The 8 F framework of Indian AgriTech investing
Written jointly with A B Chakravarthy.
AgriTech investments in India in 2020 were worth $1.1 Billion. In 2013 this figure was only $89 Million. In an economy that contributes to 15% of the gross domestic product and employs close to half of the workforce, AgriTech came as a rather late entrant to mainstream venture funds’ portfolios. Well, better late than never.
Undoubtedly, agriculture poses a massive opportunity. Typically, the sector is segmented using a ‘Farm to Fork’ approach with technology layers (AI/ML, IOT, etc.) added on top. In this piece, we take a fresh approach of looking at Indian Agri with a product lens. This will allow the reader to grasp and appreciate the vastness of the sector, and also get a sense of the startup activity in Indian AgriTech.
The 8Fs of AgriTech investing are Food, Fuel, Fibre, Feed, Forestry, Farm inputs, Financing and Ferry. Let’s look at what each category encompasses and what the past, present and future look like for each space.
Note: We have attempted to give examples of companies that are innovating for the future. It is not an exhaustive list.
Food
This category encompasses everything inside the kitchen and fridge cabinet of a consumer. It includes the following items:
Fruits and vegetables
Meat and seafood
Pulses, Cereals, millets, oil,
Spices, flowers, medicinal plants
Dairy, Honey, Algae
Two main types of changes have been happening to these products : how they are produced and in what format.
Category
Past
Present
Future
Startup examples
Meat
Chicken, Mutton
Hygienic, traceable meat
Plant-based meat, Cell-based meat
GoodDOT, ClearMeat
Dairy
Milk, curd, butter
Flavoured milk, ice creams, cheese
Milk with active ingredients, Flavoured ghee
Milk Mantra
Groundnut
Fresh nuts, homemade confectionaries
Peanut butter
Energy bars & Super foods
Yogabar, The Whole Truth
There are 250 other commercial crops that are consumed by Indians. How are they going to be reimagined?
Fuel
There are three types of fuel relevant for agri:
Non renewable: oil, natural gas, coal, nuclear
Renewable: Solar, wind, hydro, biofuels, etc.
Organism based energy: algae, cell-based energy, animals (bullock cart), ethanol (plants)
Category
Past
Present
Future
Startup examples
Fuel
Animal and human based, fossil fuels
Renewable sources- solar, wind, hydro, nuclear, biomass
Plant-based, microorganism -based
JSP Enviro
Today, 80% of the energy generated in the world is through fossil fuels. Given the large size of the market, and potential for impact through plant-based and other clean sources of energy, we feel this sector is severely overlooked.
Fibre
This category largely includes whatever we wear today and what we use to store/protect goods that we consume (packaging).
Currently, there are three forms of fibres in wide use:
Synthetic: typically made using petrochemicals
Natural: cotton, jute, banana, pineapple, opium
Blend of both synthetic and natural fibres
Category
Past
Present
Future
Startup examples
Apparel
Cotton, indigo (colours), wool, silk
Synthetic cotton, wool, silk
Hemp, Banana, Pineapple fibre
BoHeCo
Packaging
Cardboard, wood
Plastic and styrofoam
Biodegradable/ plant-based and / or renewable resource based
Bambrew, Kriya Labs
Bags
Cotton and jute bags
Polythene, leather bags
High strength, water and fire resistant cotton, jute, and hemp bags
LaFabrica Craft
Consumer durables, furnishing, housing- anything that today uses plastic can potentially be displaced by natural materials and fiber.
Fodder/Feed
This category includes all types of feed for livestock, fisheries, sericulture (silk) among others.
Category
Past
Present
Future
Startup examples
Animal feed (poultry, fish, cattle, etc)
Grains, oilcake
Pellets, fish meal
Sustainable protein feed
StringBio, Keetup
Mary McCarthy writes: “45 percent of global greenhouse gas emissions from livestock production are related to feed production and processing. About half of global agricultural land is used for feeding animals, and more than a fifth of wild-caught fish is fed to animals. In many countries, livestock production is accelerating deforestation and biodiversity loss, as well as water scarcity — irrigation of feed crops consumes 12 percent of global groundwater and surface water.” Sustainable methods of production of animal feed are hence a large market opportunity for AgriTech startups.
Forestry
Forestry consists of timber and non-timber forest products (NTFPs). NTFPs include fruits, nuts, medicinal plants, fibre, firewood, resins, honey, etc.
Category
Past
Present
Future
Startup examples
Furnishing
Wooden
Plastic
Paddy straw based alternatives to wood
The Bio Company
Indian forests and the biodiversity hosted by them are under pressure for many reasons, ranging from fuel wood collection, extraction of resources, fodder, wood, and non-timber forest products (NTFPs). The wooden furnishing industry by itself is estimated to be worth $18.46B and is growing at a CAGR of 30%. Clearly, this is yet another sector waiting to be disrupted.
Farm inputs
This category includes anything that goes into growing agricultural products:
Seeds
Fertilizers
Pesticides/ insecticides/ weedicides
Irrigation systems and monitors
Farm machineries and equipments
Category
Past
Present
Future
Startup examples
Seeds
Farmers grew their own seeds
HYV seeds
Climate and disease resilient seeds
Tierra Seeds
Farm Tools
Manual tools
Mechanized improvements
IOT, Robotics
Fasal, GRoboMac, Tartansense
Crop protection
Intercropping, natural methods- fire as a trap for insects
Chemical, synthetic inputs
Blended/ sustainable inputs, eg: pheromones, biopesticides which only targets the pest and not the crops
Barrix
Crop nutrition
Farmyard manure or biomass
Generic chemical based products like Urea, Muriate of Potash
Bio-fertilizers and products that provide targeted nutrients
FIB-SOL life science technologies
Agriculture in India is marred by low levels of productivity. One of the reasons for it is because of the lack of adoption of effective farm management practices and high quality inputs. The Agri inputs market and farm management tools market is expected to reach a market size of $1.5B and $3.4B respectively by 2025 per a report by EY.
Finance
Here we include both financing and financial protection (insurance) for farmers.
Category
Past
Present
Future
Startup examples
Farmer financing
Self financing, moneylender
Banks, NBFCs
Consumer financing the farmers, contract farming, digital platforms for lending to farmers
Farmart, Jai Kisan
Crop insurance
Communities covering risk
Government provision and financing of insurance
Digital insurance distribution
Gramcover
As farming increasingly gets digitized, financial institutions will be better positioned to provide financial services like credit and insurance for farming activities in the country.
Ferry
This category includes all logistics from farm to fork including aspects of discovery between a buyer and seller.
Category
Past
Present
Future
Startup examples
First mile transport
Bullock carts
Unorganized shared transport, fossil fuel based vehicles
Tech optimized shared transport, EV-led logistics
Tessol
Trading – grains
Home based storage and bartering
APMC (Agricultural produce market committee) Mandis and private market places
Digital market places
Bijak
Trading – livestock
Trading based on personal networks
Informal middlemen, semi-annual trade fairs
Hyperlocal online platform based trading enabling better prices and quality
Animall
With 1.3 billion consumers, 235 million cultivators and agricultural laborers, and a rapidly growing interest in AgriTech from both entrepreneurs and investors, the future of Indian AgriTech looks more promising now than ever.
Photo by henry perks on Unsplash