Key Agritech Trends To Expect In 2022
Agritech entrepreneurs and investors expect greater tech-driven innovation and deployment across value chains in the coming year
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Investors' interest in agritech startups has increased tremendously today as agritech is one of the few sectors that not only survived but thrived during the pandemic. According to industry reports, agritech startups in India received around $1 billion between 2017 and 2020 and India was the third largest receiver of agritech funding in the world. According to the Bain and Company analysis, it offers a significant untapped opportunity that is predicted to expand to $30-35 billion market by 2025.
"Over the past five years, more than 3,000 agritech startups have entered the scene. However, their combined revenue was less than $100 million. This shows there's room for more players in the sector as it's impossible for any one company to have a monopoly and effectively address all the challenges. This is good news for investors. There is potential for a 25-30 percent growth in the agritech startup segment by 2025," said Nukul Upadhye, co-founder and CEO, Bijak.
Agritech not only outperformed other industries during the peak of the pandemic, but the pace of digitization in the sector also accelerated to a great extent. Will agritech's resilience be a brownie point going ahead as well?
"The emergence of new agri-trading platforms, more efficient market linkages, as well as the use of big data and IoT in driving farm input has and will help the entire agricultural sector. In our view, the resilience will not only continue it will actually strengthen," said Anjali Bansal, founder, Avaana Capital.
Agritech In 2022
Startups in the space are actively deploying transformative technology like artificial intelligence (AI), machine learning (ML), internet of things (IoT), etc. to increase efficiency, productivity and bring transparency in the sector. "These digital transformations are winning the trust of potential investors which has put the agritech sector on an upwards growth trajectory. India's agriculture sector has come a long way and with the emerging tech-driven agriculture startups it has the potential to become "the food bowl of the world". In FY22, we can surely expect a multiplicity of tech innovations to come into play in the agri sector," said Ranjith Mukandan, CEO and co-founder, Stellapps.
Additionally, agritech is seeing an influx of entrepreneurs who understand deep tech and are also from farmers' families. This allows them to use the right tech at the grassroots level. "As the sector becomes more flushed with investment, we can expect greater technological advancements and adoption of digital systems across agriculture value chains," said Taranjeet Singh Bhamra, founder and CEO, AgNext Technologies.
Segments That Will See The Most Growth And Other Trends
Between 2014 and 2021, market linkage startups in India received $305.2 million in funding. For the uninitiated, input and output market linkage activities help farmers connect with the right input providers (e.g. farm machinery rentals, field leveling equipment, pesticide spraying, etc.) and the right buyers without losing the bulk of their working capital or profits to intermediaries. The segment is expected to see more influx of capital.
"As far as investors are concerned, there's never been a better time to invest. The segments within agri-tech that show high growth potential for growth are marketplace and e-distributors, farm inputs including smart farm equipment, AI/Image powered solutions for crop quality assessment, precision agriculture and farm management, agri finance and insurance, farmer advisory services and hydroponics," said Upadhye.
He also added that some of the key agritech trends that we can expect to see in 2022 are IoT Devices, next-gen internet connection, autonomous agricultural machinery, sustainable development and biodiversity and satellite imagery.
Experts are expecting to see greater demand for technological interventions across various intersections in agricultural value chains. "Further, increasing demand for traceability is expected to fuel digitization of food systems, logistical processes, storage facilities, quality checks, and financial transactions, among others, with greater integration of real-time data to generate critical business insights," said Bhamra.
"Given India's significant vulnerability to climate change, we expect more entrepreneurs to work towards innovations for climate mitigation and building resilience within the agri community. We also hope to see more innovations in agrifood life sciences which is critical for ushering in commercially viable sustainable agriculture," said Subhadeep Sanyal, partner, Omnivore.
New food brands, nutritional supplements, as well as alt protein will also continue to see growth. "These are currently niche segments but we see increasing consumer appetite for "better for the planet" brands. Sustainability, mitigation, and resilience will continue to be the themes in agriculture over the next several years as the sector is not only a key emitter but also a user of resources. As we think about the road from COP 26 and India's goal for Net Zero, agriculture has to play a big role. Consequently, use of climate data, alternative energy, as well as better usage of water and waste will also be trends," said Bansal.
According to Mukandan, the quality and traceability segment is still a largely untapped market. "With the demand for premium quality products picking up due to increasing purchasing power, quality and traceability monitoring and management segment are likely to grow in the future," he said.
Lastly, segments such as agri-fintech, quality and traceability management have tremendous potential to grow, and segments such as farm management, input delivery and precision agriculture that have already seen tremendous growth will scale further.