India’s agricultural industry is a market ready for innovation. Over the last 50 years the country has seen its agricultural productivity grow at a phenomenal rate, outpacing even its population growth. Now, the nation is the world’s second largest producer of fruits and vegetables, as well as contributing a fifth of the world’s rice supply and 13% of its wheat. The sector’s significance is felt domestically as well as internationally, with around 60% of the nation’s population reliant on agriculture. Yet there is a disconnect, with the sector’s hefty size being betrayed by its struggles with productivity. Among the problems include the consistently slow integration of technological advancements into existing processes, something that sets the nation apart at a time where economies around the world are putting digitisation at the heart of expansion plans.
Many processes continue to rely on manual labour and personal choice – meaning the margin of error is widened, volatility in prices is common and often crop yields are lower than in other countries. A lack of supply chain transparency and inconsistency in food prices has meant the industry is weighed down by inefficiency, and calls are rising for widespread change to bring stability and profit to the fore. Sure enough, there are companies wading into the field to ensure those changes are made, and a new landscape seems to be on the horizon for the nation’s food sector.
The rise of tech
According to a PRS Legislative Research report from 2016, key issues identified as affecting India’s agricultural productivity included; ‘continued dependence on the monsoon, inadequate access to irrigation, imbalanced use of soil nutrients’ and ‘uneven access to modern technology’. Yet the tides have been turning to welcome a new influx of tech deals and investment over the last few years.
In AgFunder’s 2020 Farmtech investment report, it found that in 2019 India recorded the second highest number of deals after the US, with the majority of this going towards marketplaces, farmer to consumer brands, farmer platforms, and rural fintech.
“It saw an 87% year-on-year funding growth, from $133 million to $249 million in 2019,” the report reads.
The region has also been the recipient of funding injections from some major players such as Google and Microsoft. Last year Google announced its $10bn investment, seeking to ‘leverag[e] technology and AI’ in service of progressing industries such as health, education and agriculture. Microsoft also announced its own pledge last year, launching a program for agtech startups in India that are ‘committed to driving transformation in agriculture’.
An environment of technological opportunity is thus being fostered, and startups in the country are beginning to gain traction, with a 2019 NASSCOM report saying agricultural startups are growing at a rate of 25% every year. The country now boasts hundreds of these firms, all of which focus on resolving the plethora of issues currently faced in the industry. Apps that use AI and IoT are being developed to monitor and improve crop and soil quality, while data analytics and machine learning tools are being harnessed to address supply chain issues. With the COVID-19 pandemic forcing many processes online, further digitisation is on the cards for the nation.
So who are some of the companies leading the charge? We take a look.
Making tech their business
B2B online platform Onato is making waves in the country’s fruit and vegetable industry – a sector that the group’s founders estimate is worth over $100bn per year. Only this week, the group announced it had raised $2.2m in seed funding from investors Vertex Ventures Southeast Asia & India, as well as local agrifoodtech firm Omnivore, to help develop its platform and accelerate widespread rollout.
Based out of Bangalore, the company – which launched in February this year – was established to connect suppliers and buyers of produce across India, enabling greater supply chain transparency and price security. In a statement, founder Vedant Katiyar said;
“More than 60% of the population of India is dependent on agriculture, and yet tech penetration in the agri-supply chain is quite low. Decision making is mostly intuition-driven, which leads to a lot of volatility in prices and wastage.”
The platform seeks to remedy this issue through the use of protected data, offering a framework for decision making, and keeping communication between buyers and sellers secure. The promise of protecting such supply chains against instability and fluctuation drew the attention of investors, and Kanika Mayar, executive director of Vertex Ventures Southeast Asia & India, said in a statement that “most of India’s fresh supply moves through inefficient supply chains due to fragmented volumes, arbitrary pricing, and complex credit management.”
“Onato aims to solve these critical bottlenecks, and we are excited to partner with Vedant and Ashish [in] their mission,” Mayar added.
A similar venture is that from Intello Labs, which earlier this month announced the launch of its produce trade exchange platform ‘Praman’. This new tool allows for online assessment and auctioning of agricultural commodities. The platform is anticipated to reach a monthly gross transaction value of $100 million within the next two quarters, making it the largest agri-trade exchange in India. Such a system is seen as greatly needed in the industry as manual grading systems are typically seen as inadequate and giving rise to significant disparities in prices of produce.
While we’re not seeing total industry reform yet, the conditions are ripe for change, and the rising tide of investment into India’s agricultural startups holds promise that the nation could soon be casting aside the issues that have previously held it back from reaching full potential. With technologies increasingly adapting to meet agricultural needs, supply chains are tightening up and India’s resulting development will be one worth watching.