AgClinic: The Next Generation Agri input Distribution Models – Efficiency and Economics

An AgClinic- The Next Generation Agri input Distribution Models – Efficiency and Economics was co-hosted by ThinkAg and Stellapps on 23rd Feb 2023.

The virtual event witnessed a discussion amongst an eminent panel comprising Ravi Kumar, Lead- Small Holder Farming, SEA, Bayer; Sachin Nandwana, Co-Founder & Director, BigHaat; Rajendra Lora, Co-Founder & CEO, Freshokartz; Satyam Khagen Bose, Chairman & CEO, Virenxia Group; and Umesh Prajapat, Business Head, Agri input, Stellapps. The discussion was superbly moderated by Deepak Pareek, Technology Strategist & Social Entrepreneur, Technology Pioneer, World Economic Forum.

The video of the AgClinic is available at https://youtu.be/4OyzKjPjE4M

Below are the key takeaways from the AgClinic.

The context

• In India, a million people are directly or indirectly involved in agri retail; of that, 0.35 million are retail shops, 0.38 million are those who have licences. It is a big community of retailers

• The agri input retail market which includes fertilisers, crop nutrients, crop protection, seeds, consumables and irrigation is about $52 billion, of which 55 per cent is fertilisers, 15 per cent seeds, 16 per cent mechanisation, 10 per cent crop protection and 4 per cent consumables

• A lot of AgTech start-ups are trying to contribute to this sector and even established players are shifting strategies and trying to evolve

How the input market is evolving and key trends

• India has 150 million farmers, of whom 85 per cent are small and marginal farmers

• Only 50 per cent of small and marginal farmers use fertilisers and 30 per cent of them use high-yielding variety seeds

• Inherent demand and potential demand already there in the system

• The democratisation of technology and know-how in curating new products and services is huge – 10-15 years back, the R&D focus used to be with MNCs and large companies and that has been democratised now

• This will lead to more innovative products coming into the ecosystem

• Multiple people are coming with new formulations, new high-yielding seeds, which have a huge value-creation for the end consumer

• There will be greater focus on green and sustainable products; nano urea is one such example

• The new distribution models are solving a lot of efficiency problems in the value chain

• There has been a growth in services inputs

• For instance, agri financing and insurance are becoming increasingly important and people are focussing on trying innovative products that can solve the problems for farmers

• There is greater emphasis on precision agriculture, IoT and software as a service, which is giving customised advisory and right time availability of information

• Bundling of products and services is happening at different levels; it is inefficient for multiple people to reach the same farmer for multiple products or services at multiple times

• Farmers value bundling of products and services and are prepared to pay a premium for that; this is something that will grow

• The situation is just right for innovation

• The transition to bio-ag alternatives and regenerative agriculture is inevitable

• This transition needs to be handled in a calibrated manner

• To manage this transition, evangelising, capacity building, training and crop advisory towards regenerative farming must be effectively provided

• This will give a new approach to soil, water and crop management

• The primary crop nutrition should come out of local bio-waste recycling and thus establish circular economy

• Therefore, there is a need to establish local community driven distributed manufacturing

• Globally, biologicals market is $12 billion or roughly 5 per cent of total agro-protection and agro-chemical market. This needs to change. In the next five years, that would double

• The ecosystem is ready for digital to play a bigger role; each family has at least one smart phone and the digital penetration that was expected to happen in 2024 has been achieved in 2021

• There should be exponential growth in agri-input digital penetration

• There will continue to be a mix of digital, phygital and village level entrepreneurs

• There will be consolidation of farmer-facing touchpoints – farmers now have to go to different places for different products and services. Start-ups and traditional players are becoming one-stop solution providers for all farm needs

• There will be centralised advisory but through decentralised resources

• There will be greater collaborations and partnerships among different players in the ecosystem – it is a big space and difficult for one entity to solve all the challenges; most of the companies are trying to become one brand, but at the back-end they are partnering with each other

What will drive biologicals' adoption?

• Biologicals are the future of agriculture

• Climate smart, sustainable, regenerative farming is the future

• The challenge in managing the transition from synthetic chemical inputs to bio-ag is that it will take three-five years and will be characterised by volatile crop uncertainties, which farmers can ill afford, because of which there will be resistance to change

• The losses during the transition period have to be under-written by the Government

A few early points on increase in yields and farmers’ income

• A study in Uttar Pradesh and Karnataka showed farmers’ income in the last two years increased by 90 per cent – a number that is specific to one company with a curated set of farmers

• Yield increased in chilly in eastern Uttar Pradesh from 5-6 tonnes per acre to 25 tonnes per acre; income has increased from ₹80,000 per acre to ₹2.5 lakhs/acre

• Tomato yield increased from eight tonnes to 30 tonnes

• Paddy yield increased from two tonnes per acre to 3.2 tonnes per acre

The challenges and opportunities in agri input distribution

• The challenge is to make available the right product at the right time to the farmer and not push any product as is being done now

• Tremendous opportunities for bringing on board more village level entrepreneurs – they will have to be farmers and in the 30-40 years age group

• There is a need to solve the problem of market linkage and the problem of credit to farmers at right interest rates