Why Agritech Industry is Growing in India
Traditionally, agriculture was looked at as the government's responsibility but now there are more players recognizing gaps in the value chain and finding ways to improve this segment. There is a movement of talent growing in the agri zone to address these gaps, which is the reason that the agritech sector is booming in India.
According to a joint study on India's post-pandemic agri landscape by Accel Partners and Omnivore, about 85 percent of agritech startups across the value chain recorded an increase in demand for their products and services during the lockdown.
The lockdowns and the uncertainties and a shutdown of the age-old business module gave way to online mandis and a host of e-commerce platters at every level. Agritech swiftly and surely is shaping the agricultural economy for a tech-led more progressive future. There is a whole new paradigm shift from traditional and analog markets to highly interactive, and innovative online marketplaces.
Impact of COVID on Agritech Industry
During the first wave of the pandemic last year, farmers were struggling to purchase inputs right ahead of the harvest season. Because of the lockdown, access to marketplaces and mandis was limited, and agri-logistics and transport systems were broken. All of this resulted in mounting post-harvest losses, and the cost of unsold produce pinched farmer finances.
Gururaj Rao, Founder of Deep Rooted, says, “The learnings from the first wave prepared us better for the challenges during the second wave of COVID-19. We planned and executed better tech automation, one example being that we updated our Delivery Management System to capture customer location precisely to increase delivery efficiency and enhance overall customer experience.”
Arpit Katta, CFO, and CMO, VegEase, adds, “Magnitude of challenges due to Covid had been different on different sectors. This disruption has opened scope for new opportunities in the agritech market. From farm to the consumer to farmer platforms to app-based concepts to rural fintech businesses all got more than hope. The traditional ecosystem suffered and a new disruptive market rule book became the new normal.”
The agritech industry is one of the few that the pandemic has catalyzed with a shift from the traditional markets towards innovative and digital ones.
Chattanathan Devarajan, Co-Founder, Arya, tells, “The impact of the first wave was limited as access to markets started improving faster. Though it is early days the spread of the second wave into rural areas and the hinterland may have a deeper ramification on business. However, innovative business models built on technology and the learnings of last year’s disruption may help sustain the momentum in agritech.”
Agritech Sector Booming in India
After fintech and edutech, agritech as a sector is seeing a lot of interest from investors. Apart from sector specialists, a lot of the generalist VCs are beginning to look at the agricultural sector closely, given the huge opportunity across the entire value chain. The reality is that demand in India has become organized at a much more rapid pace than supply and therefore upstream areas such as supply chain, core supply, services around farms/ farmers are areas that are evincing a lot of interest.
“The pandemic has accelerated some of the structural unbottling in the sector via regulatory changes that we are seeing today. The increased attention on individual hygiene and safe consumption practices has also lead to a massive customer demand for fresh and clean farm produce, which can be made possible only with state-of-the-art technology on the backend (farming tech) as well as front end (consumer-facing tech). All of the above i.e. regulatory changes, the private capital interest, consumer demand, points to the direction of unprecedented growth for the agritech sector in India,” Gururaj informs.
The future of agri storage solutions is clearly more digital, modular, and flexible, bringing in traceability to each farmer's grain and transparency with regard to the quality of the produce.
Chattanathan says, “Through its digitally integrated model, Arya converts each bag of the farmer’s commodity into an electronic balance that in turn can be stored, offered as security for a loan, or be sold digitally at just the click of a button. Artificial Intelligence and IoT are used for consistent quality assurance and data analysis. Arya’s digital marketplace integrates warehouse discovery, financing, and market linkages to create an integrated digital platform for the tech-savvy rural communities of India and the platform efficiently connects the supply side of the agro-ecosystem with the demand side.”
“At Deep Rooted.Co, we look at our technology as a “tech stack” that builds 3 critical elements, including Farm Tech (for network monitoring and planning), Warehouse Tech (for ensuring efficient operations), and Consumer Tech (not a conventional e-commerce app but one that represents our traceable, clean and differentiated supply chain,” Gururaj explains.
“VegEase being a process-oriented company has put in efforts to streamline the process to build a robust, scalable system and make the team more productive. To achieve this, we are using the latest technology stack. As the numerous data requirements are being generated, we are planning to use Docker/ Kubernetes container-based deployment system and move towards a microservices architecture. We are also planning to set up Big Data pipelines. VegEase is also setting up application monitoring tools for better identification of issues in real-time. We are also planning the data digitization and data analytics coupled with Machine Learning to optimize and get reach time solutions,” Arpit asserts.
Digital Initiatives Help in Promoting the Brand
Many companies are now introducing digital initiatives in order to gain traction and build their network among consumers.
Arpit tells, “We have an ever-growing presence on the digital landscape in a short span of time. From active social media activities to engage and reach out to the consumer at home, the brand has even explored digital spaces of traditional media arms like radio and even print.
“Multiple digital initiatives were taken by us to expand our presence. We have collaborated with several digital influencers and have created 120+ pieces of content since our launch. This activity helped us in garnering huge customer engagement. Also, we keep creating engagement-driven content pieces to engage with our customers,” he further adds.
D2C: A Route for Expansion
The demand for ready-to-eat meals, healthy & immunity-boosting food choices, safe and processed snacks have become drivers to growth for D2C channels. Home delivery of packaged and processed food has shifted from mere convenience to a necessity.
“The concept of farm to fork opens up large possibilities and opportunities to scale both in terms of the processed food industry and the logistics that surround it. Various agritech companies have their own applications to improve access and ease. Food Processing is essential to reduce wastage. With the right balance of storage infrastructure and food processing, a large part of these perishable commodities could be stored, packaged, marketed, and preserved for later consumption and better returns. FPOs may play a greater role too in this context,” Chattanathan asserts.
Future of Agritech in India
India’s agritech revolution is in a nascent stage. It is looking at greater adoption of emergent technology and innovative solutions across the value chain. On the post-harvest side, digitization of food grains, digitization of commodity inventory, transaction systems & processes integrated with real-time data, real-time monitoring of supply and demand embedded in Artificial Intelligence is the highlight of the future.
“It is estimated that agriculture industry is roughly $5 trillion industry. In the next 5 years, the face of agriculture will be changed by the Indian Agri-Tech start-ups. Farmers productivity and efficiency will improve and a robust supply chain network shall be created to reduce the wastage,” Arpit states.
Chattanathan adds, “With banks collaborating with new platforms for collaborative solutions, we are looking at a culture of transparency and accountability in a previously informal, analog agricultural market. The Agritech segment is poised for tremendous growth in the coming two decades with greater investor interest, better infrastructure, sustainable market linkages, and the digital transformation of Agriculture.”
“COVID-19 has also led to increasing levels of health consciousness, with consumers becoming more vigilant about eating healthy and unadulterated food. This will continue to create a tremendous uptick in demand for Farm-to-Consumer (F2C) brands that are able to assure quality and provide traceability back to the source. Moreover, with people shifting to online ordering due to the lockdown, this could prove to be a watershed moment for F2C brands as they look to disrupt traditional distribution channels,” Gururaj concludes.