- Team ThinkAg
Agritech as driver of rural entrepreneurship
Agritech– offers hope and optimism in catalyzing many unexplored models of rural entrepreneurship
Covid times reiterated the resilience of Indian agricultural economy, which is demonstrating growth when other segments of economy are facing turbulence. Despite the second covid wave, we expect this year Rabi output (at approx. 155 million MT) to be higher than the last year. Having said that the contribution of agriculture to Indian economy is declining, while 60% (about 750 mn) of our population continue to depend on agriculture, as the key source of their livelihood.
The severe second covid wave in the country has further added to rural distress with about 5.6 million job losses among salaried class in rural India. The job losses in the salaried jobs in rural India is estimated to be 4.5 times that of urban India in last few months. This imbalance in our economy with urban-rural dichotomy needs a sharp correction.
Agritech – a word often used as a substitute for new age innovations in agriculture – offers hope and optimism in catalyzing many unexplored models of rural entrepreneurship. There are at least fifteen such models – which can come alive on the growing agritech prowess. This article touches upon some of these emerging livelihood models in rural India anchored by agritech models. These models have potential to create millions of jobs in villages, making rural economy robust and pandemic-agnostic. The models are listed below.
1. Farm-gate value-creators
Farm gate value addition is the huge opportunity in waiting. Farmers are leaving too much on the table (err. in the fields) for others to make money by selling crops as commodities rather than products or brands. The opportunity to value-add through simple processes like sorting, grading, packing, milling, extraction, pulverization, dehydration, cooling, freezing can remunerate farmers 30-50% over and above farm gate price.
This is demonstrated by multiple innovators, through building farm level infrastructure for sorting, grading packing of vegetables, fruits, staples such as Farmlink (Innoterra group), Kamatan, Waycool, Ninjacart, DeHaat, Agribolo, Impagro, Agrowave. Some of them have demonstrated secondary processing innovations like S4S technologies (solar conduction drying of vegetables), Our Foods (micro processing units such as dal mill, flour mill) and Desai Fruit Ventures from Innoterra group (packhouses for bananas, other fruits).
There are many evidences of positive impact of such near-farm value addition on job creation. The success of packhouses and CA (Controlled Atmosphere) storages for apples, which have sprung in hilly areas of Himachal Pradesh and Jammu & Kashmir, in creating local jobs is noteworthy. Fruit supply chain companies like Adani, FIL Industries, Suri Agro Fresh, Devbhumi Cold Chain have done a great job in building this infrastructure for apples in remote hilly areas.
The above models need investment in physical infrastructure, which can vary from few hundred to few thousand dollars. Some of it can be funded by government schemes (such as recently announced Agri Infra Fund) and some through private investment, which even Village Level Entrepreneur (VLE) is willing to make as long as there is demand visibility.
A significant part of India’s warehousing capacity is dominated by large warehouses, typically catering to traders and processors. Majority of farmers with few tons of harvested produce find it difficult get a warehouse and thus end up selling the produce, immediately post-harvest when prices are usually at the lowest.
Decentralized, affordable and accessible warehousing for farmers coupled with the option for post-harvest financing is key to improving farmer income. It will also have soothing effect on volatility of commodity prices, to the benefit of farmers as well as MSMEs who are usually at the receiving end of price shocks.
The work done by likes of Arya Collateral, Star Agri, Ergos, Apna Godam, Whrrl in enabling farmer access to warehouses along with creating post-harvest digital layer for facilitating financing and market linkages can create new models of rural entrepreneurship in warehouse management and allied services.
3. Digital soil doctors
For a sustainable agri supply chain, the supply chain paradigm has to shift from “farm-to-fork” to “soil-to-stomach” continuum, with soil at the centerpiece. Indian soil health needs immediate attention to meet productivity challenges. For sure, India needs more soil labs than path labs.
Soil diagnosis usually done with innovative techniques (sensors, IoT devices, proprietary algorithms) can take soil labs to farmer fields. This can drive accurate and timely correction in NPK ratio and other micronutrients to keep soil healthy. Rural youth can become soil doctors by training them in using portable kits developed by likes of Krishitantra, SenseGrass, Nordetect, EasyKrishi. They can buy, rent, lease or even work on revenue share models.
Drones are usually used as a symbol of new age innovations in many reports published on the subject of agritech. The irony is that drone applications in Indian agriculture is still negligible. It’s time to propagate use of drones in agriculture for the purpose of data collection, pesticide spray, weed detection, crop health monitoring etc.
Drone applications in agriculture presents a at least a few billion dollars opportunity but number of operating players are very limited (3thi, Thanos, IoTechworld, Agricopter to name a few). For mainstreaming drone use, we need to train rural youth in flying drones. The certified drone-preneurs can in turn be employed by the government agencies, agrochemical companies, banks etc. Let rural youth learn, earn and fly!!
5. Quality assaying as a service (QUAS)
Majority of emerging digital quality assaying models (using smartphones, spectrometers, optical cameras) for commodities by likes of Lateral Praxis (Innoterra), Agnext, Intellolabs, Agricx, qZense, InfyuLabs continue to be B2B targeting aggregators and processors.
For providing quality assaying services to farmers directly, we need an army of trained QUAS-ians on the ground who can collect commodity data through digital tools and provide almost-instant reports to farmers for a fee. QUAS-ians can also provide these services to collection centers and aggregation points in mandis, warehouses, processing units in their catchment areas.
6. Silage stations
Despite India being one of the largest producers of milk, the milk productivity level (at about 1600 litres per year) continue to be low. One of the reasons for this is lack of proper cattle nutrition, specifically green and dry fodder. India is short by about 36% in green and about 11% in dry fodder. The fodder availability goes further down in summer months impacting milk production; which can be addressed by feeding silage (fermented fodder with moisture) to cattle. To meet the growing demand for quality cattle nutrition, India needs more silage stations (may be about one lakh) than petro stations that we have in the country.
Silage is prepared from corn, grass, cereals – raw materials which are locally available. Since silage is a bulky product, the production needs to be decentralized with participation of VLEs. Many dairy companies like Milklane (Innoterra), Mango Dairies and organisations like BAIF are working on silage solutions.
7. Mobile picking stations
Farm pick up of the agri produce is still not common. Farmers go to the nearest market yard to sell the produce. Farmers incur the logistics cost and usually end up selling in the mandi at the prevailing price (as the cost of bringing produce back to village is prohibitive).
Farm pick-up models is the need of the hour and typically require developing real-time communication channels with farmers, estimation of farm produce, harvest schedule, route scheduling and price forecasting. With government easing regulations for GIS mapping, rural roads can be mapped with much more accuracy; making farm pick-up solutions more feasible.
These models are still work in process. Only a handful of startups such as Agrowave, Apna Godam, Ergos have attempted to build it. My guess is that such models can scale with participation from local youth who can be empowered with technology tools to work with farmers in enabling efficient pick up and transportation from the villages.
8. Water management specialists
Efficient use of water for irrigation is going to be key for sustainability of Indian agriculture. Indian agriculture’s ability to pass “water stress test” depends on the adoption of solutions for conserving water. Fortunately, there are enough tech tools – using sensors, IoT, satellite imagery – developed by startups (like Agsmartic, Fasal, SoilSense, Yuktix, Cultyvate, SatSure, Satyukt etc) to estimate surface and root zone moisture and accordingly advice famers on scheduling irrigation.
Solutions around irrigation controller (Flybird), irrigation guns (Agrirain), borewell charging (Urdhvam), hydrogel (EF Polymer) need to go mainstream to improve water use efficiency. Again, we need trained manpower from the villages who can partner with innovators to take these solutions to the farmers.
9. Cooling as a Service (CAAS)
Farm level cooling solutions are needed for perishable products including vegetables, fruits, fisheries, flowers and milk amongst others. Fisheries sector was a major victim of last years’ lockdown as the fishermen could not get ice for iceboxes in time, which are used for storage and transportation of their catch. The affordable and distributed cold stores at the point of collection is the need of the hour be it bulk milk coolers, cold rooms for vegetable, fruits, eggs and meat products.
Though many startups are working on modular designs (Promethean, Ecozen, Tan90, Tessol, Rukart, New Leaf Dynamics), the challenge is to fill the full capacity where the role of local ecosystem including FPOs, NGOs becomes important as without their participation, utilizing and maintaining cold chain facilities is not very efficient. This opens up opportunity VLEs and village organizations to provide cooling as a service to farmers. The investment could range from few thousand to few lakh rupees with payback period of 2-3 years.
10. Pollination as a Service (PAAS)
Bees play critical role in cross pollination in majority of horticulture, oilseeds, fodder and pulses crops. However, the density of bee population in Indian farms is declining, blame it on the climate change or use of pesticides. There is an opportunity to promote PAAS not just for making honey but also build bee boxes for renting (rentals vary from USD 10-20 for the pollination period – typically 3 months) per bee box. A trained beekeeper can easily maintain upto 500 beeboxes. A beekeeper with even 100 boxes can earn about USD 750 per season in addition to income from sale of honey.
Scientifically designed bee-boxes with sensors, optical cameras, IoT devices and GPS enablement to monitor and track bee colonies can make the maintenance and monitoring of beeboxes easy for PASS providers.
11. First and Last mile hustlers
Many agribusinesses and agtech models need field support for first and last mile access the farmers, including:
Demand aggregation and doorstep delivery of agri-inputs (for agri input companies and agri input ecommerce platforms such as BigHaat, Unnati, Gramophone, Behtar Zindagi, Helicrofter, Plantix and Agrostar)
Farmer onboarding, KYC checks and loan recovery (for banks as well as agrifintech such as Samunnati, JaiKisan, GrayMatter Technologies, Agrifi)
Ground truthing of data (to complement data collected form Seattleite imagery by likes of CropIn, SatSure, RMSI)
There is growing breed of startups who are training people for building farmer connect. The VLEs trained by Hesa (called Hesaathis), Frontier Markets (women entrepreneurs called sahelis) are providing the first/ last mile access to farmers using “digital assist” or “phygital” models with participation from rural youth and specifically, women in the rural areas.
12. Insurance agents
While the government is pushing for deeper penetration of crop insurance (under the Pradhan Mantri Fasal Bima Yojna), there is huge opportunity in waiting of providing micro / parametric insurance products to farmers. Weather insurance, for example, is the obvious product specifically in the context of improving availability and sophistication of tools (such as weather stations, satellite imagery, drones) to provide accurate data for underwriting of insurance products.
The penetration can improve once the farmer starts trusting the product as well as insurance provider. The product has to be simple and easy to comprehend for the farmers. The expertise is needed in designing and distributing the product to rural community, that is where we will need millions of insurance agents in rural areas. The work done by IBISA and Gramcover in distributing multiple insurance products through locally hired channel partners is exemplary.
13. Vet services at farmer doorsteps
The quality of veterinarian services for cattle, poultry, fisheries and aqua has a lot to be desired. Typical farmer needs include animal vaccination, disease management, artificial insemination (AI) / lactation management (in case of cattle), managing dissolved oxygen (in case of aqua), temperature, humidity, carbon dioxide emission (in hatcheries and broiler farms).
Innovators like Milklane (Innoterra), Livestoc, Pashushala, Moofarms, Dvara Dairy are developing such platforms which can empower local vets with tools for disease detection, artificial insemination, cattle insurance etc. For these models to scale, we need qualified and trained veterinarians, who are in short supply (less than one lakh vets in India). We have 300 mn cattle population and if we add broilers, layer birds, goats, sheep population; the number is overwhelming. We need not just vet doctors but a large number of para-vet staff to execute diagnostic test, AI services etc which open ups huge opportunity for rural women and men, who can be trained to provide some of these services.
14. Farm equipment management services
Indian farms need mechanization in the wake of disappearing and expensive labour. We need equipments for urea deep placement (Distinct Horizon), tools for weeding, spraying, tilling, seed treatment, soil pulverization, land leveler (VST Tillers, Shaktiman, Toolsvilla, Balwan, X-Machines); specialists for tractor / equipment repair; agents for sale / purchase / loans for first hand as well used tractors (Tractor Junction, Mera Tractor).
These models need intensive training to build technical expertise in villages. This expertise exists in informal sector and in pockets (places like Karnal and Vadodara, which are famous for developing farm tools). The existing informal mediums can leverage digital mediums developed by agtech entrepreneurs for demand generation as well as efficient delivery of such services.
15. Management services for Farmer Producer Companies (FPOs)
Government is promoting FPOs for many years now through various policy initiatives but the management expertise needed to manage and scale FPOs is scarce. Talent for financial controls, governance, ERP development, human resources management, value addition, branding, sales and distribution for such rural centric businesses needs to be developed in rural areas only.
It is unlikely that talent from places like Mumbai, Delhi or Bengaluru is going to move to places like Sangli, Saharanpur or Kolar. The only viable option is to train people from the local ecosystem through short term courses. It is much easier now (than it was a year ago) with increased adoption of digital education models during covid times. The trained manpower can provide professional services to FPOs and other rural enterprises.
To conclude, as I said earlier, the list of fifteen models as listed above is indicative and not exhaustive by any means. There are multiple other areas such as quality milk collection and procurement (Milklane, Promethean); fruit picking, sorting and grading (sickle innovation); digitization in value chains like silk (ReshaMandi), Jute (Borlaug Web Services), spices (Krishikan, Masala Market); waste to energy / food/ feed models (String Bio, Krimanshi, Takachar); which also can create job opportunities in villages.
In an attempt to estimate the potential employment opportunity in agtech-anchored models, I believe each of 1000 odd existing new age innovative companies can create on an average 100 micro-entrepreneurs within 3-5 years of their scale up journey and each micro entrepreneur can create about 10 direct / indirect jobs in the villages. This adds up to creation of about one million livelihood opportunities in rural areas. More than the number, these opportunities can bring stability, learning, skills, pride and dignity to our rural youth.
As the number of agtech innovators multiply and go from 1000 to 10,000 in next 10 years or so; the number of new livelihood opportunity will balloon to more than 10 million. There are not too many sectors which has such multiplier effect on job creation.
The beauty is that most of these opportunities will be driven by private capital (from entrepreneurs, corporates and VCs) without putting pressure on public finances. Needless to say, the positive impact of innovations in terms of improving farmer income, climate resilience, reducing food loss, diversification from crop income to ancillary industries; will further add to the resilience of rural economy. Public intervention through enabling policies for skilling rural youth, rural incubation, affordable debt and catalytic funding can further boost rural entrepreneurial models.
The convergence of agritech with ruraltech, upstream with downstream value chains; crops with ancillary industries; coincidently happening at the same time; enabled through innovations is indeed the watershed moment for Indian agriculture. The marriage of agtech innovations with rural entrepreneurship will unlock the true value of rural economy creating millions of jobs and help India realise the dream of $ 1 trillion agrifood economy in not-so-distant future.
- This article has been written by Hemendra Mathur, Co-Founder- ThinkAg, Venture Partner- Bharat Innovation Fund, & Advisor- Innoterra Group, and already published on Innoterra website.