📺 Stream EntrepreneurTV for Free 📺

Ploughing Down Long Road Harvest To Growth Agri-tech start-ups and private investors are ploughing hard for harvesting better growth ahead

By Sandeep Soni

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Entrepreneur India

Much credit goes to world food crisis in 2007-08 that has led global economies to reinforce efficiency in agriculture.

Through technology, commitment is being enabled at multiple value points – favourable policies, transparency in market information, leaner supply chain, single window access to raw materials and affordable machinery, and access to credit.

Barring policies, which is pure government play, agri-tech start-ups and private investors are ploughing hard for harvesting better growth ahead. On $313 million raised by 53 agritech start-ups in India in 2016 (as per online investment platform for agri-food technologies - AgFunder), one might laugh off at it when seen through the e-commerce lens. But since agri-tech space is nascent globally, India became the second highest investment destination after the US with those 53 deals last year.

Digging Deeper

The technology solutions by Indian agritech start-ups are largely focusing on four areas. First, helping farmers with a) Right information for e.g., about the crop, weather, soil, market prices, etc., using algorithms, data analytics and image processing techniques that has companies like AgroStar and Airwood; and b) Devices for e.g., irrigation control system etc., having startups like Flybird.

Second, selling agri-products through online marketplace where again we have AgroStar and Kisan Point. Shardul Sheth, Co-founder, AgroStar, says, "E-commerce is just one part of our solution. Every information related to growing crops, whether it is the prices at the mandis, weather updates, what products to use, how to improve yield, how to conserve water, crop infection, etc., is available for farmers."

Started in 2010 as a manufacturer of organic fertilizers, AgroStar pivoted to the current model in 2013. Currently 200 sellers sell agri inputs on AgroStar and delivers surprisingly via India Post, unlike other marketplaces.

"India Post has been amazingly efficient against the popular perception of it. No other logistics company can deliver, let's say 50 kms away from a taluka in a tier III district within five days. They can deliver to any valid pin code across the country," explains Sheth.

AgroStar has one centralized warehouse each in Pune, Ahmedabad and Jaipur and is looking to become profitable within next two years. Third area is about ending pilferage in the supply chain by connecting consumer and farmer in terms of online delivery of fresh farm produce that has start-ups like Paalak.in selling directly to consumers and Crofarm aiming at neighborhood retailers.

Ajay Kakra, Director, Agri & Natural Resources, PricewaterhouseCoopers India, says, "For farmers, production cost is big and any technology that helps them reduce it and increase their share is very welcoming. For e.g. if producing mango would cost him Rs 10 per kg while consumers buy at Rs 50 per kg, then the additional Rs 40 is gained by the intermediaries without any value addition."

The impact of agri-tech, believes Swapnil Tripathi, Co-founder, Paalak.in, can be maximized in solving the fundamental issue with supply chain as compared to last mile. "Last mile is a generic problem and not specific to the agri space." Started in August 2016, Noida-based Paalak.in has two collection centres - in Bulandshahr and Hapur (towns in Western Uttar Pradesh) and it delivers in Delhi NCR.

It also sells to retailers. When selling to retailers, which becomes business-to-business, the supplies are 10 per cent cheaper as though it depends on the product, apart from the convenience and freshness quotient that it brings to retailers.

Varun Khurana, Co-Founder, Crofarm and former CTO at Grofers, says, "At Crofarm they can sell their products in packaged form unlike mandis, to reduce wastage. In fruits and vegetables there is a whopping, at least 60 per cent, wastage in the supply chain."

Gurugram-based Crofarm has potato, tomato and onions as its highest selling items with average sale order worth more than Rs 10,000 per day. "Maximum opportunity is in retail as it is the last part of the chain where businesses are trying to innovate. But in five-10 years it will percolate down to the producer side which is till now mostly untouched," adds Kakra.

Fourth area is "Uber-ing' underutilized machinery, including tractors by connecting its owners to farmers who can't afford it, wherein we have start-ups like FarMart. Alekh Sanghera, Co-founder and CEO, FarMart – launched in January 2016 , says, "80 per cent of farmers can't afford machines. On the other hand, machine owners traditionally can reach only to farmers in their village and nearby ones. So aggregating machines on the single platform, gives cost benefit to farmers which is 20-25 per cent cheaper than offline market."

For machine owners, they are able to serve more customers with wider reach, up to seven kms area. "The charges are per hour or per land holding size basis," adds Sanghera.

Owners can track their orders via the app on the subsidized smartphones given by FarMart. This is the part of the trend that is coming up in countries like the US, Canada, Israel, and Australia, where there is an increased interest in agriculture as people are now more aware of it after going through the global food crisis.

From consumer perspective, there is broader interest in healthy eating. Mark Kahn, Founding Partner, Omnivore Partners, says, "This trend is playing out in India as well, where entrepreneurs are launching businesses around food, agri sustainability, organics, vertical agriculture, hydroponics, etc." Bengaluru-based venture capital firm, Omnivore Partners is among the few investors focusing on early stage agri and food start-ups since last six years.

Customizing Technology

While most of the start-ups have set up call centres where farmers can call for agronomy-related advice, these businesses want farmers adopt app usage. But how do you navigate them in using the app with probably negligible connectivity?

The mindset shift to smartphones among farmers is being driven mostly by their children, who are aware of basic smartphone features and use WhatsApp. Moreover, the apps are meant to work even at low 2G connection and offline as well with downloadable content.

"Our app works offline as well and the size is less than 8 MB. We have given tremendous attention to its user interface based on multiple interactions with farmers," adds Sheth.

Once the farmer downloads the app, AgroStar team calls them to guide on how to search the products, how and where to click etc. There were three key discoveries during the interactions that Sheth observed.

First, farmers don't understand the search option. Hence AgroStar removed it. Second, they tend to continuously scroll down the screen. So AgroStar instead of putting the most important thing right on the top of the page, took it to the second page. Third, farmers don't usually have the patience to read lengthy content about a particular problem. So it was reduced to its crux.

AgroStar uses image recognition technology to offer solution on the infected crops. It has repository of images for major crop diseases that are 90 per cent accurate to the pictures that farmers share of the infected crop.

"In the cotton season, we saw that 80 per cent of cotton has five-seven diseases. Farmers can share the picture of the crop based on which we can suggest them the products to solve that problem," claims Sheth.

More than the cost advantage, it is the clarity on pricing that farmers and retailers often grapple with. For e.g., in consumer market, the pricing for X commodity for up to 15 days of the season's beginning is expensive and when the season nears its end, the prices again go steep. This means in between, that is 75 per cent of the season, the price remains almost static.

"With Paalak.in if a farmer is supplying for e.g., bottle gourd between January-February, the prices are not going to change. In the market, if I take the median at Rs 10 then the farmer might end up transacting between Rs 6 to Rs 12. But we keep the prices static at Rs 10," explains Tripathi.

Another issue is that of seasonality of crops but since agritech start-ups partner with farmers which are into multiple types of crop farming, it doesn't remain extremely cyclical.

"For vegetables, farmers would need machinery almost every second month while for wheat it is November to April cycle and for rice it is June to November. So, in 12 months of time, around 10 months we are working with full capacity. There are not more two months when machinery is not in use," maintains Sanghera.

In a country where 78 per cent farmers are small and marginal who probably can't afford three-time meal in a day, it is tricky to understand how they will adopt even the "affordable' technology available. And that seems a long, really long road ahead.

(This article was first published in the May issue of Entrepreneur Magazine. To subscribe, click here)

Sandeep Soni

Former Features Editor

Side Hustle

These Coworkers-Turned-Friends Started a Side Hustle on Amazon — Now It's a 'Full Hustle' Earning Over $20 Million a Year: 'Jump in With Both Feet'

Achal Patel and Russell Gong met at a large consulting firm and "bonded over a shared vision to create a mission-led company."


How to Harness the Power of Authentic Storytelling to Become a More Effective and Inspiring Leader

Storytelling enhances business leadership by inspiring a culture of authenticity and trust through sharing relevant personal stories.


Want to Be More Productive? Here's How Google Executives Structure Their Schedules

These five tactics from inside Google will help you focus and protect your time.

News and Trends

Niyogin Fintech Limited Acquires "Superscan" from Orbo.ai

This strategic acquisition showcases Niyogin's commitment to spearheading digital transformation and encouraging the widespread adoption of cutting-edge technologies.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.


5 Ways Solopreneurs Can Scale Their Business Through Collaboration

Our culture loves to perpetuate the myth that entrepreneurs must go it alone. But for many, the path to success is found in collaboration.