This food crisis apart, what adds to the melee is that most of the developing countries, that host a large population comprising mainly of youth, are vulnerable to food shortages. It is imperative to scale up food production, improve efficiency along the value chain, reduce wastages and artificial shortages, whilst promoting sustainable methods of farming in order to safeguard the cropland and ecosystems. This is where AgTech can play a huge role to bring in scalability, monitoring, and efficiency in the farm to fork process.
Reducing data tariff, increasing smartphone adoption and a scale-up of incubators have made India a hotbed for digital startups. But while those targeting the consumer sector mostly aimed for convenience or entertainment, those targeting agriculture (commonly referred to as the AgTech sector) aim a far more primitive need – our collective survival! Food crises and AgTech A recent report by the Global Network Against Food Crises, an alliance comprising of the UN, the EU, and other agencies said the number of people facing acute food insecurity hit a five-year high in 2020.
This food crisis apart, what adds to the melee is that most of the developing countries, that host a large population comprising mainly of youth, are vulnerable to food shortages. It is imperative to scale up food production, improve efficiency along the value chain, reduce wastages and artificial shortages, whilst promoting sustainable methods of farming in order to safeguard the cropland and ecosystems. This is where AgTech can play a huge role to bring in scalability, monitoring, and efficiency in the farm to fork process.
India, a country host to all the challenges outlined in the prior paragraph, is seeing significant activity in this space. Deep-diving into India, the arithmetic itself makes AgTech an imperative in this country. ~41%1 of India’s workforce is dependent on agriculture, higher than most Asian peers. Despite this, yields on cereals in India are lower by ~50%2 than the US or China. The equation worsens when one considers India’s (largely young) population is estimated to cross 1.5 billion3 by 2036and ~29%4of its cropland is already risking degradation. With inflation-adjusted farmer income growing a mere ~0.44%5 CAGR between 2011 and 2016, deteriorating farm economics only adds to the despair.
Agtech scaling up in India Recent years have seen an influx of AgTech start-ups that address pain points in the Indian farm-to-fork chain. Their service offering mainly revolve around weather predictability, science-based inputs, farming aspects, grading, transport, and supply chain, allied services, etc., and they help make farming more effective, efficient, profitable, less resource-intensive, and adaptable in the face of evolving environmental headwinds whilst improving yield and reducing wastage. Importantly, they have innovated to make their business models viable in a largely poor and smallholder agrarian landscape.
Instead of direct farmer transactions, some opted for a B2B approach through the established distribution networks of intermediary products, etc. Another model is asset-sharing, or farming-as-a-service, thus negating the need for poor farmers to invest capital behind harvesters and implements. The subscription-fee model has emerged with start-ups that use specialized equipment for science-based inputs, storage facilities, etc. Those concentrating on market linkages to bridge the gaps in the input or output side opted for a margin-based revenue model. The sector expects collaboration-based models amongst specialist solution providers, each with their specific role carved out, that can then offer a holistic solution to the farmer.
Transaction-based revenue models are emerging in the less explored segments like loans or insurance, especially those leveraging technology to assess the risk profile and income patterns of smallholders, often neglected when it comes to financial inclusion. With India’s ~1196 million farmers spread across regions, digital platforms for extension of farm advisory are emerging. Opportunity exists not only to go deeper into each of these models, but also to incorporate the training needs of farmers and staff to use the very services these AgTech startups offer. Innovative and adaptable business models reduce cash-flow risks, though scaling up is still to be seen It is estimated over 50%7 of the 366 AgTech start-ups incepted between 2013 and 2017 came up in 2015 and 2016, hence the coming decade will be crucial to see how many scales up! One green shoot is while the number of new start-ups has moderated, annual investment flows to startups rose. This indicates some start-ups are maturing and can substantiate raising larger amounts in subsequent fundraising rounds.
India is now home to ~5009 AgTech start-ups, up from ~10 a decade ago. An influx of technology graduates into agriculture has meant sophisticated technologies like predictive analytics, IoT, big data, artificial intelligence, sensors, robotics, digital platforms, etc. form the base of the tools these start-ups offer.
Popular startups include INI Farms, which enables farm advisory, supply chain automation, post-harvest efficiency and waste reduction, Bharat Agri, which conducts soil and water tests across ~30 parameters using satellite imagery, data algorithms and other techniques, Farmguru, which supplies scientific input for cattle feed growth and resource-use and Gramophone, which offers farm advisory and input orders via an app. In the long-run, emergence of more workable business models in the Indian AgTech space will only reverse the deteriorating arithmetic in farming, while promoting climate-smart agriculture.
Replicability of this model across peer developing countries will help spread the benefits across a broader set of population and geography, which will only serve to close the gap such nations face on food security!
Source: Business World
