Five Trends in Agritech Innovation in India to Watch Out for in 2017

February 6, 2017

Editor’s Note: Hemendra Mathur is agribusiness investment lead and venture partner at Bharat Innovations Funda new $150 million early stage fund with a focus on agtech, cleantech, health-tech and enterprise-tech ventures. Mathur previously worked at SEAF India Investment Advisors and Yes Bank. 

Here Mathur writes about five trends in agritech innovation to look out for in India in 2017.

The year 2016 saw the Indian agritech ecosystem evolve as many startups furiously developed solutions for the Indian and global agriculture industries. Interestingly, several entrepreneurs innovating in agriculture hailed from non-agricultural backgrounds, driven to create sustainable solutions for the industry based on clear need and opportunity. Last year we also saw the beginnings of institutional investor interest in backing early stage companies such as Nubesol, BigHaat, MeraKisan.

We believe the sector will gain further momentum in 2017. Given the state of the agricultural supply chain, we expect to see the development of innovations throughout the chain, although we believe process innovations will precede product innovations. Farm produce aggregation, farm automation, farm management solutions, organic farming, and cattle farming are examples of process innovations. Product innovations include soil inputs to increase productivity, devices for the spectral analysis of soil and crops, sensors and IoT for precision agriculture.

The ability to manage the long and complicated agricultural supply chain in India with the right technological interventions will be the key to the success of start-ups.

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This year could well be the inflection point for investment in agritech resulting in a greater number of deals as well as increased participation from mainstream VC funds; the mainstream VCs that have been bullish on food e-commerce startups are already in the process of evaluating several agritech deals. Tech-enabled supply chain models for aggregation as well as precision agriculture are likely to have higher share in the number of deals.

Looking at the opportunities in the sector from an investor’s standpoint, here are five trends in agritech innovation we believe will drive the sector in 2017.

1. Farming-as-a-Service

“Farming as a service (FaaS)” is a concept introduced to India by a company called EM3 Agri Services, which offers farming services and machinery rentals to farmers on a pay-for-use basis. Impact investment fund Aspada invested in EM3 in 2015. The concept has caught on and there are other agriculture equipment leasing and farm services startups in the space including Goldfarm, Ravgo, Oxen Farm Solutions, and FarMart. The average farm holding in India is 1.2 hectares, compared to several hundred of even thousand across Europe and the US, meaning the farmers have less income to invest in equipment like irrigation pumps, storage solutions, and so on. FaaS variabilizes the cost of farming and reduces the need for capex making it relevant to small farm sizes and affordable to small and marginal farmers.

2. Big Data for improving farm productivity

Farm productivity in India is one third to one half less than the world average. This is in part due to poor soil health. Soil analyses show the NPK (Nitrogen, Phosphorus, Potassium) ratio of Indian soils is significantly skewed in favour of N due to high usage of Urea. Developing farm-specific, data-driven diagnostics to determine soil health is a big opportunity area as well as biotechnological solutions to help improve soil health like soil amendments. There are also a growing number of big data technologies aimed at improving the efficiency of farming and in supply chain such as drones, sensors, and other IoT technology, and data analytics to provide decision support to farmers and other players in the supply chain. CropIn, AgRisk, AgNext, Skymet, Stellaps, and Airwood are some of the examples that are working on this theme.

3. Market linkage models for farmers

Indian agriculture is supply driven and less market-driven compared to other markets. This is the primary reason for seasonal food inflation as well as significant food waste and value loss along the supply chain. Though demand is becoming more predictable in India given the homogenization of consumption trends, supply is less predictable.

A farmer’s decision on which crop to plant each year is often driven by the price of that crop the previous year. Government policy in supporting the price for certain crops also plays a role in that decision. This presents an opportunity for developing market linkage models for farmers. This in turn could require innovations to help farmers with the timely and accurate estimation of sowing and harvesting in the context of patterns in consumer demand. The way forward will probably be hybrid models involving Big Data and Aggregation. Sabziwala, MeraKisan, Dehaat are some of the start-ups who have demonstrated successful aggregation in horticulture.

4. Fintech platforms for farmers

About one-third of the financing received by Indian farmers – approx. $60 billion – comes from non-institutional sources. Though the number of institutional funding sources is growing, there is an opportunity for fintech to improve the landscape for funders by providing them better intelligence about the farmers they’re lending to and farm credit-worthiness. Most fintech startups in India have focused on urban areas until now so it is time to look the at rural opportunity to make farmer financing more efficient, and therefore more available to the industry.

The Government of India’s decision to demonetize its currency in November 2016, and the consequent impact that had on agricultural trade due to a lack of liquidity, has also highlighted the need for agricultural trade to go digital. The majority of farm income is in cash, presenting an opportunity for digitizing payments to farmers through payment gateways linked to their accounts. Given increasing penetration of smartphones among farmers, this could come in the form of apps and platforms that connect farmers digitally with rest of the trade. Apps in vernacular languages, high on simplicity and safety, is the way to scale.

5. Supply chain models for dairy and horticulture

The dairy and horticulture industries are growing faster than the grain industry in India. Milk production in India is approx. 150 mn tonnes and horticulture production is approx. 270 million tonnes. For the first time in Indian history, horticulture production has outpaced food grain production.  There is need to optimize these supply chains for both milk and horticulture. Solutions that can preserve the quality, reduce waste, improve traceability, and improve shelf-life efficient aggregation, transportation and storage, are in need. Farm to consumer milk supply chain models, such as LaVeda, Farmery, Puralite, and 4S Foods have been able to innovate supply chains and scale up at a city to regional level.

Investment across the agricultural supply chain in India has averaged around $250 million each year for the last five. We expect this to gain momentum with more focus on the above five trends in agritech innovation. Indian agriculture is set for a big leap forward in 2017, with an infusion of capital and high quality entrepreneurial talent focused on scaling up innovations.

Are you a startup innovating in food and agriculture? We want to hear from you! [email protected].

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  • Correct me if i am wrong, but main issue with crops is water and market price.
    1) If you dont have water from canals, you can grow max. 2 crops, while, atleast 3 crops are required to achieve something. Regions which dont yet have canals are in this category along with point no. 2)
    2) The price of crop after harvest is even below the cost incurred. Not to mention labour rates are higher than ever before and even with farmers themselves harvesting and doing other work (due to alternate labour work available, very few are willing to work on farms), they still arent able to reap any money in the end.
    Storage is not an option as they need immediate cash (you may argue for storage system in villages but they are always running for cash, they already have on credit their seeds, fertilizers, pesticides, etc.).

    I request if someone can disrupt supply chain eliminating middle men with storage infra (the ones who have cold storage facilities, using it to jack prices just b4 harvest is about to happen (when market is out of supply)), that would solve a lot of problems as diff. b/w end user price and farmer price is reduced. The solution to this was cooperative network (similar to dairy system we have in gujarat) but even that isnt alien to nexus/corruption. Farmers can leverage if u have a cooperative structure for farm produce (this makes it equivalent to US scenario where ppl hold hundrerds of hectares of land)..a startup in that could bring some long term results.

    • One solution to improve farmer’s income is to aggregate and sell/buy through a Farmers Producers Organization. Though government is pushing this concept it has not really taken off in the true sense.

    • Honb. Hemendra Mathura is righteously mentioned “Product innovations include soil inputs to increase productivity,” and of course water storage and supply. To takle runoff of, hard metals, arsenic and toxic too need to be checked. In process to address such problem for arable, non arable land sand, desertation check . Invented the liquid nano mineral clay which start converting sand into soil within three hours and secondly Zoom hydro ball with the help which absorbs more the 800 times of water of its molecular weight. Thereby reducing the requirement of water for irrigation. Areas with less water, crops dependent on rainfall are highly benefited as zoom ball not only absorb large quantity of water but also absorb the nutrient inform materials, fertilizer pesticides etc and maintains the moisture for longer time, reducing the thermal conductivity of soil, limiting the total desolved solids, eroding heavy metals, increasing ground water and storage, reducing the compactness of soil, soft tillage and target agriculture, increase the crop yield, can be applied for any crop, suitable for acid and alkaline both, balance the pH, slow release of all type of exogenous mineral, micronutrients, fertilizer, pesticides etc thereby effective result for longer period with less quantity. Zoom ball is effective for three years of period in peak, total life span of 17 years after single application. Minimum water storage and release is for 26 to 30 days with normal irrigation. Release of water at minimum 18 degree delicious or less then 8% moisture on table. Increase the buffering and leaching naturally.
      Since Zoom ball is prepared through hetero polysaccride (plants) is natural without any chemical process and interference. Similarly liquid nano mineral clay is also made from natural inert minerals and does not have any chemical composition, process or interference therefore free from arsenic and toxic effects etc. It also does not disturb or hinder the natural secondary process of soil of earth metrials. 52 Ground trials on 18 different climatic and agro zone conducted on all major crops, horticulture and floriculture. Tested on all possible, popular agri techniques . Easy application teqnique and economical then any other product . 26 years of long research and study finally Applied for patent.
      To know more please call+91-9829289782 or mail : [email protected]

  • Interesting updates by Mathur including the one in March 2017! As a a Dutch investor in Food Business we are keen on reading this of course as it is educating the audience and pointing towards opportunities!

  • Wow amazing article dear, I found what I was looking for, thanks for sharing this information


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