The agri-tech industry, which had gone unnoticed for more than a decade, was brought to light during the pandemic when businesses experienced exponential growth curves due to farmers quickening the embrace of technology. But what does the foreseeable future hold?
Saurabh Agarwal, Director, and CEO, GROWiT India, talks to ET Insights about the institutional bottlenecks, unicorns in the agri-tech sector, indigenous farming practices, and financial management in the following interview.
Amidst the funding winter, do you think the agri-tech industry in India has taken a hit too? How do you see government schemes for agricultural start-ups from that perspective?
The agri-tech industry was not immune to the funding winter that hit the ecosystem this year. The sector saw an investment of $859 million in 2021, while the number came down to $515 million in 2022. But it is not all blue for the segment as there was a potential rise in investments from the first half of the FY 21-22 to the second half of the year. The investments in the segment have grown exponentially from $ 296 million in the first half of the FY 2021-22 to almost double at $157 million in the second half of the year and are above the pre-pandemic level. This is owing to the factors such as increased demand for quality food, rapid population growth, and climate change.
The government has taken initiatives to boost the agri-tech sector with schemes such as ‘Innovation & Agri-Entrepreneurship Development’ and Rs 500 crore accelerator programme to enhance Agri-Tech start-ups’. The Ministry of Agriculture has allocated Rs 1,32,514 crore in FY 2022-23 for the welfare of farmers and the overall agricultural industry in the country. All other programmes of the Ministry, including interest subsidy and crop insurance, have been allocated Rs 64,514 crore in 2022-23. The mentioned financial contributions by the government authorities have benefitted agriculture a lot in FY 2022. The government’s policies have brought about a positive change in solving farmers’ problems and boosting their incomes. The intervention of technology is providing efficient and effective ways of improving farming.
In recent times, many agricultural start-ups have cropped up and folded. What do you think is the best approach for an agri-tech company in India to become profitable or a unicorn? Do you think India will see unicorns in the agri-tech industry in recent times?
Agri-tech start-ups have the potential to become profitable and claim the title of a unicorn. Start-ups must look at generating revenue after deducting variable costs. The sector has many challenges, such as thin margins, unstable economy, unpredictable climate conditions, and more, which makes it difficult for start-ups to navigate without adequate capital funds. It is important for agri-tech start-ups to change with the changing times. Their offering should be unique and add value to the agriculture sector in India. They should rigorously adopt new forms of technology in the agriculture space to meet global standards. Only those start-ups who will keep their offerings fresh and innovative, will become profitable and become unicorns. With this approach and support from the government and funding landscape, India will definitely see unicorns in the agri-tech space in the near future.
Do you think the agri-tech industry has been able to solve fundamental issues in Indian agriculture and farming practices? Do explain how.
Empowering and educating farmers in core rural areas have been a fundamental issue for the sector since a long time. Agri-tech companies are bridging this gap by educating and technologically empowering the farmers in the rural areas. These start-ups are implementing new and modern technologies in the agriculture sector to transform traditional agricultural practices, increase productivity as well as farm income. The increase of internet accessibility, smartphone penetration, and various government initiatives in rural areas have helped agri-tech platforms in supporting the farming community and add value to the economic growth of the country. New forms of farming, such as protective and organic farming, are making their way into the sector and have the potential of creating more profits in farming practices in the long run.
What is the ideal USP of an agri-tech player? Does it help improve the financial situation of the farmers?
Agri-tech players should look at staying technologically equipped, provide innovative ideas, and find affordable solutions for best farming practices. The focus of agri-tech players in their offering should be on holistically increasing farm output, producing quality food, climate smart agriculture, farmer empowerment and raising farmer productivity.
Agri-tech intervention in rural areas has helped educate farmers and make them financially independent. Start-ups are looking at innovative ways of bridging the wide gap in use of technology by farmers. India is a country of agriculture and holds a huge potential if the right technology is used in the right way. Farmers are being educated about innovative farming methods, dealing with unpredictable weather conditions, protective and organic ways of farming, etc. which is empowering them to yield more crops and improve food quality. This is improving the financial situation of farmers and making them aware and independent. Agri-tech startups will be crucial in easing farmers’ challenges by modernising the entire supply chain in tandem with sustainability solutions. The implementation of operational efficiencies has the tremendous potential to revolutionise the Indian agriculture space.