These issues are not new but the pandemic has turned the spotlight on them since economic revival is now crucially linked to this sector. The measures the Union government announced in May on agriculture marketing reforms to eliminate inter-state barriers to free trade and create a legal framework for contract farming, too, have helped generated excitement among entrepreneurs and investors.
“The golden age of Indian agriculture may well have just begun, backed by unparalleled digital access to farmers, overarching reforms and government support,” says Pankaj Karna, managing director, Maple Capital Advisors.
Fraazo is one start-up that is riding this wave. It started with seed funding, and later raised $2 million from Equanimity Ventures, Gujarat Venture Finance Limited, and the family office of Manish Choksi of Asian Paints in the first round.
Atul Kumar, CEO of this farm-to-fork firm, says Covid-19 has led to a shift in consumer focus towards hygienic food. The company that started with 100 orders per day when it opened its first store in October 2019 in Powai, Mumbai, now processes 1,500 orders daily. Fraazo hopes to benefit from amendments to the Agricultural Produce Marketing Committee Act, which allows farmers some freedom to sell their produce to buyers other than licensed middlemen in mandis.
Value addition and supply chains are the new name of the game. “Companies
are investing in infrastructure, are involved in risk sharing, in increasing productivity, access to finance, and these are some of the key factors that enable creating a viable and scalable business model,” says Rema Subramanian, managing partner, Ankur Capital and senior member of Indian Venture Capital Association.
AgriBazaar Agritech, is a case in point. It is a private electronic mandi that offers pre- and post-harvest solutions helping small farmers and agri-traders, such as millers, processors and buyers, shift to digital buying and selling. Amit Agarwal, co-founder and CEO, says, “We have successfully built a ‘physical’ channel with both physical presence and digital platforms. This is our biggest strength and differentiator.” (The company’s parent, StarAgri, has raised an undisclosed amount.) Currently, Agribazaar’s gross month value is Rs 1,000 crore and Agarwal says it is profitable at a per-unit level.
Since its inception in 2016, the Agribazaar app platform has connected almost 16,000 traders and processors, over 200 Farmer Producer Organisations (FPOs) with its network of over 300,000 farmers across India.
Incremental reforms in agriculture, such as direct benefit transfer to farmers’ account, better access to finance via banking channels, various schemes and the spread of FPOs are slowly opening up the sector for more organised players.
A key challenge is making agriculture more sustainable for small farmers. Start-ups
are attempting to do this by reducing the labour cost for small holdings by improving access to technology and ensuring remunerative returns by linking them directly to the market. Over 500 start-ups
are currently creating tech platforms and solutions for aggregation points where farmers can come together to sell their produce seamlessly and profitably.
The Atmanirbhar Bharat Abhiyaan provides a capital outlay of Rs 1 trillion for the development of farm-gate aggregation points and other post-harvest management infrastructure. This also calls for huge investment in building warehouses and cold chains to complete the link from farm-to-fork and iron out the last-mile delivery issues, says Kumar.
To be sure, capital flows to this sector still lag sectors such as consumer tech. But Subramanian says that’s changing and the rate of change is expected to accelerate.