[Editorial Analysis] Why start-up yield harvests

Mains Paper 3: Economy
Prelims level: Agritech ecosystem
Mains level: Significance of the Agritech start-up’s

Context:

• For the past few years, the Indian startup including the Agritech ecosystem is creating a buzz by raising large funding because they disrupt the traditional system of doing business and leapfrog to efficiency, winning the trust of potential investors.

• Currently, India is competing with the US and China in the agri-startup space.

• According to the AgFunder, India witnessed funding of $2 billion in H1 2021.

• At the same time, Ernst and Young’s study pegs the Indian Agritech market potential at $24 billion by 2025.

• Among others, the supply chain technology and output markets segment has the highest potential.

• According to NASSCOM, there are about 600 to 700 Agritech startups in India operating at different levels of agri-value chains.

Business Opportunities and Innovative Solutions:

• The Agritech sector has made way for several market opportunities in India, especially in developing and refining market linkages.

• These developments include taking farmer products directly to consumers, digitizing agriculture, improving accessibility to real-time information for farmers, increasing transparency across the value chain, providing better-quality implements to farmers to increase yields, and offering micro-financing options to farmers to manage risks.

• All these solutions indicate that improving the supply chain is a key focus area for Agritech start-ups, with the underlying goal of increasing farmer share in profits from crop sales.

Key Players and Business Models:

Various business models have emerged to tackle opportunities in the agricultural space. These can be categorized into five main buckets:

• Upstream marketplace model – Agrostar, BigHaat, Agrevolution, Agronxt, Ninjacart, Agrihub, and FarmGuru are the main players employing this model.

• Downstream ‘farm-to-fork supply chain model – Krishi Star, Crofarm, Sabziwala, and BharatBazar are start-ups working towards increasing efficiencies using this mechanism.

• Farming-as-a-service model – Far Mart, EM3 Agri Services, RAVGO, and Oxen are players offering farm equipment rentals to ease the burden of capital investments for farmers.

• IoT or Big Data-led innovation model – FlyBird, Cropin, and Exabit Systems are deploying smart technology to assist farmers to gain access to timely information and drive productivity.

• Engineering led-innovation model – Kheyti, Drip, Kamal Kisan, and Nanopix are players driving innovative solutions in this space.

Significance of Agritech Startups:

• The use of technology in agriculture has significant potential, with increased smartphone reach and digital connectivity in rural India.

• Several agri-tech startups are utilizing the opportunity to tap the 150-million-strong farmer community and provide tech-based solutions for their problems.

• They can reduce consumption of water and fertilizers by nearly 50%, without affecting the volume and quality of their produce.

• They can access a system that gives accurate information on irrigation parameters, soil moisture, evaporation, and weather forecast on a real-time basis which helps in planning the cultivation better.

• Increased reach of smartphones and digital connectivity tools in rural areas provide huge potential in deploying technology in agriculture, a sector that has been grappling with supply chain imbalance and market volatility.

• The technology could revolutionize the country’s agriculture ecosystem. They are eyeing the largely untapped market of 150 million farmers who cultivate over 145 million hectares of farmland.

• Few agri-tech firms are developing diversified smart solutions targeting a range of problems that farmers struggle with daily.

• While some are working on farm inputs like supplying seeds, crop protection, and nutrition, others provide technical assistance from the cultivation stage to harvest by way of crop management systems like drones to spray pesticide or smart irrigation controls.

• Several firms are also working on supply chain and output market linkages to aid farmers in post-production and the sale of commodities to fetch better market rates.

• At the same time, many of these are trying to fix major issues in the agriculture sector, such as weather unpredictability, soil fertility, labour shortage, supply chain issues, and price discovery.

• The novelty of startup-led value chain transformation is not limited to empowering farmers but also co-opting local grocery stores as well as small agri-food businesses that are an integral part of the agrifood ecosystem.

• At the same time, it can leverage the bigger front-end players who demand bulk quality produce and have challenges indirectly linking with farmers.

• There are merging trends of multiple models of engagement that recognize the need to address the challenges that confront the agrifood ecosystem and achieve greater scale effects.

• Some startups use data science and agriscience to nurture a thriving ecosystem of farmers, micro-entrepreneurs and institutional buyers.

Benefits of Agritech Startups:

• Some startups like Ninjacart reduced wastage to 4% compared to up to 25% in traditional chains through demand-driven harvest schedules.

• The logical optimization enabled delivery in less than 12 hrs at 1/3rd the cost of the traditional chain.

• Due to the startup’s efforts farmers’ net incomes are reported to have increased by 20-50% as a result of savings in input costs, increased farm productivity and better price discovery.

• At last, the Agritech startups-led e-commerce platforms have the potential to steer the shift from govt-controlled agricultural markets towards more demand-driven digital markets.

Challenges to Agri-startups:

• Some studies identify small landholding sizes, diverse soil conditions and patterns, long gestation period, and digital divide as some of the constraints in the adoption of AI in India’s agriculture sector.

• For startups deploying technology tools, the challenge is to modify interfaces to make technology intervention accessible and usable.

• Entrepreneurs are beginning to understand that sophisticated technology will not help to scale up and reach a larger audience.

• Indian farmers as progressive, traditional, and marginal.

• There is less effort in bringing progressive farmers on board because they are always open to experiment, and about 30-40% of farmers belong to this category.

• The next level of farmers – the traditional ones – need a “human interface” to connect and build trust, and a multichannel approach is more important to reach out to this category.

• The slow impact of digital tools on revenue is widely perceived as one of the factors delaying technology adoption in agriculture.

• The sustainability and scalability of these ventures will be critical over time because with many ventures falling out, others consolidating through mergers and acquisitions.

• The biggest challenge will be to sustain and scale up the farm outreach.

What more can be done?

• The startup-FPO partnership can be strengthened by incentivizing the FPOs under the central govt’s programme to add 10,000 new FPOs by 2024.

• The network of Agritech startups and investors needs to work closely with policymakers, govt departments and think tanks to develop a more nuanced understanding of the agrifood sector dynamics.

• The govt and policymakers need to leverage the existing Agritech pool and co-create solutions for shared value.

• There is a need to create technology that can capture market intelligence and assist farmers in seamlessly supplying produce to markets at the right price should be the immediate priority.

Way ahead:

• Overall, the Indian Agritech sector has huge untapped potential. Agritech seems to have reached that inflection point where it is gaining significant momentum among venture capitalists and government grants.

• Agriculture is an important industry in India’s economy and start-ups are playing a pivotal role in easing the burden on farmers by digitizing the entire supply chain with the use of new technologies such as artificial intelligence, the internet of things, Big Data analytics, and engineering innovations.

• The transparency and operational efficiencies being introduced and implemented are transforming India’s agricultural landscape.

• If the policies, institutions and partnerships can harness the current momentum, the startup ecosystem can be the next-generation technology revolution in the agrifood sector.

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Prelims Questions:

Q.1) With reference to the Y 12704 (Visakhapatnam), consider the following statements:

1. It is the lead ship of Project 15B stealth-guided missile destroyers.

2. It is being built at Cochin Shipyard.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: A

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