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Indian agriculture is on the cusp of a disruption based on technology, regulation, investment and stakeholder behavioural changes across consumers to farmers, making the idea of doubling farmer incomes a reality in the next few years, a research report said on Wednesday.
Agritech and agri-ecosystem sectors have received significant interest from the investor community, making India the third-largest nation in terms of agritech funding and the number of agritech start-ups. Estimates indicate that $30-$35 billion of the value pool will be created in agri-logistics, offtake, and agri-input delivery by 2025. These are among the findings of the report titled Indian Agriculture: Ripe for Disruption , released by Bain & Company.
Farm reform
Commenting on the report, Prashant Sarin, a Partner at Bain & Company, India, said, “We are at a key moment when we can leapfrog from the traditional methods to a new, technology-friendly way of growing, processing, and selling food. The traditional form of agriculture will be disrupted and overhauled over time, and $30-35B value will be created in new value pools across the agricultural value chain, over the next few years.”
The report said the three agriculture-focused reform Bills passed in September 2020 by Parliament are intended to encourage investment in direct farmer purchase by corporates, free movement of food items from production to consumption centres, and private investment in storage. A host of new business opportunities can be uncovered when these reforms come into operation, it said.
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The APMC reforms will enable corporates to buy directly from the farmer while the Essential Commodities Act reforms incentivise investment in storage and transportation infrastructure, resulting in supply chain efficiencies. Firms can save 5 to 10 per cent or more on procurement costs of food items through a concerted national strategy.
At inflection point
Parijat Jain, partner and leader of Bain’s Agribusiness practice in India, said, “Indian agriculture is at an inflection point. The $370-billion sector will undergo a complete transformation in the coming years on the back of significant technology interventions, regulatory support and behavioural changes across consumers and farmers. Digital disruption across the agricultural and agritech value chain is enabling ‘uberisation’ of services, converting capital investment assets to pay per-use models and creating online communities along with online input & output marketplaces.”
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Technology is driving innovations in a variety of ways across the agricultural value chain. For example, insurance, credit rating, and loans are contributing to increased funding for this sector. 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.
Between 2017 and 2020, India received about $1 billion in agritech funding. The top deals in agriculture were investments into companies like Ninjacart, AgroStar, Mahyco Grow, Husk, WayCool Foods and Products, Jumbotail, Vahdam, and DeHaat (Green AgRevolution). Based on the discernable changes in the sector, investments in agritech over the next four to five years are poised to increase significantly.
Holistic digital platform
The backbone of an agritech platform should be built around the strategic bedrock that could comprise multiple themes, such as a digital marketplace, supply chain management, or smart services across the agricultural value chain. The report said the life cycle of building an integrated platform will require sustained investment across multiple phases. A holistic digital platform would, therefore, include e-trading and an online marketplace; seamless supply chains; and smart farming and data-backed advice on risks and mitigation steps, such as short-term weather and long-term soil condition predictions.
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