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An Inc42 Plus Story

FaaS Startups Make Farming Profitable But What Has Stunted Their Growth?

Shanthi S

Inc42 Staff

25 Nov'20 18 min read

Startups operating in the farming as a service (FaaS) sub-segment address pain points across the supply chain such as lack of farm mechanisation, absence of crop advisory and farmers’ inability to reach markets or reach out to market-linkage startups

While some startups in the space such as EM3 and BigHaat have achieved scale, many, including Oxen Farm Solutions and Gold Farm, have shut shop. Is the asset-heavy model to be blamed?

Equipment rental as a standalone model may not work for all; creating parallel revenue streams would be a smarter choice, say venture capitalists who are closely watching the space

Playbooks

Farming 3.0: India’s Mission Agritech

Once least favoured, agritech is today betted as one of the most resilient sectors. The pandemic has further pushed farmers to leverage technology offered by the startups in the space, thereby making the sector a hotspot of investments. Is India’s agritech on the brink of a permanent transformation or the newly-found success a passing cloud? This playbook explores!

For 52-year-old Shailendra Singh, a small farmer residing in the Keshouri village in Bihar’s Nawada district, the biggest challenge in his profession was uncertainty. Not just uncertain weather conditions that could impact his crops but something as essential as getting a tractor on time before it would be too late to plough.

Singh had been saving a little money every year but not enough to fund a tractor. Finding the workforce to operate the machine was also an expensive and tedious affair. So, he had to depend on local agents to rent one, along with operators. The downside: There was never a guarantee that the tractor would reach his farm on time. “Two years ago, I got the tractor five days later than scheduled. By then, the land was not worth ploughing and I had a loss of around INR 20K,” he recalls.

The scenario has improved today. Singh still gets a tractor on rent, but now he knows there will be no delay. The reason: he no longer depends on local agents from the unorganised renting sector; he rents it from Agrix, an early-stage startup that guarantees timely delivery and an expert driver to do the job. The farmer is still not familiar with the operations, but he can easily reach out to the company’s village representative for any help in terms of payment and booking.

Just like Singh, many farmers across various Indian states are reaching out to agritech startups which rent tractors, ground-leveling and deep-ploughing equipment and power harrows. Startups operating in the Farming-as-a-Service (FaaS) sub-segment include the likes of EM3 Agri Services, BigHaat and Krishify, and they have been addressing the inefficiencies across the supply chain, including lack of farm mechanisation, crop advisory and access to markets.