Grain of hope - Indian agritech firms

Agriculture now is not just about farmers toiling in fields to produce record levels of foodgrains and horticulture products.

Grain of hope - Indian agritech firms

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• The story: Agriculture now is not just about farmers toiling in fields to produce record levels of foodgrains and horticulture products. It is also about something more modern - agritech.
• Agritech growing: As a result of regulatory changes and Covid-19’s impact, agritech will see more investment and will grow to a $30 b – $35 b market by 2025. At least that's what Bain & Company believes. India, which ranks third globally in agritech funding, has received $ 1 billion in agritech funding in 3 years from 2017 to 2020.
• New areas opening up: Growth of new food products is happening, and use-cases like vertical farming/controlled environment agriculture, regenerative agriculture, sustainability services, carbon trading are arriving.

1. The top recent deals in agriculture were investments into companies like Ninjacart, AgroStar, Mahyco Grow, Husk, WayCool Foods and Products, Jumbotail, Vahdam, and DeHaat (Green AgRevolution).
2. Investments in Indian agritech have increased over the past few years – from $ 91 million in 2017 to $ 329 million in 2020 at a CAGR of 53%. This trend may continue.
3. Online grocery buyers are expected to increase five fold from 30 million in 2019 to 150 million in 2025, while the online farm input sale market is expected to double in size during the same period from $ 85 billion in 2019 to $ 150 billion in 2025.

• Future projections: These technological changes, capabilities, and investment on the anvil will fundamentally change the productivity and landscape of Indian agriculture. In fact, estimates indicate that approximately $30 billion to $35 billion of value pool will be created in agri-logistics, offtake, and agri-input delivery by 2025. Precision agriculture, agritech services, biotech, marketplaces, farmer services platforms, monitoring and analytics, farm management, new farming models and sustainability will disrupt traditional agriculture.

1. Alternative proteins, alternative feed, ocean farming, cell-based food/ingredients, green ammonia/hydrogen will arrive (Firms like Air Protein, Impossible Foods, Memphis Meats)
2. Companies in the agriculture sector could build an integrated agritech platform, and could digitally transform internal business processes to adapt to regulatory and technological changes. Companies in other sectors could exploit the rapidly developing agritech ecosystem through a corporate venture capital centre of excellence (CoE)
3. Digital disruptions - Even though technology is in its early stages in the industry, it is driving innovations in a variety of ways throughout the agricultural value chain. Large farms have adopted automation and mechanisation of operations, and data-backed services across the value chain are leading to positive outcomes. For example, insurance, credit rating, and loans are contributing to increased funding for this sector.

• Technology directly: In farming activities, weather prediction and smart crop management are leading to higher output while sensors and the Internet of Things are enabling better tracking and visibility of farming activities. Direct sourcing, demand forecasting, and inventory management are fuelling agricultural produce sales. Digital engagement is promoting the ‘uberisation’ of services, creating online communities and marketplaces and even driving e-commerce. Vertical farming and controlled environment agriculture are leading to regenerative agriculture, sustainability services, and carbon trading. The consumption pattern is also changing to alternative proteins, alternative feed, ocean farming, cell-based food and ingredients, and the use of green ammonia and hydrogen. Additionally, firms can save 5% to 10% or more on procurement costs of food items through a concerted national strategy.
• Reforms are good: Corportes feel that the APMC reforms will enable corporates to buy directly from the farmer. The ECA reform incentivises investment in storage and transportation infrastructure, resulting in supply chain efficiencies. All of the above indicates that we are at the cusp of a massive disruption in the food and agriculture ecosystem.

 

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