There is an utmost need for an appropriate institutional design, incentives and market infrastructure to integrate digital technologies with agri-value chains. Comment.

Published: December 12, 2019

It is important to discuss why Agri-tech start-ups have received considerable attention of the technology developers, investors and agribusiness firms. As per Nasscom, they witnessed a growth rate of 25% and have received a $248 million funding in a six-month period of 2019, which is 300% surge as compared to 2018.

The Indian agricultural ecosystem is driven by smallholders, informal domestic markets and lack of scalability,, transparency in the agri-value chains has resulted in ill-governed, mis-trusted and less remunerative to farmers. Here, an end-to-end technology-enabled architecture is required to integrate the value chains which include production, processing and distribution. 

Digital technology start-ups have helped in improving crop production systems, optimising usage of critical resources, enhancing traceability in food supply chains, and bringing transparency in transactions. For example, Jivabhumi offers food traceability for integrated agriculture development in Karnataka. Samura Network offers digitization services for farmer producer organisations using mobile applications. Farmer Connect, a blockchain-based app, helps improve traceability for coffee value chain in Karnataka, Kerala and Tamil Nadu.

A number of start-ups are into the business-to-consumer (B2C) segment also. For example, AgroStar provides crop production solutions to farmers through a missed call or via its app-based service, apart from purchasing of critical inputs and farm implements. However, the fact is that most of these start-ups are yet to showcase scalable and time-tested solutions.

Integrating startups with agri-value chains – 

  • For agri/dairy-tech start-ups, business-to-business (B2B) is emerging as a revenue-generating segment and their partnership with corporations and government agencies can result in value creation and appropriation.
  • Public-private partnership (PPP) in agricultural value chains for startups can help benefit private as well as public sector through formalisation of value chain finance, improvement in decision making and streamlining direct benefit transfer.
  • For startups , fund-raising still remains a challenge and more investors need to come forward to enable performing startups achieve scalability and viability in the value chain business. A Positive which can be seen as an agri-tech-focused Indian investor fund, Omnivore Partners managed to raise $97 million in 2019 from companies based in the UK, Switzerland, the Netherlands, Belgium and Japan.
  • Regulation of agri-tech start-ups regulation requires a robust policy framework by integration of agribusiness incubation, acceleration, data privacy and licensing policies in a single-window system. Inference can be drawn from states like Telangana, Tamil Nadu, Karnataka and Maharashtra who have shown interest to promote agri-tech start-ups. 
  • As agriculture and dairying is a state subject, universities and relevant agencies can identify potential start-ups to tie-up for technology solutions such as farming as a service and crop/livestock management.
  • Agri-tech startups can be roped in Agribusiness incubation centres to sustain technology transfer from lab to land and achieve scalability in agri-value chains.

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