Agriculture: Ploughing Ahead

India has billions of people to feed and fortunately, an agrarian economy that is capable of sustaining that need. In the years ahead India could also be the food basket of the world and that dream too is really not as distant as it seems. The country’s foodgrain production was at record high between 2015 and 2018. The horticultural output of fruits and vegetables, flowers, honey, plantation crops, medicinal plants and spices, was around 283.4 million tonnes in the marketing year 2015- 16.

The horticultural crop surpassed foodgrain production, making India the second largest fruit and vegetable producer in the world. India is also the world’s largest producer of milk, but the dairy consumption within the country does not leave a large surplus for exports. India is the second largest producer of sugar (and turned out to be the top producer in the last marketing year) and the leader in coconut production, going by government estimates.

Experts and industry players BW Businessworld spoke to, feel that the renewed interest of investors in agro-tech could now give wings to India’s vision of being a food basket for the world. Already technology has begun to unlock value for even those at the bottom of the pyramid. As Siemens AG, CEO, Joe Kaeser said some time ago, “We need constant change, technological innovation capability, and high productivity to survive in the fierce competitive environment.”

India is the world’s largest sourcing destination for the information technology (IT) industry and had accounted for some 67 per cent of the $124– $130 billion IT market till 2017. Farm technologies are still evolving, however. When integrated with a robust information and communication technology (ICT) framework, agro-tech could give a fillip to both agricultural output and incomes of farmers.

The tech revolution

Raising agricultural production only translates into higher income for the farmer when market connectivity and the storage system are also good. Input management too is a challenge for raising both the quantity and quality of farm produce. As Anand Pareek, Founder of the agri-input support group, Salesbee, points out, “Agri input sits at the core of the agriculture industry and any digitisation and efficiency improvement in this space will significantly impact the farmers’ availability of input while also generating a large number of rural jobs and driving entrepreneurship.” Salesbee is a technology service provider which aims to digitise the agri-input space.

Investments had initially proved a challenge for agri-tech in both upstream (seeds, farm machinery and other inputs) and downstream(food processing) ventures. Upstream ventures like biotech, farm management software, farm robotics and equipment, bioenergy and biomaterials, novel farming, agribusiness marketplaces, midstream technologies and fintech, had attracted more than $189 million in investments across 146 deals between 2013 and 2017. The largest deal was worth $10 million. There are now indications of a renewed interest of investors in the agro-tech startup ecosystem.

A NASSCOM study shows emergence of 225 or more agritech startups in 2015 and 2016 alone. The report accounts for 450 startups in the agritech space. Annual investments in these ventures have gone up 25 times, particularly in mature agritech startups. Agritech startups have attracted $248 million in funding till June 2019, which is a 300 per cent jump over the previous year.

TechnifyBiz is among startups that feel motivated by the fund availability. “The fund availability is good and there are a lot of good funds with deep understanding of the agri-tech space that are now coming in and putting in money. Slowly, even the generalist VC (venture capital) players are acquiring confidence on the agri-tech market and backing some high growth startups,” says TechnifyBiz Co-founder Abhishek Agarwal. SourceTrace CEO, Venkat Maroju concurs with the view. “Agritech has definitely captured the attention of the investor community, and seen a reasonably good level of funding since the past couple of years,” he says. Rising exports of agricultural produce (Please see table) vindicate the success of upstream agri-tech groups.

Pebbles on the path

The complexities of the food and agriculture sector in India however, are vast, since the agrarian economy straddles a diversity in geography, climate, crops, practices and traditions. In the years ahead, agri-tech startups keen to develop and popularise their business models, will have to address critical issues like small landholdings, longer gestation periods, lower return on investments, the lower affordability of target groups, and the lack of skills and knowledge among farmers.

Says Anand Pareek, “Currently we are only going to agri-input retailers and hence, there is no direct link with the farmer yet. Having said that, most of these retailers are farmers themselves and their livelihood comes from servicing other farmers. The adoption rate of technology in this space is encouraging but is still not as quick as in urban markets.” Pareek too talks of challenges Salesbee customers face. “But despite these, we are seeing a positive change with every passing day and that drives us forward,” he says.

Most software as service (SaaS) groups stumble on the small sizes of landholdings and the illiteracy of potential customers. Some though, reach out to farmers in innovative ways. SourceTrace is a SaaS group. “The average small farmer is usually illiterate with small landholdings, and it’s unlikely that they would be interested in digitisation, which made it necessary for someone outside to help them,” says Maroju.  “SourceTrace does not directly engage with farmers.  We engage with them through a farmer-producer organisation, a government or development agency or an agri-business company which works with them directly,” he says.

Most agri-tech groups concur that there is a growing market. “In the last six years, when we decided to work full-fledged in agriculture, our customer base has increased from five in 2014 to 140 in 2019,” says Maroju, adding, “Our farmer footprint has increased from approximately three lakhs in 2017 to a million plus in 2019”. Ashish Mishra, Founder and CEO, TheKrishi, says, “Today, we have more than six lakh farmers benefiting from our app. The active participation of farmers has become evident with 1.2 lakh minutes being spent on TheKrishi application every day.”

Salesbee exudes enthusiasm as well. “We are a very young company, having gone commercial only six months ago and the sector in general depends on a number of indirect factors like government policy on agri-commodity trade, government agri produce purchase mechanism, the rains, global commodity prices etc. So, while the environment is volatile, the medium to long term trend is clear, and we anticipate a growth story,” says Pareek. 

The challenges associated with agriculture are changing, however, as India strives to grow its food and feed more sustainably and inclusively. A major challenge at this juncture is declining farm productivity, diminishing and degrading natural resources, a rapidly growing demand for quality food, stagnating farm income, fragmented land holdings, and climate change.

Wooing farmers

It has now been established that technology modernises production practices of farmers and results in uniform annual returns for them. It also reduces the risk of crop failure, and increases yields.

The technological revolution, if we may dub it such, has its own share of hurdles, however. As Agarwal points out, “It’s difficult to get farmers and processors to give daily basis rates, and to build their dependencies on a technology that determines the rates for them”. Maroju too admits that getting farmers to adapt to an application is a challenge. “This is part of the game when you try to introduce digital technology into a sector that has not been so technology-oriented,” he says. “We had to do a lot of customisation depending on the customer, crop and region. All customers want tailor-made solutions to suit their requirements.  Training the trainers in the customer organisations was another way of overcoming the gap in technology use,” says Maroju.

Betting on the future

Pareek is among those who are upbeat about the future of agro-tech. “We are not deficit in technology. Access to technology in this segment is highly underestimated by industry and urban commentators. Availability of connectivity and data is no longer a major issue, at least not in the pre last mile,” he says. He acknowledges the resistance to technology, but says that was changing fast. “We strongly believe that the primary onus is on the company that is designing the tech. High-tech doesn’t have to be non-user friendly. If there is a deep understanding of the users and their needs, even complicated, high-tech can be designed to ensure that deficit is ultimately reduced,” says Pareek.

‘Allied activities’ like poultry farming and pisciculture make up the agriculture value chain and have aroused the interest of agro-tech startups too. Rajamanohar Somasundaram, Founder of Farm MOJO, a full stack aquaculture technology firm, sees a huge potential in the agro-tech segment. He says, “This trade has an impressive annual growth rate of 10-15 per cent. Industry exports are valued at around $7 billion in 2018. It is a billion-dollar industry, but it is yet to address several challenges, such as disease management, production inefficiency and optimisation of farm input resources and sustainable production.”


Somasundaram says that Farm MOJO had been able to identify and rectify anomalies in the value chain. It was able to help small and marginal fish farmers overcome their apprehensions about modern technology through its interfaces with them. Agro-tech startups have also benefitted from the ease of doing business in India, especially the simplification of norms for foreign investments. “We received our first round of investment from a Norwegian fund,” recalls Somasundaram, adding, “We have very little bureaucratic hurdles and the whole process was smooth.”

“There has been a lot of improvement,” corroborates Maroju. “Customers are getting good orders for their produce and they need technology to authenticate the origin of produce.  Traceability being our forte, we are able to get good customer responses.  So things have improved over the last two years,” he says. TheKrishi is a relatively new venture and CEO and Founder, Ashish Mishra, sees scope for improvement in regulatory compliances. “The government has definitely been taking steps in the right direction. A lot of pieces are now online, so that helps,” says Mishra.

This is not the first time technology is attempting to revolutionise farm production. The Green Revolution that began in 1966-77, encouraged extensive cultivation of high-yield varieties of wheat, increased wheat production five-fold and helped raise incomes of farmers. The White Revolution or Operation Flood, began as far back as 1970 and by 1996 succeeded in transforming India into the largest milk producer in the world. The Gene Revolution was launched early in 2000 to improve yields of both food and cash crops like BT Cotton.

Another new revolution is obviously, about to hit agrarian India, where apps will help farmers determine inputs, hook up with the supply chain and market their produce. As investors begin to believe in the future of this revolution, the tribe of agro-tech startups grow, and will hopefully soon take farm production to a new high.