The book “Agribusiness and Technology: Revolutionizing the Future of Farming” by Sujit Sahgal deliberates on the future of farming in India, and is based on the author’s grassroot level discussions with thousands of farmers, entrepreneurs and policymakers, and a deep study of global trends.
It takes into consideration the farmers’ views and pain points, and pitches modern methods, best practices, effective business models and the use of technology as the best solution to make farming more lucrative, even for the small farmer. It provides a pathway for an early and impactful adoption of the various solutions.
The book will speak to all―social entrepreneurs, venture capital investors, farmers, policymakers and students invested in the Indian agricultural sector and agribusiness.
Read an excerpt from the book below.
After a detailed study of the existing landscape, certain characteristics of the current progress of agritech companies become evident.
1. Very concentrated start-ups: The first and foremost aspect to understand is which parts of the chain are most of the Indian agritech start-ups present in. There are about 500 start-ups in India already, and they are present across the spectrum, but the large ones have focused on either the marketplace model (to buy or sell) for inputs and to sell the produce or on precision farming. There is a small cluster of companies in financial services which is using data to reduce underwriting risk on insurance and loans and offers it to farmers at a lower price. Other areas which have some players are biotechnology (seeds) and renting services (for tractors and equipment). We barely see companies in the machinery and robotics manufacturing or even in farm infrastructure (greenhouses and indoor farming). Even within the two large segments, the largest cluster is that of marketplaces/output linkages, having raised about 60 per cent of all funds raised by the industry last year. This concentration is notable.
2. Institutional or export focus: Another evident characteristic of the Indian agritech space is the high focus on B2B or international markets. My research has shown that actually many of the companies operating in the marketplace space have a B2B focus because it is easy to sell to a few institutions vs millions of farmers, and there is no affordability issue. Many large start-ups are also focusing on the exports market where profitability can be high. In a sense, it is the low-hanging fruit which does not need grassroots-level footprint or need to charge the farmer who may not be able to afford it.
3. The product and service offered: Within the marketplace business, some companies provide the platform to the farmer but get paid by the input seller (large companies) or the institutional buyers (retail chains and restaurants). Bulk of their volumes are usually B2B, with a small fraction coming from actual farmer selling on them. Even that reach to the farmer is via FPOs or through local agents appointed by them. Even so, the farmer has begun to benefit from lower costs and somewhat higher price realizations. If they can get cheaper inputs (along with some unbiased free advice) and ability to sell directly at the farm gate to an institutional buyer and do away with the mandi system, they are going to realize more and get paid promptly and with a fair grading and weighing of their produce. One challenge in certain rural areas is delivery of the input to the farm. If service providers can ensure delivery at the farm gate, the farmer adoption will be very rapid. Some may be following a hybrid model, where the farmer orders online at a cheaper rate but needs to pick up from a nearby collection point. Often, despite tall claims by many companies which they have a farmer-based model, they may be procuring from the mandis. Hence, the farmers may not be seeing benefits yet.
The precision farming companies usually are selling a packaged bundle of solutions, where they would have a hardware device which would be planted at the farm and assist in collecting data via sensors. On top of this, using satellite images, more data would be captured on a continuous basis about weather, soil, pests, nutrients, etc., historically and currently. After analysing that data, advise would be given on optimum crop selection as well as input selection to increase the yield and reduce the cost. Usually, this advice is given via a smartphone app on a real-time basis via a phonecall or even SMS. Most of these companies have gone to the farmer directly, avoiding the FPO route. But even within this segment, a B2B route exists where the large buying corporate is paying for their services as the buyer benefits from the better quality of produce on farms they buy from. This is the path of ‘assurance farming’.
WHAT DO THE NEW AGRITECH OFFERINGS MEAN FOR THE FARMER
• Investment: In the input and output marketplace model, the farmer does not have to spend or invest anything. It is a low touch model for them, experimental with no skin in the game. They can try it out; if they do not benefit, they can go back to buying and selling on their old ways. In the precision farming/smart farming space though, the farmer is the payer, as they are buying a service. Usually, there is an investment to buy some hardware (sensor and laptop) and a subscription service for the data crunching and analytics and access to the cloud data. But usually, the monetary commitment is quite low, benefits are quite tangible and payback is usually in less than a year. Some models are already converting to a total FaaS model, where the hardware is for free, and only subscription is charged. This reduces the entry friction. The monthly subscription can be as low as $20 a month. And a farmer can see a much bigger payback within months. But the more important part is the commitment of effort, which I address below.
• Change of ways: Some of the agritech solutions may not demand a lot of financial commitment but a lot of mental and emotional commitment in a sense that the farmer is required to change their ways, do their job in a different way and listen to an outsider with no ‘earned’ credibility on advice about their ways of working. But even this is not a very big issue, as they can adopt on a piecemeal basis and once the benefits are visible, they can roll it out across their fields. But they must be willing to try new things. Either grow different crops or grow them in a different variety. Use more machinery for tilling, weed removal and harvesting. This calls for a big change, and hence can still take a long time to convince. My research has shown that even at the individual farmer level, both ability and willingness to pay exist—all they want to see is a sustainable, tangible benefit to their own bottom line. The other more challenging change needed is computer literacy and ability to operate a computer and applications, input some data and read out some outputs and instructions. Some of this is solved by mobile apps in vernacular languages, but heavier farm management software may need laptop-based access. But again, most farmer families have sons or daughters who are well educated and are spending quite much of their free time, helping with the farming activities anyway and should be able to help. In fact, this could excite them and reignite the interest in ‘smart farming’.