In the 1950s, some 60% of India’s workforce used to earn its income from agriculture. Agriculture then contributed 56% to the country’s GDP. In 60-odd years (till FY12, the latest year for which official data is available), the percentage of people earning from farming has come down somewhat to 49%, but the share of agriculture to GDP has fallen steeply to 16%. Clearly, something is not right with the farm sector.
Remember, these falling numbers are after the Green Revolution (which was roughly the decade from 1968), which saw the government focus all its energies on ensuring food security. The Green Revolution was a success, but a lot went wrong after, chiefly poor government policies, made worse by bad weather conditions. Today, Indian agriculture is marked by underemployment and falling output, and there seems no sign of improvement. The conversation is limited to policy reviews and pro-farmer budgets, but there’s little improvement on the ground. In fact, things are more confused since agriculture is a State subject, and so policies, initiatives, and expenditure are not the same across the country. And despite the stated aim of several governments to eliminate the middleman, these continue to exploit farmers.
The government’s track record in educating farmers on increasing productivity and income leaves much to be desired. Between FY08 and FY12, it spent a minuscule 0.5% to 0.8% of the GDP on agriculture research and education. In fact, total expenditure (plan and non-plan) from the Centre and states fell 7.8% in FY12 over the previous fiscal. To look at the brighter side, this presents a huge opportunity for product-driven advisory companies that aim to bring farmers up to speed with the latest technologies.
Over the past decade or so, technology has managed to resolve sticky issues of policy and government intervention. From retail to logistics, technology companies have stepped in to provide consumer friendly solutions. Unfortunately, agriculture attracted few technology players. Till recently, when a growing numbers of startups have sprung up offering agri-related services, from collecting and analysing data on farming, connecting farmers and helping them share information, to helping farmers get in touch with the consumer without the middleman.
A basic search throws up a bunch of names including Kamal Kisan, Zizira, Bhosale Labs, Eruvaka, eFarm, I-Agri, and FrontalRain. Clearly, technology players are seeing something in farming at long last, and are looking at ways to help farmers improve productivity and, therefore, profits. Kamal Kisan, for instance, has developed an interactive system by which its team understands what a farmer needs, and then develops and designs relevant equipment, provides it to the farmer, and gets constant feedback so improvements can be made.
Then, there’s FrontalRain, which provides a suite of software (cloud-based) products for farmers, to help them track funds, inputs, labour, soil profiles, and other crop-related information. The idea is that farmers use this data to understand their crop profiles and fix problem areas.
The future of Indian agriculture, then, could be in the hands of geeks and not in the hands of policymakers.
Here are three representative startups in this space, in three of the areas attracting the most attention from the startup community—inputs, productivity, and supply chain.
Brothers Shardul and Sitanshu Sheth founded the mobile-commerce platform AgroStar in Pune in 2012 and moved from their home in Mumbai to the nearby startup city. Shardul Sheth tells me they want to make AgroStar “the Flipkart for farmers”. Access to inputs such as fertilisers, farm implements, and seeds is one of the earliest stages where a farmer faces problems.
Agrostar eliminates the layers of middlemen between suppliers and farmers. A missed call to a toll-free number connects the farmer to a call centre where he can enquire about products he’s looking for. “We are able to reduce costs by using technology and removing middlemen. We pass some of those savings to the customer, and that’s also where our profit comes from,” Sheth explains. Inputs sold at AgroStar are 2% to 65% cheaper than those sold at shops in a village or district. Besides, Sheth says, a farmer often doesn’t get what he wants at the local shop and needs to go to one at the block or taluk level. “With us, he can place an order on phone and our team will deliver the goods to him.”
But creating a marketplace offering cheaper inputs isn’t enough. Due to the lack of technical education among farmers, they need guidance at every step. Which is why Sheth’s call centre team isn’t made up of BPO employees. Instead, he visits agricultural universities across the country to pick up experts in agronomy (the science and technology of using plants for food), horticulture, and other agricultural sciences. “Traditionally, the local shop where the farmer would go to buy supplies would advise him on the seed, implement, or pesticide to use,” says Sheth. “Similarly, when farmers approach us, our experts help them identify the right inputs.”
Although it’s too early to say whether the Sheths’ efforts are paying off, AgroStar claims it serves around 1.5 lakh farmers in Gujarat and Maharashtra. It plans to cover Rajasthan and Madhya Pradesh by the end of this year. Last August, the company raised $4 million (Rs 25 crore) in a round led by IDG Ventures.
In Bengaluru, Krishna Kumar, founder of Cropin Technologies, agrees that the importance of guidance for farmers cannot be overemphasised. “If you knew how much pesticide farmers use in India, you wouldn’t buy the vegetables they grow,” he tells me over the phone. Cropin develops farm management software and apps that use data analytics to improve productivity and operational efficiency at every step in the farm-to-fork chain.
For example, by using satellite imaging that reconstructs a farmer’s plot, Cropin can tell the farmer to increase or decrease pesticide use in one part, or provide more irrigation in another. “We can even tell what disease, if any, a crop may be suffering from by matching a satellite image with those in our database.” The result: more yield from the same land.
Kumar goes on to add that what Cropin is trying to do is help fight an impending food crisis. “Our natural resources are not going to increase. Then, how will we grow more food from the same land? We need to use what we have more efficiently.”
Cropin reaches out to farmers through companies that source produce from them. These include ITC, Bigbasket, and the Bharti Enterprise-Del Monte joint venture FieldFresh Foods. “This is the easiest way to reach farmers because they’re extremely scattered. It’s hard to reach them directly,” Kumar explains. The company sells its software and apps to these companies, which use them to monitor the production of farmers in their supply chain.
Reuters Market Light, founded by Amit Mehra in 2006 and incubated in London at the mass media and information firm Thomson Reuters, started out as an app to provide information on weather and crop prices, and region-specific farming advice. After being rechristened RML Information Services, the company overhauled its products suite.
“We want to increase our guidance [and] hand-hold farmers from crop selection and sowing to harvesting and selling [the produce],” says chief business officer Siddharth Surana. RML’s products suite includes apps that help diagnose crop diseases, pick the right crop to sow, analyse and manage soil quality, and get access to markets for harvest.
Like AgroStar, RML is also building a team of experts to “drive content” and advise farmers. It is also partnering with produce-buying companies to reach out to farmers. “Besides, we set up kiosks at krishi melas (farming fairs). The strongest channel in rural markets is still word of mouth,” says Surana.
The World Bank’s lead economist for agriculture Madhur Gautam emphasises that technological advancement alone won’t be enough. “Technology can create incentives for farmers to switch [from one crop to another]... It is necessary but not sufficient,” he says. “Policies [specifically pricing] play a complementary role in this.”
Which brings us to government initiatives in a digitally driven world. Gautam says the government and agriculture companies can be enablers in a larger ecosystem. “The government’s primary role is to ensure a suitable environment for the business of agriculture to thrive—and here it is important to underscore that agriculture is a private business—on and off the farm.”
The big challenge is going to be funding. Investors are not exactly queuing up to put their money in agriculture startups. Top-tier VC firms in India, such as Sequoia Capital, Tiger Global, and Nexus Venture Partners, haven’t shown much interest in this space.
Hyderabad-based Aspada Ventures is one of the few VC firms that has backed agri-tech startups, including farm tools company EM3. Aspada’s co-founder and partner Kartik Srivatsa says the way to look at the value proposition of such companies is to consider farming as a service (FaaS). “Our view has been that small farmers are capable. They make up 85% of the market. How do you miniaturise what big farmers do and make them viable for small farmers? The answer is in converting the capital expenditures of big farmers into pay-per-use models for the smaller ones. EM3 offers a pay-per-use model for farmers, who can hire farm equipment from the startup’s service centres.
To take digitisation of Indian agriculture from infancy to maturity, there is a need to first prepare the ground for widespread adoption of digital technological tools by Indian farmers. They have to be convinced that the tools are easy to use and capable of providing a range of solutions. At the same time, technology developers have to ensure that their products are not merely transplants from developed countries that have been adapted for use in India. It’s got to be a rerun of the Green Revolution. Only this time, the methods will be digital.