Scaling up Indian agri-tech start-ups

Published: December 11, 2019 4:32:06 AM

Second, public-private partnership (PPP) in agricultural value chains is gaining ground for start-ups as they can benefit to private as well as public sector through formalising value chain finance, improving decision-making, streamlining direct benefit transfer or subsidies, accessing large markets and so on.

agri tech, India, agri tech start up, dairy tech, agricultural tech, Digital technologyDigital technology start-ups have unleashed their potential in improving crop production systems, optimising utilisation of critical resources, enhancing traceability in food supply chains, and improving transparency in transactions.

By Kushankur Dey

The year 2019 turned out to be a golden year for the 450-odd registered agriculture-technology start-ups, as they witnessed a growth rate of 25% (Nasscom, 2019). Also, these start-ups, in the Industry 4.0 era, are reported to have received $248 million funding in a six-month period of 2019, which is 300% surge in total funding compared to 2018.

It is important to discuss why agri-tech start-ups have received considerable attention of technology developers, investors and agribusiness firms? And how to integrate them into the value chain?
We know that the Indian agricultural ecosystem is thickly populated by smallholders and driven by informality in the domestic markets, and lack of scalability, traceability, transparency in agri-value chains has made agribusiness less trusted, ill-governed and less remunerative to farmers and/or processors. Hence, an end-to-end technology-enabled architecture is necessary to integrate the value chains spanning production, processing and distribution. To this end, agri/dairy-tech start-ups have gained salience because technology innovations brought out by these start-ups aim to capture or augment values in every possible “node” of the chain, and enhance chain traceability and efficiency through smart contract between multiple stakeholders.

Digital technology start-ups have unleashed their potential in improving crop production systems, optimising utilisation of critical resources, enhancing traceability in food supply chains, and improving transparency in transactions. For example, the “food print” product promoted by Jivabhumi is a produce-based aggregation and food traceability solution working for integrated agriculture development in Karnataka.

In parallel, Samudra Network offers digitisation services for farmer producer organisations using mobile applications and dashboard. In addition, it provides agricultural market network to connecting farmer producer organisations with wholesale buyers, agri-finance companies, input suppliers, and logistics via market linkages. Farmer Connect, a blockchain-based app, helps improve traceability for coffee value chain in Karnataka, Kerala and Tamil Nadu.

A number of start-ups are into the business-to-consumer (B2C) segment also. For example, AgroStar provides crop production solutions to farmers through a missed call or via its app-based service, apart from purchasing of critical inputs and farm implements. However, the fact is that most of these start-ups are yet to showcase scalable and time-tested solutions.

So, a key question arises, as after 2015, start-ups are yet to consolidate their business. How to sustain their operations and integrate them into agri-value chains?
Here, we can draw insights from the Nasscom 2019 report that has important policy implications.

First, especially for agri/dairy-tech start-ups, business-to-business (B2B) is emerging as a revenue-generating segment relative to B2C and, thus, these start-ups need to partner with corporates and government agencies for value creation and appropriation. Some of these have already marked their footprints in employment rationalisation (EM3, Goldfarm), stakeholder empowerment (Samudra Network, Farmsurge), supply chain integration (Yuktix, AgroStar), processing and exports (Jivabhumi), resource utilisation (KisanRaja), and digital infrastructure (FarMart, Gramcover).

Second, public-private partnership (PPP) in agricultural value chains is gaining ground for start-ups as they can benefit to private as well as public sector through formalising value chain finance, improving decision-making, streamlining direct benefit transfer or subsidies, accessing large markets and so on.

Third, fund-raising remains a challenge as start-ups require a few critical years to withstand the test of time. Impact investors can, therefore, come forward to enable performing start-ups achieve their scalability and viability in value chain businesses. There is a silver-lining for fund-raising as agri-tech-focused Indian investor fund, Omnivore Partners, raised $97 million in 2019 from companies based in the UK, Switzerland, the Netherlands, Belgium and Japan.

Fourth, agri-tech start-ups regulation calls for a robust policy framework—integrating financial inclusion, agribusiness incubation and acceleration, data privacy and sharing, and licensing policies into a single-window system. A few states have evinced interest in the promotion of agri-tech start-ups and made provision for catalytic or micro-fund ($2-14 million) to nurture them. We can draw anecdotal evidences from Telangana, Tamil Nadu, Karnataka and Maharashtra.

Fifth, as agriculture and dairying is a state subject, agriculture and animal husbandry universities and anchored extension agencies need to identify potential start-ups for tie-up for technology solutions such as farming as a service and crop/livestock management.

Agribusiness incubation centres should rope in agri-tech start-ups to sustain technology transfer from lab to land and attain scalability in agri-value chains.

Sixth, there is an utmost need for an appropriate institutional design, incentives and enabling market infrastructure to integrating digital technologies into agri-value chains.

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