Facebook’s $5.7bn Reliance Jio deal will make it an even bigger player in Indian agrifood

Facebook is investing ₹436 billion ($5.7 billion) in Reliance Jio, India’s largest mobile network operator, in a deal that will have significant implications for the Indian agrifood ecosystem.

The US tech giant is buying a stake of 9.99% in Jio Platforms, a subsidiary of the Reliance Industries conglomerate that brings together Jio’s range of mobile apps and digital services, including its 4G network.

Reliance claims it’s the largest investment ever made by a tech company in return for a minority stake, as well as the largest foreign direct investment deal in India’s tech sector to date.

With a foot in the door at Jio, Facebook gets more of what it desires most: users and their data. Jio had almost 371 million subscribers as of last December, according to the Telecom Regulatory Authority of India.

Clearly, the deal to acquire just under 10% of the Indian telco is about a lot more than agriculture and food supply chains. But its impact on the sector could be massive.

In a statement announcing the investment, Reliance said that Jio’s “vision is to enable a ‘Digital India’ for 1.3 billion Indians and Indian businesses, especially small merchants, micro-businesses, and farmers.”

With Facebook on board, Jio’s “focus will be India’s 60 million micro, small, and medium businesses, 120 million farmers, 30 million small merchants, and millions of small and medium enterprises in the informal sector,” it continued.

Smallholder WhatsApp groups

Facebook is already a major player in India’s agriculture space. Its flagship social network and messaging app WhatsApp – which has 400 million users in the country – are arguably the most widely-used tech tools among Indian farmers, who use both platforms to form groups, share knowledge and information, and exchange ideas.

Take, for example, Hoy Amhi Shetkari (HAS – meaning ‘yes, we are farmers’ in Marathi). It started out in 2012 as a WhatsApp group for smallholders in the south-west of Maharashtra state, set up by banker-turned-farmer Amol Patil and agriculture PhD Ankush Chormule. In June 2015 they added a Facebook group; they later launched a YouTube channel.

Today, the organization operates over 70 WhatsApp groups and a news portal, and runs regular field workshops across Maharashtra. It has begun to expand to neighboring states too. As of June last year it was engaging with over 600,000 farmers, according to The Economic Times.

Enabled by HAS and Facebook technology, several smallholders have made names for themselves as trailblazers among India’s farming community.

Maharashtrian farmer Ganesh Babar – a member of the HAS Facebook group – was the first to sound the alarm on the arrival of fall armyworm in the state. He used his phone to send in photos of his crops, which he suspected of being affected by the destructive pest after reading an article from HAS.

When it comes to tech, Southeast Asian smallholders still prefer WhatsApp to niche farming platforms. Find out why here.

Vijay Magdum, a smallholder from the neighboring state of Karnataka, shared his successful approach to increasing sugarcane yields with fellow HAS group members. His planting method  – which calls for alternating distances of 4.5 feet and 7 feet between each row of sugarcane plants – has enabled smallholders to produce up to 100 tonnes of the crop per acre.

Rajesh Bagal – who became the first farmer in his district to hit that yield milestone after joining HAS and implementing know-how received through WhatsApp – told the Times that he now has friends all over the country.

“People recognise me as a progressive farmer, which could happen only because of coming into contact with […] the entire HAS team through my smartphone,” he said.

It’s a story replicated all across India. WhatsApp groups run by Baliraja inform members about pesticide and fertilizer use, as well as other farming technologies. Beyond the farm gate, another group – Anna Arogya (meaning ‘food for good health’ in Kannada) – shares tips on organic food and sustainable agriculture. Farmers and food merchants alike – from mango growers to mums grinding their own masalas (spice mixes) – are using WhatsApp and Facebook to sell their wares.

Farmer apps and digital payments

Other than enhancing Facebook’s access to the millions of farmers and food merchants who already use its apps, the investment in Jio Platforms will add further strings to the US company’s bow.

Jio launched a farmer-centric mobile app, Jio Krishi, earlier this year. It provides smallholders with advice on precision farming techniques and assists them with making data-driven decisions on things like planting, irrigation, and pest control. By entering information about their own operations into the app, users receive tailored alerts on weather conditions, irrigation timings, and pest problems in their area.

This means that Facebook could potentially find itself with an invaluable trove of agricultural data on its hands, not only allowing it to target farmers with personalized services but also opening the door to partnerships with large agribusiness and agritech startups.

But the biggest prize for Facebook is farther downstream. Facebook has been looking to launch a payments platform on WhatsApp in India for some time, obtaining regulatory approval to do so earlier in the year.

The US company has sensed the opportunity in getting the country’s millions of ‘kirana stores’ (ie, small neighborhood kiosks selling everyday food staples and groceries) conducting commerce through its messaging platform, which is already in widespread use among them.

Moreover, Jio is in the midst of launching its own e-grocery portal, JioMart. Reliance Retail, the conglomerate’s arm with oversight of JioMart, says the platform has been “built in partnership with millions of small merchants and kirana shops to empower them to better serve the needs of Indian consumers.”

Concurrently with Facebook’s announcement, Reliance Retail yesterday unveiled a strategic pact with WhatsApp, under which the pair will “work closely to ensure that consumers are able to access the nearest kiranas, who can provide products and services to their homes […] using WhatsApp.”

A $5.7 billion bargain?

All in all, Facebook and Reliance Jio will be present at almost every point in the Indian agrifood ecosystem – from providing services to smallholders to handling payments for distributors and grocers.

Some won’t be meeting this with much fanfare. Among them is Paytm – the homegrown digital payments giant backed by Alibaba and Softbank – which currently dominates the market, as well as rival e-grocers like Bigbasket and Grofers. Fellow US tech players Amazon and Google have also been quicker off the mark than Facebook, having already launched their own payments apps in India. Facebook, after all, has something of a reputation for being late to the party – whether joining in with the smartphone revolution a decade ago, or its reactive response to the Cambridge Analytica data scandal. Some may also ask questions about why this mega-deal involving a deep-pocketed foreign entrant is being allowed to go ahead in a country known for its past protectionist tendencies.

Despite this, the opportunity – on paper, at least – for Facebook in this market of over 1.3 billion people is pretty much unmatched. It arguably has a stickier presence with Indian users than some of the other players, thanks to WhatsApp – which, as we’ve seen, is used across the agrifood vertical, and not just towards the consumer end. There’s plenty more room for further smartphone penetration, which stood at about 25.3% of the population in 2019; while the number of internet users in rural India stands at about 33%, with an annual growth rate of 35%. With that in mind, the $5.7 billion price tag could prove to be a bargain.

Have you got a different view on how Facebook and Jio will impact India’s agrifood sector? Share your thoughts with me at [email protected]