The Promise of Agri-Tech: Food for 1.32B and Beyond

A millennial today may probably consider the iPhone or Instagram to be one of the most important inventions by mankind. But the human race actually surged forward when we learnt to organise ourselves in societies, cultivate crops and domesticate animals. In essence, Agriculture was one of the first and most important inventions of our time. It was also at this stage that humans began to form communities, assign work-roles and in effect, a lot of brain development also happened after this inflection point.

Kalaari Capital is a technology fund that primarily invests in Indian market opportunities and looks for companies solving uniquely Indian problems. If you had asked us five years ago, if we would be looking to invest in Agritech seriously, I would have probably said, “I don’t think so”.

Over the last two years, we have been looking at how technology can be applicable to an age-old sector, like agriculture. There aren’t necessarily new problems in this sector but there are many fundamental problems. It is good to see how much energy, enthusiasm and passion has come up in this sector.

Kstart’s recent event, “The Promise of AgriTech” was an initiative to bring all the key stakeholders in the AgriTech space under one roof. The event saw participation from over 250 attendees who interacted with over 40 mentors and speakers. This action packed line up consisted of industry veterans, executives from large corporates, tech start-up founders to investors and founders, who added value by sharing their respective insights in the space. You can find more details about the event here.

What will the agriculture of tomorrow look like?

Siva Sivakumar, Group Head Agribusinesses and IT, ITC delivered the keynote session and spoke about the current trials and tribulations as well as the aspiration of different stakeholders — end consumers, farmers and society at large — in the Indian AgriTech ecosystem.

Based on his deep understanding of the space, he believes three main shifts will happen in the Agriculture of India’s tomorrow.

The Agriculture of India’s Tomorrow: S Sivakumar

1. Farms as factories — Precision farming, climate resilient farming will enable farms to produce massive outputs, at par with factories.

 2. Homes as farms — kitchen gardens, community gardens will help communities have better quality control and serve their own needs.

 3. Agriculture will go back to basics — From mono-cropping to poly-cropping and integrated farms. Pisciculture, animal husbandry, beekeeping and other activities will be practiced in tandem with cultivating a variety of crops.

Corporates initiatives fuelling Indian AgriTech

In a panel discussion moderated by Mark Kahn, Founding Partner at Omnivore Partners, the panelists — Sanjay Sacheti, Country Head — India Region at Olam Agro India; Nitin Puri, Senior President & Head — FASAR, Yes Bank; Sagar Kaushik, COO at United Phosphorus Ltd and Himanshu Goyal, India Leader, The Weather Company- discussed what start-ups and corporates could do to fuel innovation in Indian AgriTech.

Corporate Initiatives fuelling Indian Agritech: Himanshu Goyal, Sanjay Sacheti, Nitin Puri, Sagar Kaushik, Mark Kahn ( from left to right)

While start-ups may not have the vast financial resources that corporates do, Himanshu noted that startups had the advantage of being able to set up agile teams and solve problems that corporates can’t. Sagar echoed these sentiments and added,

“Start-ups need to look at invisible needs that are much more felt. A lot of new innovations are needed in AgriTech space.”

From his experience, Nitin observed that it is generally difficult to incubate innovations within large corporates. Start-ups on the other hand can be nimble and innovate more quickly. Hence corporates are generally on the lookout to partner with or invest in a start-up that are solving problems in unique ways. Nitin believes that the next start-up unicorn in the AgriTech space will operate at the convergence of four segment- supply-chain, traceability, fintech and e-commerce.

How to scale your agritech start-up

Shardul Sheth, Promoter-Director of Agrostar.in and Taranjeet Singh, Founder and CEO Of Agnext Technologies shared their personal start-up journeys and described in detail how they took their start-up from the inception stage to market-fit to scale. Shardul noted,

“To be able to successfully sell to farmers, we created a digital experience as close to a retail shop as possible”

A major challenge most e-commerce players generally face is last mile deliveries. Since most of Agrostar’s customers were based in remote villages, India Post was the only delivery service which had last-mile access. Therefore, Agrostar tied up with them for deliveries but ran into one more roadblock.

In extremely remote areas, India Post would refuse to do last mile deliveries and instead asked farmers to come to the post office to pick up their packages. So, Agrostar decided to solve this pain point by starting their own last mile delivery service, Agro-Ex, which Shardul described as Agrostar’s version of Amazon Prime. This model worked for out as it led to faster deliveries, lower returns and in-effect happier customers.

Tales of Scale- Shardul Sheth

Some of the key takeaways from his talk:

1. Know your customer(KYC)- To get a better understanding of needs of end customers, Agrostar’s UI/UX and tech teams went to villages and spent time with farmers to understand user behavior and feature requests. They realized that farmers like sharing selfies and pictures of their harvest with others in their network. So, they launched a social network for farmers to connect with each other and it has been a hit, so far.

 2. Keep iterating and be patient- Get feedback from end customers and keep tweaking the offerings.

 3. Don’t scale till you have a product-market fit and avoid selling at a loss at all costs.

 4. Keep building symbiotic partnerships- When Agrostar started, the founders visited every big agri-chemical player in India and were asked to return in three years, when they had made more progress and a name for themselves. The founders kept meeting these companies every year, showcasing their progress and iterating on the mutual benefits of a partnership, this approach led to multiple fruitful partnerships much sooner than was expected.

Investor’s Take

Hemendra Mathur, Venture Partner at Bharat Innovation Fund moderated a session on the increasing interests of strategic and VCs in the Agritech space. Ritu Verma, Managing Partner at Ankur Capital, Mark Kahn, Founding Partner at Omnivore Partners took part in the discussions.

Investors’ Take: Keep the $$ Flowing- Hemendra Mathur, Mark Kahn, Vani Kola, Ritu Verma (from left to right)

All the panelists agreed that there is a tremendous promise and opportunity to build something of significant scale and of sustainable economics in the Agritech space but it is yet to be proven as there are no real market leaders in the India Agritech space, yet.

Affordable and more accessible technology has also made it easier to build a product at scale, reiterate and keep building. But, the consistency of regulations (water, electricity) does not exist in India today to do anything revolutionary (in terms of Solar and other sectors). Hence, a lot of partners need to collaborate and build processes to overcome many of these barriers.

How AI & Blockchain can transform agriculture

Transforming Agriculture with AI & Blockchain- Sriram Raghavan

With its complex value chain components — from the farm to the consumer’s plate — Agriculture presents a huge opportunity to be rebuilt. Given India’s complexity, a myriad of tailor-made solutions may be needed to address specific use cases. However, Sriram Raghavan — Vice President, IBM Research & CTO IBM India, believes that globally validated technologies like Artificial Intelligence (AI) and Blockchain can provide platform level solutions that solve for more general problems and enable more specific solutions to be built on them.

The two major problems faced by the agriculture sector include low productivity and lack of visibility through the supply chain. IBM sees IoT, blockchain & AI, serving as a foundation for solving these problems and for further innovation in AgriTech. Using AI to fuse data from multiple satellites, IBM is able to locate underperforming patches of the crop at nearly the same accuracy as that of the on-ground Internet of Things (IoT) sensors. For one of their clients in South East Asia, IBM was able to predict crop stress in a region due to pest/disease contamination, which then took the on-ground team several hours to just reach.

Policies impacting the future of Indian Agritech

Prof. M. Moni, Advisor(IT), Agriculture & Farmer’s Welfare, Government of India went into detail about policies impacting the Future of Indian Agriculture and the needs of the hour. He reiterated the need to leverage on a mix of emerging and existing technologies for effective and inexpensive Information and Communications Technology(ICT) penetration for productivity in the farming sector.

Prof. M. Moni also addressed various issues that Indian farmers face and the need for Digital Inclusion through Digital Network for Farmers(DNF) and Farmers Welfare e-Governance Architecture. He noted,

“We have Digital India, Make in India, Start-up India, Skill in India but nothing converges at the farm level. This is important. We have to have a policy and support system for farmers.”

Policies Impacting the future of Indian Agriculture- Prof. M Moni

To keep the innovation engines going, he believes that India needs,

 1. 3500 start-ups in farming.

 2. 6500 agritech start-ups to serve 130 million farmers.

 3. Introduction of IT in agriculture, which can in-effect bring 1% GDP growth.

The time for Indian Agritech is now!

Vani Kola, MD, Kalaari Capital

Compared to the developments and mergers globally, it may be fair to say that India is lagging behind many developed markets like the US when it comes to agritech. But there are multiple silver linings. Companies like Jain Irrigation, UPL and Mahindra have made it a point to adopt new technologies that have a chance of bringing disruptive value such as augmenting farmer income and building efficient supply chain networks. Since the green revolution, India has also become the world’s largest exporter of cereal products, cotton and sugar.

As they say, it takes a village to raise a child. In a similar manner, I think it is really important to create an ecosystem where influencers and mentors can nurture these AgriTech innovators and entrepreneurs. In recent times, farmers too have become more open to learning, after seeing first-hand the impact that technology can have on their livelihood. A collaborative ecosystem is thus emerging and we should look to enable the new Green revolution 2.0 that is unfolding.

Acknowledging Harshith Mallya, who contributed to this article. Harshith is a Kstart Fellow.

Disclaimer: Views represented in this blog are personal and belong solely to the author and do not represent the views of Kstart or Kalaari.