India's Agri-tech industry is booming, with valuations rising and investor interest remaining strong
A controlled marketplace for selling cattle was launched by Indian agri-tech company Animall in 2021 with funding from Silicon Valley venture capital (VC) firm Rocketship.vc.
A partner at the company- Madhu Shalini Iyer stated it was their first investment in the field. After seeing Animall's necessity and promise in a large agricultural market like India, the company decided to invest in it, she said.
Iyer said that the VC company, which uses data science and analytics to make investment choices, began to see agri-tech come up in their algorithms over the last few months, which prompted the business to investigate even more closely into the industry.
6.4% of the globe's total economic output is contributed by the agricultural sector. It is impossible to overstate the significance of agriculture to the Indian economy. The major source of income for an estimated 58% of Indians is agriculture, which also accounts for 17% of the country's GDP. The sector's ongoing resiliency serves as more evidence for this. The agriculture industry showed to be the most robust when the industrial sector stumbled during the pandemic, with a growth of 3.6% in 2020–21 and then increasing further to 3.9% in 2021–22.
Given that India is one of the world's most populated nations and that the UN has predicted it would overtake the United States as the most populous nation sometime in 2023, it is simple to comprehend the significance of agriculture in supplying the world's expanding food requirement. Because of this, it is essential to use technology in all facets of the agricultural business to boost productivity. Although there has already been amazing innovation across the board, we anticipate major developments in the next ten years as the significance of food supply, quality, and safety is further highlighted by climate change and the effects of COVID-19.
The example of apples may be used to demonstrate the advantages of technological integration in the agri-supply chain. Apples are mostly farmed in three Northern states: Jammu & Kashmir, Uttarakhand, and Himachal Pradesh, where India ranks fifth in the world as an apple producer. When these apples were transported via antiquated supply chain systems to the marketplaces of the Southern states six years ago, they were no longer juicy due to the challenging topography of the plantation sites and inadequate road and transportation infrastructure.
In the year 2022, South Indian shoppers may now get crisp apples even in the heat since they are brought in refrigerated trucks only 72 hours from Kashmir. This is an illustration of the advantages of modern transportation, effective logistics, and packaging.
The agri-tech industry in India is only beginning to undergo a revolution, and there are still many issues that need to be resolved, such as outdated farming, storage, and transportation methods. According to Bain & Co. research, the Indian agri-tech sector has garnered $1 billion in capital from investors worldwide, setting a record.
Here are a few intriguing locations to watch.
1. Digital transformation creates effective models
Year-round demand exists for a variety of agricultural products, but seasonal supply results in a widening disparity between suppliers and buyers. The widespread use of data and cell phones has made it possible to close the gap on both sides of the market.
The agricultural community has been able to adapt to technological developments because of the rapid deployment of 4G, the proliferation of affordable smartphones, and the availability of mobile-enabled information services. 41% of Indian farmers use cell phones to acquire agricultural information, according to a survey by AgEcon. Many farmers utilize social media platforms to learn from professionals and other farmers. Information services continue to grow and expand the breadth of rural production in the future as technological adoption within the agricultural community develops quickly.
2. Expanding our knowledge of crop requirements with AI
Some farmers, who previously relied on chemical fertilizers and pesticides to cultivate such crops, are finding it difficult to do so in light of the increased consumer demand for organic products.
AI is also being used by agri-tech businesses to identify potential crop performance issues. For example, a farmer could upload images of a pest or other abnormality on a specific crop, and the platform's technology would be able to identify the problem and provide information on the kinds of pesticides that could be used to stop the insect attack or fertilizers to promote healthier growth, saving the farmer time and money and increasing crop yield overall.
Through its National Horticulture Mission, the Government of India acknowledges the potential of agricultural technology (NHM). The NHM offers financial support, technological promotion, a round-the-clock hotline, financial aid, and technical guidance to farmers to maximize yields. The Indian government is helping current farmers with this endeavor as well.
3. The relevance of product quality and traceability is increasing.
Health-conscious buyers are more likely to research a product's quality before making a purchase. Captain Fresh, a B2B marketplace for the seafood business, is one example of the clever use of technology to allay worries about the freshness of goods. Since its AI platform objectively scores fish based on size and visual attributes to predict the remaining shelf life, anybody may use the technology to determine a fish's perishability by taking a photo beneath its gills. Even while certain steps have been done to improve the traceability of fruits and vegetables, they are still in their infancy. This presents a wonderful potential for businesses to further revolutionize this industry.
4. Eliminating supply chain problems
The supply chain is inefficient on both ends because there is a shortage of product that can be sold while there is an increasing demand for it. It takes time to identify customers, and since global demand has increased, it is harder to find suppliers of high-quality goods.
An inefficient supply chain results in an estimated 40% of the food produced in India each year being wasted, according to the Food and Agricultural Organization (FAO).
The new generation of agri-centric innovations by businesses can significantly reduce this wastage through the use of online detection technologies, intelligent monitoring of fresh foods, and inventory management software that can keep complete track of food delivery and storage as well as foresee overstocking or inventory shortage.
All things considered, ag-tech is a sizable sector with strong tailwinds, and there has been and will continue to be a lot of innovation in the next ten years. Any developments might significantly enhance the experience for farmers, consumers, and businesses given the economic influence that ag-tech has on India.
Reversing the trend in 2022
Big players in industries like ed-tech, e-commerce, and fintech—the poster boys of 2021's startup party—had to take a step back this year as private equity and venture capital investors shifted their emphasis from growth to profitability. They also had to align themselves with the fundamentals.
The agri-tech ecosystem, meantime, has seen values soar and has maintained fundraising with persistent investor enthusiasm.