INDIAN AGRI TECH

Context

Key points 

• This report presents the current state of Indian agri-tech in India.
• It highlights emerging opportunities in this field.
• It also recommends a way forward for Traditional agriculture companies to succeed across the agriculture value chain Agri-tech start-ups to address the stiff competition ahead.

Agri-Tech startups 

• Start-ups are driving India's agri-tech innovations and investment story with significant private equity inflows.
• Start-ups will need an acute focus on profitability to survive an emerging "battle of platforms" as several of these players now compete for farmer attention.
• This situation will be exacerbated by a funding slump in the medium term amidst an overall slowdown in global investment activity.
• Innovative global start-ups need to be responsible for addressing systemic barriers and building the critical ecosystem required to scale the agri-carbon market.

Technology

• While the first wave of Indian agri-tech focused on market linkages, several mature, late-stage start-ups are now becoming "full-stack" platforms, including value-added services such as agri-fintech in their core offerings.

• Climate change has intensified the focus on agri-carbon innovations.
  Technology has irreversibly disrupted the traditional agricultural value chain from how farmers access information and inputs to how they grow and sell their produce.
• Stronger need to adapt to this digital transformation of agriculture.
• Investments in in-farm innovations, including artificial intelligence (AI) and Internet of Things (IoT) solutions, robotics/ drones and farm management software, have been growing exponentially.
• The government is playing a key role in the continued mainstreaming of agri-tech in Indian agriculture, through supportive policies in each of these emerging categories.

Traditional Agriculture companies

• The report highlights that while traditional agriculture companies lag in most categories, large agrochemical players benefit from in-house R&D and a greater investment capacity.
• They are therefore ahead in developing, producing and marketing sustainable and specialized inputs such as bio-fertilizers and organic fertilizers.
• However, traditional agriculture companies focused on the upstream and midstream value chain, including in-farm mechanization solution providers, lag behind start-ups in most other agri-tech innovation categories.
• Traditional agriculture companies must embrace technology to succeed
• Whether they double down on their strengths or expand into adjacencies, they will need to develop a few core digital capabilities such as data analytics and digital farmer networks.

Why agri-tech innovations are required?

• Agriculture accounts for an estimated 43 per cent of India's employment.
• Despite its importance to India's economic and social development, the sector is fraught with challenges.

• Agri-tech innovations can address many of these challenges by making better information and technology available to farmers.
• This will in turn provide opportunities for to farmers improve their incomes and engage in more sustainable food production.
• India's agri-tech advancements, if utilized correctly, present an excellent opportunity for sustainable and equitable growth, ensuring not only profitability for agribusinesses but also improved livelihoods for farmers.
• Agritech startups have great potential in India highlighting that agritech startups can steer the shift from government-controlled agricultural markets toward more demand-driven digital markets.

Key highlights 

• Globally, India is competing with the US and China in the agri-startup space.
• According to AgFunder, India witnessed an increase in funding from $619 million in H 1 2020 to $2 billion in H1 2021, behind the US ($9.5 billion) and China ($4.5 billion).
• An Ernst & Young 2020 study pegs the Indian agritech market potential at $24 billion by 2025, of which only 1 per cent has been captured so far.
• Currently, it is estimated that there are about 600 to 700 agritech startups in India operating at different levels of agri-value chains.
• Many of them use artificial intelligence (AI), machine learning (ML), internet of things (IoT) etc, to unlock the potential of big data for greater resource use efficiency, transparency and inclusiveness.
• The pandemic helped them catapult and the 2020 farm laws can give them a further boost by providing a legal framework to work with the farmers through FPOs, co-operatives and other collectives.
• Some startups in the marketing space are empowering farmers and small agrifood operations and giving consumers a better deal.
  Ninjacart, Dehaat and Crofarm (Otipy) are a few of the many startups that are redefining the agrifood marketplace.
• The novelty of startup-led value chain transformation is not limited to empowering farmers but also co-opting local grocery, mom-and-pop and Kirana stores as well as small agrifood businesses that are an integral part of the agrifood ecosystem.
• At the same time, the startup network can leverage the bigger front-end players who demand bulk quality produce and have challenges in directly linking with farmers.
• This is in contrast to the earlier organised retail (big box) wave that emerged in the mid-2000s, wherein the livelihood of unorganised retailers and small businesses was perceived to be threatened.

 Agritech startups have a growing footprint

• Dehaat is present in Bihar, West Bengal, Odisha and Uttar Pradesh, working with 6, 50, 000 farmers through 1, 890 Dehaat Centres.
• Dehaat Ninjacart sources fresh produce from farmers and supplies to retailers, restaurants, grocery and Kirana stores and small businesses and is operational in nearly 11 cities.
• With a farmer network of 10, 000 plus, Crofarm has served more than 1 lakh consumers and 5, 000 businesses.
• Otipy has emerged as one of the popular app-based platforms with nearly 2 lakh customers and more than 8.25 lakh mobile downloads.
• It currently works with 10, 000 plus resellers in Delhi NCR and is also present in UP, Gujarat and Himachal Pradesh. About 70 per cent of the resellers are women.

Impact 

• Ninjacart reduced wastage to 4 per cent compared to up to 25 per cent in traditional chains through a demand-driven harvest schedule.
• Logistics optimisation enabled delivery in less than 12 hours at one-third the cost in traditional chains.
• Farmers' net incomes are reported to have increased by 20 per cent.
• Dehaat has enabled up to a 50 per cent increase in farmers' income as a result of savings in input costs, increased farm productivity and better price discovery.

Important Terminologies 

Prelims & Mains Perspective