Agri-tech startups: Bridging gaps in the agri-retail supply chain

Agri-tech startups: Bridging gaps in the agri-retail supply chain

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Rapidly rising mobile and internet penetration, including in rural India, has disrupted the consumption story in India with embedding at every stage of the consumer’s journey.

Agri-tech: Long-haul gestation putting off investors
In the past few years, some entrepreneurs have been attempting to embed technology in the complex and diverse agriculture sector, with a keen focus on simplifying agriculture and farmers' logistics

And now, it is moving to the back-end, to the backbone of India’s economy.

In the past few years, some entrepreneurs have been attempting to embed technology in the complex and diverse agriculture sector, with a keen focus on simplifying agriculture and farmers’ logistics — from production to distribution. Startups such as , , Auxin and Agrowbook, among others, are working toward inclusive growth by making farmers digitally-enabled. They are bridging gaps in the agri-retail supply chain, providing farmers with direct market access and information, besides weather and soil management services.

“There are two fundamental challenges facing the agriculture sector — productivity and distribution,” says Executive Director of for-profit social organisation eKutir, Suvankar Mishra.

Headquartered in Bhubaneswar, eKutir was founded in 2009 with a twin focus on creating local jobs through micro-entrepreneurs who use mobile applications to ultimately serve farmers. The startup has developed a mobile application ‘eAgro’ that has in-built tools that allow data capture and offers advice on agro practices to maximise output.

“Our key beneficiaries are small farmers who have just an acre of land each and are digitally ignorant, and in a few cases, illiterate. For them, getting access to information and knowledge through mobile applications involves getting expert assistance. Thus, we create and train these micro-entrepreneurs who further help farmers in using these tools effectively,” Mishra says.

The app (eAgro) has three tools which address issues ranging from soil management, seed selection and provide overall access to best farming practises and marketing data.

“The first is ‘mrittika’, a soil nutrient analysis and recommendation tool. Then there is ‘ankur’, which is a knowledge-based programme, providing tailored information on crops, soil type, seed selection and recommended practices for seed preparation. The third is ‘Farmer Portfolio Management Tool (FPMT)’ which is a system that records individual farmer activities, advises on how to improve management of assets, connects farmers to experts and provides market connections and trading data,” explains Mishra.

Ekutir charges a nominal fee from farmers to avail these services.

Since its launch, the app has been used by 287 micro-entrepreneurs, reaching out to 60,000 farmers across India, Bangladesh, and Cambodia. In India, the company largely works in Odisha and has engaged partners (like-minded organisations) in Bihar, Madhya Pradesh and Maharashtra.

eKutir also launched an e-commerce website VeggieKart in 2013, which provides direct farmer-to-consumer linkages. The retail initiative removes pilferage in the existing agriculture retail chain and offers superior quality and benefits for both farmers and consumers.

“The portal is currently available only in Bhubaneswar, but going forward we are planning to take both eAgro and Veggiekart to Mumbai and Delhi. Besides that, we are targeting to reach 2,50,000 farmers across emerging markets in Latin America, Africa, and South-East Asia. We are also working on new strategies to engage with players working with farmer cooperatives and farm produce organisations which will surely benefit from eAgro,” Mishra says.

Bengaluru-based startup Farmily also swears by the benefits of providing internet access to farmers.

“How does Ola make an entrepreneur out of a driver? How did Airbnb make business people out of house owners? Or how did Amazon and Flipkart make e-commerce entrepreneurs out of small businesses?,” asks Founder and CEO of Farmily, Karthik Natarajan. “By giving them Internet presence.”

“If you look at e-commerce today, every industry is driven by it but if there is one place where no e-commerce is done — the farming industry. If you are able to bring in optimisation over there, there are a lot of things that can be done,” he explains.

Launched in August 2014, Farmily provides micro-sites for farmers to display their farm produce and bring consumers and farmers onto a single platform. It allows buyers to order or express interest in purchasing the farmer’s produce via the Farmily platform. The platform is free of cost and is available for all farmers and buyers across the globe.

Natarajan asserts that giving internet access to the farmers not only helps them get better prices for their produce, but also contains the problem of food wastage in developing countries.

“First, there is the middleman who makes all the money as the farmer sells his/her produce to them at the farm gate. Farmers get very little or no money at all because of which he’s unable to invest in practices such as grading, sorting, quality control, cold chain,” he elaborates.

Natarajan points out that in developing countries, at least 30-50 percent of all farm produce never make it to dining tables. “Clearly, there is wastage at the farms, in the transportation and distribution process and even at homes.So I realised that things could be optimised from the farm gate to the plate by making farmers digitally empowered.”

Farmily claims to have over 20,000 users on its platform with 80% of them being farmers and the rest being buyers. The website is in 14 different languages and allows both farmers and buyers to post and get information in their respective languages.

But what about the challenges that a farmer faces in understanding the technology and e-commerce?

“There are 118 million farms in India today, out of which 30-40 million farmers are progressive farmers. These farmers have between 5-25 acres of land, are educated, have used smartphones, know how to use Facebook, WhatsApp, etc. So if we are able to bring these 30-40 million farmers on board and get them e-commerce-enabled, the rest will automatically follow through,” Natarajan explains.

While the agri-tech space is slowly but surely witnessing increased entrepreneur activity, the investor community has so far been slow in showing interest. Only a few VCs , including , a venture capital firm focused on agriculture and food-tech, have invested in agri-tech till date. The others appear to be waiting and watching.

But lack of investor interest has not dissuaded outfits such as eKutir and Farmily, both of which have scaled to this point through internal accruals.

“Agri-tech is a complicated business; one cannot expect an early exit here. If you are planning to invest today and exit in two years, then agri-tech is definitely not the space for you — both from the investor’s and entrepreneur’s point of view. It will take its own sweet time to build a strong business,” Mishra explains.

“VCs have a tendency to follow the herd; the insane frenzy in food tech startups being a case in point,” he adds. “VCs are not looking at business models such as ours so far. It will take a while for them to realise the opportunity here. There are some really smart VCs, but it will take a little bit of time for them to get around to farming.”

“The problem with agri-tech startups today is that even while there is huge potential, it typically takes a fairly long time to build the business,” Natarajan notes. “It needs investment for the long haul. But eventually VCs have to get their head around and see the potential in valuable businesses such as these.”