rs 920 crore ($125 million) across equity, venture debt and conventional debt rounds.
Roadblocks
Despite favourable conditions and strong government support, the agri-tech startup sector still has some loose ends. Many agri-tech firms are grappling with their own set of issues. These problems include the overall structure of their business model which is holding them from scaling up, expertise on the subject, not being able to convince farmers to opt for their model, gaps in supply chain management, connectivity issues and many such hurdles.
“The major hurdles which block the growth of an agri-tech startup sector include limited traceability as well as operational visibility along the crop cycle. The input companies face the issue of low visibility on the marketing activities, inefficient operations and much more. Also, there is a lack of a centralised agri data database. So it becomes necessary for the Agri-tech startups like us to knit the gap and pave a transparent way. In the supply chain, the digital model minimises the losses across the value chain,” said Godara.
Farming companies are impacted by limited traceability and visibility. Agri input companies still struggle with inefficient field force management and operations along with lack of centralised database that causes huge losses along the value chain.
Pointing out another loose end, Jahi said, “Investment is one of the biggest hurdles. In order to develop new technologies and make them available at a price point that is economical to farmers, they need a lot of investment in R&D and manufacturing. Distribution will also remaina big challenge in agriculture.”
Vishnu B, an analyst of GlobalData PlC, Hyderabad stated that many of the existing agri-enterprises, despite tasting initial success, are facing difficulties to expand their businesses beyond a point because of lack of commercial guidance. Such support is normally provided to the startups by the project incubators by helping them in capacity building, networking, accessing knowledge and resources, and other kinds of needed expertise. But, regrettably, not many of the existing 300-odd incubators and their advanced version called accelerators have the expertise and competence to guide the farm-oriented enterprises.
Nitin Konde
