SUMMARY
Agritech startups are gearing up to resolve the issue at multiple levels from supply chain to financing
The Covid-19 pandemic has derailed harvest preparation due to lack of agricultural labour and disruption in the transportation of produce
Maharashtra is among the worst-hit, where the grape harvest and supply chain has completely broken down
India has around 130 Mn farmers with 195 m hectares of land under cultivation. Agriculture is the primary source of livelihood for about 58% of the population. The gross value added by agriculture, forestry and fishing is estimated at INR 18.55 lakh Cr (US$ 265.51 billion) in FY19.
However, it’s impossible for farmers, who largely live on sustenance to shoulder even a small disruption in cash flow putting them in deep debts. The pandemic has also derailed harvest preparation, due to lack of agricultural labour to harvest. Logistical curbs on transportation of produce are adding to their woes. The government’s move to alleviate their troubles by putting agriculture under the list of the essential services hasn’t done much to allay their fears.
Maharashtra is among the major affected areas where the grape harvest and supply chain is completely crippled.
“The available logistics has been erratic and certain offtake channels — hotels, restaurants and catering as well as exports — have been temporarily imploded. For farmers who need to harvest their Rabi crops, lack of farm labour is adding to the misery,” Mark Kahn, managing partner of agritech-focussed Omnivore told Inc42.
Lack of labour may lead to large harvests going to waste, aay the agritech entrepreneurs, experts and investors that we spoke to. Farmers may also struggle to get good prices to support their family. Moreover, farmers who have just harvested crops or about to harvest (especially perishable crops) are most vulnerable due to supply chain disruption. According to reports, farmers had to discard tonnes of produce and some had to leave many quintals of crop and fruit to rot. This is on top of already existing issues such as poor post-harvest management, absence of cold chain and processing facilities. According to the government statistics, various studies on fresh fruits, vegetables and fisheries in India have indicated a loss percentage ranging from about 8% to 18% in 2018.
With the situation likely to get worse in the pandemic, can agritech startups help the agricultural sector stay afloat? Given the fact that India is estimated to have more than 1090 agritech startups as per DataLabs, this sector has been spearheading a revolution in terms of technology. From high-tech drones, IoT devices and data analytics to AI and satellite imagery, India’s agritech startups have lately become crucial contributors to the agriculture economy.
How Startups Are Prepping Up To Use Tech To Address The Situation
Though agri-business is categorised under essential commodities act, the local authorities are not able to differentiate between agri-supply chains and other supply chain goods. This has led to a lot of on-ground confusion amongst companies and startups as cross-district and state border logistics is still a problem.
Smoothening The Supply Chain
“We are associating closely with other agri startups, government and large foundations and developmental agencies to accelerate our pace of reach to the farmers, to be of service in this crucial time,” said Ayush Nigan, cofounder and CEO, Distinct Horizon.
AgriBazaar, an integrated agri-marketplace founded in 2016, is also working closely with farmers, state governments and procurement agencies to allow farmers to download its app and trade on it from the safety of their homes. The platform has more than 1,13K farmers on its platform.
“Crop care startups are talking to procurement companies to help farmers sell produce and logistic and market-linkage startups are helping them in doing that. We are working with farmers across Maharashtra and Karnataka and enabling them to sell their harvested produce directly to our partner procurement companies,” Ananda Verma, cofounder, Fasal told us.
In the current situation, an aggregator model meets the COVID-19 safety procedures as it ensures no crowding in physical mandis and maintaining social distancing norms. For instance, AgriBazaar allows farmers to register and list the produce for sale, while buyers like merchants, traders and corporates give orders for purchase. Once the deal is complete, the startup ensures the logistics of picking up the grain from the farmer’s doorstep and delivering it to the buyers’ godown or warehouse.
“I think every challenge is an opportunity. COVID19 is an opportunity for Indian agritech startups to showcase how tech-intervention and innovation in agriculture can solve the problem of not only yield but procurement and fasten the entire agri-supply chain,” Amith Agarwal, cofounder and CEO, AgriBazaar told Inc42.
Homegrown ventures have understood the problem of the small size of Indian farms and have been following a B2C2B model whereby, direct linkages with the farmer gets established, aggregation is done to supply to large agri-buyers, processors or manufacturers and retailers, noted Nigan.
Smart monitoring technologies will also play a crucial role here. With supply chains completely disrupted, monitoring the end to end supply chain operations becomes more important now than ever. And smart farming technologies can be used for the same. “Smart farming technologies have the capability to monitor the end to end supply chain operations and provide the right remedy for many pain points of agricultural enterprises,” Jitesh N Shah, CRO of CropIn, which is a farm management-monitoring-traceability business solution provider, launched in 2010.
With experts saying that the coronavirus is here to stay for long and we have to learn to live safely, startups have also started sensitising and training farmers to take extra care to completely sanitize themselves before entering the farm. Many such as Barton Breeze have donated produce from our farms to the needy. Omnivore backed M.I.T.R.A is currently using sprayers and tech normally used for agriculture protection for sanitisation by partnering with municipal bodies.
Additionally, agritech startup DeHaat is working to support smallholder farmers in Bihar, UP, Odisha, and Jharkhand. Shrimp farming tech startup Aquaconnect is leading the charge to help aquaculture farmers in Andhra Pradesh and Tamil Nadu survive the collapse of global shrimp markets. Similarly, Bijak is helping rural commodity traders and buyers transition to digital commerce. Clover is making sure greenhouse farmers avoid financial ruin while delivering fresh vegetables to kirana shops.
Creating Direct Linkages With Farmers
Many agritech startups have created direct linkages with farmers for procurement. And it is the need of the hour that the produce of the farmer finds a buyer. And then it is brought either to the warehouse or for end consumption. The direct linkages during such time reduce the chances of fraud or the farmer not getting the right price. Many startups with field staff and agronomists spread all over the country provide the critical last-mile logistics support to pick up the produce from the farmers and deliver it to the buyer. This is besides the value-added services like warehouse financing for the produce, quality checking facility, pre-sowing and post-harvesting solutions to increase yield.
Many companies are working towards delivering essentials to citizens, but there is still a shortage of essential goods faced by a majority of the leading ecommerce platforms. “Kirana stores, on the other hand, are attracting more footfalls and more customers who are going offline to buy essentials. Startups and SMEs are playing a major role by helping these kirana stores stock up during this crisis,” Prithwi Singh, cofounder and CEO, SuperZop told us. The company is using its B2B agri-commerce platform to reach out to kirana stores and help them stock up staples along with the assurance of high quality.
With the lack of information on mandi timings and also the fear among farmers, many startups are working towards sending across the correct information. FarMart, for instance, has a mobile app that helps agri-input merchants disseminate information to their farmers through SMS alerts. “We identified an opportunity where merchants want to inform their farmers about the store opening & closing time. We rolled out this additional feature and merchants now informing their farmers regarding their inventory and service timings. This feature has been a great hit amongst our merchant base and is helping us acquire other merchants organically,” said Alekh Sanghera, cofounder and CEO, FarMart.
Solving Payments For Agri-Businesses
Usually, farmers are paid in 2-3 days but currently, startups such as Farmpal are working on immediate payments in order to not just help farmers but also motivate others to bring in more produce which is in huge demand in cities. Farmers get their payments online in their bank account within the stipulated time from the startups.
Farmpal, Pune based agritech startup that connects farmers to businesses directly, has launched new collection centres to help farmers maintain their daily income and to provide consumers with easy access to fresh produce.
With the aim to expand and increase outreach, Farmpal has launched the fourth collection centre at Kopargaon, near Shirdi and a distribution centre in Wadgaon Sheri in east Pune. This will be followed by three more distribution centres across Pune. “On the supply side, we are buying 100% produce from our farmers as earlier, the only difference being now we are buying whatever they can make available to us – either bring to our collection centres or help us pick it up from their farms. This is because consumers are less picky at this time given the crisis,” said Puneet Sethi, director and cofounder, Farmpal.
Bringing Cities Into Play
The urban population in India stands at 377 Mn and is expected to touch 404 Mn by 2050. With 50% of the Indian population expected to live in cities by 2050, urban farming is something startups such as Homecrop, Growing Greens have been looking at as an option. This resolves the issue of pesticides to a great extent as fresh produce can reach city dwellers within a few hours and also without the need for resource-intensive transportation, refrigeration and storage facilities.
“Since our farms are close to the city, we can reach the supermarket shelves in one hour compared to 3-4 days for the produce to come from village farms outside the city,” said Shivendra Singh, founder at Barton Breeze, which has 18 farms in cities.
While the hotels, restaurants, caterers segment or institutional sales are completely shut, supermarkets and local retailers have seen a spike in consumer spending on agri-produce as everyone is staying indoors and eating at home. Urban farming started by startups to primarily promote organic farming can resolve the supply issue now.
Startups such as Barton Breeze has been doing hydroponic and other soil-less farming and their farms continue to operate even in these testing times mainly due to hydroponic farming that demands lean operations, with just have 2-3 people to manage the half-acre hydroponic farm. During such a crisis, hydroponic farms can deliver quickly and better. Additionally, as compared to conventional farming which takes three months for produce (90 days), hydroponic farms can grow most veggies in 30 days.
As compared to conventional farming, startups like Pindfresh do not depend on external weather. Founded in 2016, the Punjab-based startup uses technologies such as coco peat gardening and other soilless techniques, which takes less space, demands lesser water and is free from pathogens and biological contaminants.
“The future of agriculture will be smart, controlled, precision farming that will help in sustainability as proved during the coronavirus crisis. We can help the economy bounce back more quickly and help feed the needy. We can hit the market more quickly and help the customers,” added Singh.
