by Vinay Khatu
Agriculture, is a large contributor to the Indian GDP, with over 58 percent of the rural households in India depending on agriculture as their principal means of livelihood
However, the farmer is beset with a host of problems making farming one of the least remunerative businesses today; vagaries in weather, irrigation, pest attacks, agri-input costs, crop selection, and opaque mandi prices all add to the complexities and the farmer usually resorts to his peers for advice. The Government on its part has been trying to resolve some of these issues but suffers in actual implementation leading to farm loan write offs as the final resolution for farmer woes. This is coupled with the fact that India ranks among the bottom few in agricultural productivity.
A new set of entrepreneurs are entering the agriculture sector with enthusiasm and a disruptive mindset - where farming is now being looked at as a sunrise sector that is underserved and full of opportunities.
There are numerous examples of professionals quitting their day jobs to take up agriculture with enthusiasm.
These entrepreneurs and a number of others are making this shift to unlock the huge latent potential that Agriculture holds.
With the second largest smartphone market in the world, and 87 million rural mobile internet users, the tide finally seems to be turning. The onset of technology coupled with the growing mobile penetration in India, we believe, provides an opportunity that will spur the growth of the Agritech sector, mirroring global markets.
Conventionally in farming, most decisions were made by intuition and advice from experienced farmers. Lack of proper data use lead to improper advice, reduced productivity and losses in the harvest. Information asymmetry is reducing, and proper analytics is solving problems in farm produce aggregation, farm management, risk management as well as farm automation. Globally there are drones flying, IoT devices being embedded in the soil, automated irrigation taking place, smartphone apps notifying farmers about the changes taking place in their land; and all at a marginal cost to the farmers.
While some of these like drones are futuristic for India, innovations across the supply chain, market linkages, technology and equipment, the introduction of big data and analytics, and disruptions in conventional methods and processes can already be seen.
Key areas where we see the maximum impact include:
Farming-as-a-service: a new concept introduced in India by EM3, which offers farming services and machinery rentals on a pay-per-use basis - the Uberization of farm equipment. This concept has caught on and there are also few other startups in this space like Trringo (a Mahindra & Mahindra venture) and Ravgo. With most land holdings being fragmented, farmers do not see value in purchasing machinery (including tractors) that will typically be used for 8-10 weeks during the year. While very local in terms of the area serviced, the key to successful scale in this model will be setting up multiple centers across the country at viable economics.
Big Data and Analytics: Big data is moving into agriculture in a big way – data on soil, wind, pests, amongst others can lead to significant impact on input costs and hence profitability. Additionally analysis on price movements across markets can lead to higher realizations. With all the data being generated and available, it needed firms to analyse and share with farmers effectively to create profitable businesses - companies like RML Agtech, CropIn and Nubesol that are providing web-based solutions and applications to monitor growth and provide expert advice for farmers.
Procurement & Sales: Not only analytics but the conventional ways in which farmers procured seeds and inputs are also changing. While middlemen governed the price, and made most of the profits in the market, farmers bought inputs at a retail price and sold their produce at a wholesale price. This has changed over the years. There are apps and service providers that enable farmers to not only procure inputs at a reasonable price but also sell their produce at their desired price to retailers beyond their own geographic area as well. The information asymmetry that led to increase in prices as high as 4 times the original is being curbed.
Supply chain and market linkage platform also form important segments in Agritech. Door step delivery of milk and milk products, and delivery of fruits and vegetables from farm-to-home and farm-to-business concepts are being adopted by startups like 4S Foods, Farmery, and Sabziwala, CroFarm to name a few. Some market linkage platforms also help connect farmers to their suppliers and make that transition easy.
Automated irrigation, remote controlled equipment, on demand availability of equipment and inputs, precision farming are all results of innovation in agriculture in India.
Agriculture has not only been successful to attract startups and entrepreneurs but also investors and government interests. Increasing number of startups are seeking funding from all the major fund in India, and abroad. The investors are not shying away from the sector either. The Indian agricultural services and agricultural machinery sectors have cumulatively attracted FDI equity inflow of about US$ 2.3 billion from April 2000 to December 2016* - a trend we believe will only rapidly grow from here.