Agritech — Making Indian Farming Profitable

October 3, 2022

Agritech — Making Indian Farming Profitable

Small and marginal farmers in India face a myriad of wicked challenges, as they do elsewhere in the world, that keeps them on the cusp of poverty. With close to 100 million farmers spread throughout the world’s 7th largest country, it’s critical that their issues are addressed in a systematic, and thoughtful way. In pursuit of this, the next wave of entrepreneurs have begun developing Agriculture Technology (AgriTech) companies. These startups use digital technologies, such as Artificial Intelligence (AI), Machine Learning (ML), Big Data, Image Analytics (IA), Internet of Things (IoT), and novel business models such as Software as a service (SaaS), to disrupt the agriculture ecosystem and transform the lives of Indian farmers.

Indian Agriculture — Turning Challenges into Opportunities

So how big is the challenge faced by farmers? India’s agricultural sector accounts for 16% of GDP, providing more than $500 billion to India’s economy, and employing over a hundred and fifty million people. After China, India is the second largest contributor to Agriculture in the world.

Despite their critical contribution to the economy, 86.2% of farmers in India are small and marginal, with land holdings of less than two hectares, and earning less than $150 a month. They have limited access to technology, inputs, credit, capital, and markets. Compounding these major issues, farmers also face:

Photo by Deepak kumar on Unsplash

Genesis and Growth of Indian Agritech

Over the last decade, Agritech startups, geared towards solving these key issues, have flourished. These cover a range of areas, from B2B Agri marketplaces and rural fintech products, to farm-to-fork brands which simplify the rural supply chain and enhance warehousing infrastructure. The National Association of Software and Service Companies (NASSCOM) reports, that in 2019 there were more than 450 Agri startups operating in India, with an estimated 25% growth year on year, today there are more than 1500 according to Tracxn.

Ernst & Young (EY) states that the market potential of Indian Agritech startups is estimated to grow to USD $24 billion by 2025. With multiple untapped market opportunities, growing interest from global investment, and increased government support, are all expected to drive Agritech’s growth over the next decade.

* Funding figures as per Entrackr data

As per Entrackr’s data, Indian Agri startups closed 37 deals worth $155 million in 2020, 58 deals worth $636 million in 2021, and 44 deals worth $539 million this year, with more expected in the 4th quarter of 2022.

Reshaping the Lives of Farmers!

Photo by cubicroot XYZ on Unsplash

Agritech startups are changing the way agriculture is traditionally done at every stage of the value chain.

Precision agriculture and Agri advisory Startups are improving productivity through weather, soil health data, and scientific agronomy advisory. Guiding farmers with systematic agriculture practices based on real context, and identifying pests and diseases on crops through Image Analytics. These help farmers improve crop yields by up to 30%.

On the Agri-inputs side (seeds, pesticides etc.), output market linkage and supply chain optimisation enable farmers to achieve better returns through transparent online price discovery for inputs and outputs. Forty percent of produce gets wasted due to a lack of proper transportation and storage facilities. Startups are working on improving the efficiencies of agri supply chain to reduce food wastage, thereby improving productivity and increasing farmers’ income. Integrating technology with physical infrastructure removes several layers of intermediaries, thus bringing better price realization across the Agri value chain. It’s a win-win scenario for both farmers and consumers.

Traceability and quality management startups offer incentives and better prices to farmers for high-quality produce.

Financial services startups make Agri credit accessible to farmers at minimal interest rates in a transparent manner to meet their cultivation costs. They are also providing crop insurance to compensate in case of weather calamities and pests & diseases.

The government has also provided heavy support for drone usage in Indian agriculture. It’s supporting farmers with subsidies to rent low-cost drones for crop monitoring and spraying fertilizers and agrochemicals. Drones and Farm Equipments rental startups are helping small and marginal farmers to avail implements and costly equipment on a pay-per-use basis.

AgriCentral Impact on Farmers

AgriCentral, part of Jiva Ag, is a farmer services platform which provides farm management practices, delivers daily prices for the largest collection of commodities in the world, and sells Agri inputs through e-commerce. Its every offering is centered around minimizing the cultivation costs and increasing the profitability for farmers. Through insightful digital services, it aims to improve the lives of India’s 90+ million small and marginal farmers.

A few of the key features the platform supports, are:

Subham, an AgriCentral farmer from Niwari, Madhya Pradesh state in India was able to negotiate significantly better prices for Groundnut and Wheat at Rs. 4,400/quintal and Rs. 2,100/quintal respectively. In selling his crop, Subham earned more than USD $2300 ($200 month averaged out). This is 40% higher than the average farmer income.

Another of our farmers Nagabhushan, from Anathapur which is a drought-prone district in Andhra Pradesh, was successfully able to cultivated corn by following AgriCentral’s Smart Farming practices. Despite the often challenging conditions, Nagabhusan was able to produce a very high yield of 42 quintals (4.2 metric tonnes) per acre; roughly 10MT / hectare which is close to the maximum that can be achieved in lab conditions. However, not only did he achieve a much higher yield, he also reduced his costs of cultivation at the same time, ultimately resulting in a far higher profit margin.

Parting thoughts

In the past, the aforementioned critical obstacles have prevented Indian agriculture from reaching its full potential. However, the recent surge in Agritech startups, and the accelerating adoption of digital technologies will play a major factor in solving these age old issues. We must make sure that there is more and continued investment in agritech if we want to continue to fuel innovation, drive supply chain improvement, and ultimately rebalance the profit share and uplift livelihoods of farmers.

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