Agriculture -an immense opportunity for startups
How does agri-based startups create value for Indian agriculture?
Most of the Indians are neither aware of, nor remember the story of “ship to mouth” diplomacy — when back to back drought forced India to import grain from United State of America under PL 480 law. Since we did not have enough foreign reserves to purchase grain from the international market, we faced humiliation and inconsistent supply. Finally, when we received, we had to transfer it from the Ship standing at the dock to distribution channels directly to save the lives of our poor countryman.
Since then we have made immense progress in agriculture and not only able to feed 1.35 crore people but also exporting to many countries. In spite of this commendable achievement, everything is not right in the Indian agriculture sector. Despite the challenging situation provides an immense opportunity for new innovative ideas supported by technology to bring a revolution in Indian agriculture.
What are the key challenges ??????
Let us understand what are the challenges Indian agriculture has been facing even after 73 years of independence –
1. Small landholding and low productivity — With 86% of Indian farmers has less than 2hac land it is quite difficult for them to mechanize their farming, adopt best practices to get increase current productivity levels.
2. Inconsistent transfer of knowledge from labs to land — In spite of having various good research institutes, universities, we have not been able to given the benefit of research findings to all our farmers.
3. Lack of adequate capital available at right time — Though the government has priority lending norms for the financial institution to support farmers however it is still a challenge to provide timely capital and finance to the farmer community. Political interference making it a risky proposition for banks.
4. Lack of direct and right marketing channels available — This has been a big challenge however government brought a new ordinance which will allow farmers to sell their produce outside APMC markets.
If you analyze the value chain of any crop you will realize a lot of inefficiencies that directly impact the interest of farmers and consumers through benefiting middle man. This pocket of inefficiencies lies in both supply and demand side. Lack of adequate capital is further deteriorating the situation.
What are the key areas to look for ?
Solution-oriented ideas & initiatives supported by technology and data analytics can remove inefficiencies and bring multiplier impact for farmers, the food industry, and consumers. There are broadly three specific areas where Agri startups can work
o Supply-side — By creating tech platforms to bring farmer and input suppliers together for a price discovery that is beneficial for both
o Knowledge sharing — a tech platform to provide critical information to farmers at the right time.
o Demand-side — a platform to take produce to the consumer directly with least intervention in between.
Due to geographical and climatic diversity, there is ample opportunity for hundreds of Agritech players to come up, grow, and being a huge investment in the sector for the next 5–7 years. Later next phase of consolidation will start that will further benefit the whole agriculture sector.
What kind of solutions can be provided by Agri startups -
Though most of the Agri startup focusing on providing timely information to farmers, building marketing linkages for better pricing and marketing, however, there are few other areas that can be explored and monetize for the benefit for all stakeholders….
Any solution in agriculture in not complete without facilitating capital/ finance to all stakeholders in the value chain therefore along with a technology platform to provide knowledge and to build market linkage, an Agri startup can additionally provide the financial solution. Here comes a new segment of startups “Agri-fintech”.
Another opportunity is to bring local level innovations to the mainstream. Local innovation (Jugaad) is the core strength of Indian agriculture however lack of patent knowledge and the right platform not supporting them to reach across geographies. This kind of startup can facilitate the identification of such opportunities, support in patent, manufacturing, and marketing.
Contract farming where you can bring a group of farmers of a region, area together and provide them quality inputs, know-how, the right set of equipment, and assurance of purchase of final products at the right price will surely revolutionize Indian agriculture. However, we need to ensure the involvement of corporate, Agri startups as well as individuals to bring granularity in the system. If policies support only corporate for contract farming, this might impact the interest of farmers in the longer run.
Another important aspect is to make the subsidy availing process easy for farmers. Most of the farmers are not aware of the subsidies or even if they know, they don’t apply due to the complexities involved. An Agri startup can provide a solution to this by integrating systems of all stakeholders ( government institutions, financial institutions, and other institutions) involved in the processing of subsidies.
Agriculture is a huge sector with a large population dependent on this, has the potential to become a hub of Agri-tech initiatives. This Agri-tech revolution has already started however needs more entrepreneurial attitude, solution-oriented approach, and investments.
This is going to be a very lucrative and interesting career path for youth. Professionals from agriculture, technology, engineering, and marketing can seriously think to jump to take advantage of this opportunity. The success mantra for all Agri startup is a solution-oriented mindset, empathy toward farmers, and a vision to maximize benefits for all stakeholders.
