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AgClinic – Agri Value Chain Business Models in India – Scalable, Profitable and Sustainable

Updated: Jan 2

An AgClinic "Agri Value Chain Business Models in India - Scaleable, Profitable & Sustainable" was co-hosted by ThinkAg & Stellapps Technologies Private Limited on 15th Dec 2022.

Watch the discussion by the stellar panel comprising Karthik B. Reddy, Managing Partner, Blume Ventures; Reihem Roy, Partner, Omnivore; Sudhir Rao, Managing Partner - India, Celesta Capital; Joost Matthijssen, Director - Venturing & Business Development, Nutreco; and, Archana Srivatsan, Head - South Asia, Gates Strategic Investment Fund, Bill & Melinda Gates Foundation, superbly moderated by Vamshi Reddy, Partner, Kalaari Capital.

Watch the video recording at

Also, find below the synopsis of the AgClinic.

The background

  • Agriculture is the largest contributor in terms of employment for the country and accounts for 15 per cent of India’s GDP

  • It is a major contributor to the country’s export earnings

  • The sector employs a third of the population

  • Despite its contribution to GDP, solutions have not emerged in this space like in e-commerce or EdTech or mobility

  • The problems in unlocking value in this sector are fundamental

The Challenges

  • There are so many challenges this sector faces, including low productivity, inadequate infrastructure, limited access to technology and markets

  • In agriculture, irrespective of what sector it is, it is always the same story of the point of production and the point of consumption being far apart

  • There are hundreds of layers in between, all trying to extract arbitrage, essentially from information asymmetry

  • That information asymmetry is rooted in the fact that public infrastructure is not the strongest in this space, digital penetration is often the weakest and this results in inefficiencies

  • One of the key challenges is how to get rid of the information asymmetry that allows for the middleman culture that exists in India

  • How to build platforms that allow production and demand to talk to each other in real-time

  • How to end the situation which is unique in many ways to India and other smaller developing nations where a bumper harvest spells doom and not success simply because there is no way to connect demand with your bumper harvest

  • Technology is about enabling that. It is after getting all these stakeholders talking to each other in real-time, incentivising good behaviour.

Investment thesis for VCs

  • One of the lenses that is applied is whether it is a fintech model applied to an agriculture business or a value chain, just as you would apply financing to education or commerce or small and medium businesses

  • There are certain components which are purely agriculture and certain components where technology is going to start enabling and reach a larger point of penetration and thus become an integral part of the agri-tech environment

  • Agriculture is probably the most promising SMB market of the country

  • It is important to understand end-to-end value chains and whether the application of technology makes those value chains more effective

  • Is there a deep differentiated moat or an insight that a founder brings which gives them an edge over anybody else who will try to replicate it because it is a fragmented market

  • Look at investing in core technology that is going to drive an emerging application

  • In the milk sector alone, there are 100 million stakeholders in the dairy industry, 80 million of them are dairy farmers managing 300 million heads of cattle

  • It took an innovation of a smart collection centre that could evaluate milk in real-time to incentivise farmers to produce better milk, to feed their cows better inputs and this is where technology plays a role

  • There is such a pool of technology and talent to tap into, where people are creative, have skills capabilities that they can leverage in a unique way to develop solutions that are not being developed elsewhere

  • If you can point the right technology in an attractive market to address inefficiency, then you are on a path towards something interesting

  • It is about taking technology that is developed in a frugal, effective way and deploying it in a different market and context, where it is valued much higher than in its home turf

  • The promise of enabling farmers to be more productive at a higher quality and, therefore, more profitable while at the same time optimise the entire integrity, efficiency and quality of the supply chain, offering better value to consumers that is even more transformational than just one intervention at the farm level

  • It is more ambitious to target that solution, especially in a market like India where the number of farmers is large and the size of the farmer at an individual level is quite small and the infrastructure is not in place

  • There is great potential for more value chain intervention targeted at addressing the economics of the entire system. It is harder to get it right, but the returns are attractive if you manage to do so

  • Must find the technology and point it at an inefficiency that is worth solving, and consistently prove that that inefficiency can be solved in a way that it is attractive for customers and the ecosystem around it

  • Given the way the ecosystem functions and that everything is broken in the ecosystem, do the solutions address concerns of multiple stakeholders in the ecosystem or just one. If it does not address concerns of multiple stakeholders in the ecosystem – for example, farmer, lender, insurer, agribusinesses that procure from farmers – is it really solving a key problem and is it going to be able to scale

  • Does the solution provide incremental innovation or does it solve the root cause of the problem in the ecosystem

  • There are super interesting spaces that have been up and coming for a while now – things around quality assurance, whether that is through robotics, AI, automation, on-field and off-field, whether it is the quality assurance techniques in post-farm chain, there is a lot of innovation that is coming up that is interesting

  • Most problems must be seen from the lens of an enterprise customer. Scalable problems are B2B and everything flows from that

  • The most exciting aspect of agriculture is that it is fragmented and that is the opportunity. It is not owned by one person; it is co-owned and cooperatively run

  • The place where it is worth spending time on is where the end product can be changed, can be better packaged, but should only go down that road if it is possible to genuinely demonstrate value and margins

  • B2B in agriculture is where value can be truly unlocked

  • In B2B, you are dealing with a finite set of problems as opposed to B2C, where the dynamics and issues are too many to name and number

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