By Kavery Ganguly & Ashok Gulati
Agri-startups, like startups in other areas, are mushrooming, and are trying to raise funding. India is next to the US and China in the agri-startup space. According to Agfunder, India witnessed an increase in funding, from $619 million in H12020 to $2 billion in H12021, preceded by the US ($9.5 billion) and China ($4.5 billion). A 2020 study by EY pegs the Indian agritech market potential at $24 billion by 2025, of which only 1% has been captured so far. Among various agritech segments, supply-chain technology and output markets have the highest potential, worth $12.1 billion. Currently, India seems to have about 600-700 agritech startups, many of them using artificial intelligence (AI), machine learning (ML), internet of things (IoT), etc, to unlock the potential of big data for greater resource-use efficiency, transparency, and inclusiveness.
The pandemic helped them catapult, and the Farm Laws 2020 can give them a further boost by providing a legal framework to work with farmers collectives. Here, we focus on some startups in marketing space that are empowering farmers, small agrifood operators, and giving consumers a better deal for their money.
Ninjacart, Dehaat, and Crofarm (Otipy) are three of the many startups that are redefining the agrifood marketplace. Their novelty is not limited to empowering farmers but also encompasses co-opting local grocery stores as well as small agrifood businesses. This is in contrast to the organised retail wave of the mid-2000s, wherein the livelihood of the unorganised retailers and small businesses were perceived to be threatened.
Some interesting trends are emerging.
Multiple models of engagement: Ninjacart started off as a farmer-to-consumer (F2C) venture but soon moved onto farmer-to-business (F2B), recognising the need to address the challenges that confront the agrifood ecosystem and achieve greater scale effects. Dehaat Beej se Baazar Tak is a full-stack agri-service startup that engages through B2F and F2B models. It uses data science, agri science and analytics to nurture a thriving ecosystem of farmers, micro-entrepreneurs and institutional buyers. Crofarm is a F2B digital supply-chain that manages logistics, inventory and supply of fresh produce directly from farms to retail chains like Big Bazaar, Reliance Retail, BigBasket and Grofers. Crofarm’s Otipy is an app-based F2B2C social commerce platform that delivers (in addition to grocery and other household items) fruits and vegetables directly sourced from farmers to consumers through their partner resellers.
Promising investment and valuation trends: With a total funding of $162 million since June 2014, Dehaat raised $115 million alone in October 2021, claimed to be one of the biggest funding in agritech space. Its valuation, as on January 20, 2021, was $158 million. Ninjacart raised funding worth $222 million since March 2016 and is valued at $503 million (as on October 21, 2020). With a total funding of $16.9 million since July 2016, Crofarm is valued at $24.4 million as on July 16, 2021. Since 2019, Otipy has raised funding worth $12.7 million, of which $10.2 million was raised in July 2021.
Increasing footprint of agritech startups: Dehaat is present in Bihar, West Bengal, Odisha, and Uttar Pradesh, working with 6,50,000 farmers through 1,890 Dehaat Centers. Ninjacart sources fresh produce from farms and supplies to retailers, restaurants, grocery and kirana stores, and small businesses, and is operational in nearly 11 cities. With a farmer network of 10,000-plus, Crofarm has served more than 1 lakh consumers and 5,000 businesses. Otipy has emerged as one of the popular app-based platform with nearly 2 lakh customers and more than 8.25 lakh mobile downloads. It currently works with 10,000-plus resellers in Delhi NCR and is also present in Uttar Pradesh, Gujarat, and Himachal Pradesh. About 70% of the resellers are women.
Demonstrated impact: Ninjacart reduced wastage to 4% compared to upto 25% in traditional chains through demand-driven harvest schedule. Logistics-optimisation enabled delivery in less than 12 hours at one-third the cost in traditional chains. Farmers’ net incomes are reported to have increased by 20%. Dehaat has enabled farmers to secure upto 50% increase in income as a result of savings in input costs, increased farm productivity, and better price discover.
Agritech-startup-led e-commerce platforms can potentially steer the shift from government-controlled agricultural markets towards more demand-driven digital markets. However, sustainability and scalability of these ventures is yet to be tested. The startup-FPO partnership can be strengthened under the Centre’s programme to add 10,000 new FPOs by 2024. The network of agritech startups, incubators, accelerators and investors needs to work closely with policymakers, academia, and think-tanks to create solutions for shared value in India’s dynamic agrifood system. If policies, institutions and partnerships are able to harness the current momentum, the startup ecosystem can be the next-generation technology revolution in agrifood sector.
Co-authored with Kavery Ganguly, senior research fellow, ICRIER
Ganguly is senior research fellow,and Gulati is Infosys Chair professor for agriculture, ICRIER