Vijay, a farmer from Doddabellalu village of Mysore district, was worried about the payment he received for the milk he sold. He knew that he was getting much less than what the quality of the milk demanded. He suspected that the process of weighing the milk had been rigged and that he was being cheated. Vijay’s fate changed when he got a procurement setup installed in the procurement centre of his village. He said, “Milk weighing and quality check is now automated and the whole process is transparent with regular SMSes about payment details following every transcaction.”
India constitutes a majority of rural and semi-urban population that is dependent on agricultural products. As per estimates by the Central Statistics Office (CSO), the share of agriculture and allied sectors (including livestock, forestry and fishery) was 15.35% of the Gross Value Added (GVA) during 2015–16 at 2011–12 prices. IBEF reports, “As per the 3rd Advance Estimates, India’s food grain production has increased marginally to 252.23 million tonnes (MT) in the 2015-16 crop year. Production of pulses is estimated at 17.06 million tonnes.”
However, vast stretches of bare farming lands go unutilized or are kept untouched by farmers due to lack of appropriate yielding machinery. To boost the agricultural sector, agri-startups are being set up by committed young entrepreneurs to encourage sustainable farming.BE focuses on some of thes startups.
Startups to aid farmers and agriculture
Stellapps: Founded in April 2011, this startup was formed when the five co-founders, Ranjith Mukundan, Ravishankar Shiroor, Praveen Nale, Ramakrishna Adukuri, and Venkatesh Seshasayee quit their jobs to start it. They focused on optimization of the milk supply chain.
The team told BE, “Our aim is to get the dairy farmers believe that we are with them for the long haul and we will help them reap benefits of dairy technology, assisting them right from the production level to storage facilities. We use our technology for this.”
IBEF reports, “With an annual output of 146.31 MT, India is the largest producer of milk, accounting for 18.5% of the total world milk production. It also has the largest bovine population.” There’s a huge untapped opportunity here.
Dindayal, a prosperous farmer in Doddapally village, Kolar had no respite until he came across Stellapps’s monitoring system for the BMC, which solved his problem of milk cuddling. He can now regulate the storage temperature using his mobile as well. Another dairy farmer, Anup Bala is content with the new technology provided by Stellapp. He said, “Through Stellapps technology solutions, I have been able to fetch better prices and could improve cattle health services.” The app also connects dairy farmers to veterinary doctors.
Stellapps’s growth curve has been 300% on a year-on-year basis. The team plans to maintain this rate for the next five years. They informed BE, “We are touching more than three lakh farmers each day through our solutions. We are also reaching out to more than 6000 collection centres per day and deal in about 2.5 million litres of milk every day.” They added, “Our solution has the capability to be implemented in other emerging economies as well. We feel that we have an immense global prospect.”
Omnivore Partners: Omnivore Partners was started in 2010 with an aim to provide financial assistance and support to develop new technologies for food and agricultural sectors. Omnivore focuses on startups in the agricultural and food processing sector like Stellapps and MITRA.
Omnivore prefers backing breakthrough technologies in science and engineering (with intellectual property) and chooses companies with significant traction with customers in these sectors. Omnivore invested in YCook, which produces ambient-stable and preservative-free flash cooked fresh produce, and iSkymet, which is India’s leading provider of risk solutions for weather and agriculture. Omnivore also focuses on technological inputs in agriculture, provides data to farmers, helps in mordernising farms and helps in marketing agricultural produce. The company also advises farmers on food safety norms and gives inputs regarding water management and energy conservation.
Omnivore has invested in 13 portfolio companies with last two investments now underway. Net returns to date are tracking around 19% on a market-to-market basis, which is expected to deliver net returns of 20% to 25%.
Omnivore told BE, “Our targets for FY2016-17 include completing the last two new deals, providing follow-on funding to some existing startups as part of investor syndicates and completing our fund disbursing target.”
The Agrihub: The Agrihub brings together all stake holders in agriculture like manufacturers, distributors, retailers, importers and farmers on one platform and enables companies to showcase their product at one end and help farmers and agribusiness owners to discover new products and technologies. Agrihub deals with seeds, fertilisers, irrigation, plant protection, farm tools, hi-tech agriculture and has created the biggest supplier base in the agriculture and also promotes innovations like irrigation automation through mobile phones, vertical farming, floor irritation. They are also trying to popularize technologies like polyhouse, nethouse, protected farming to help farmers increase their farm income.
Agrihub generates awareness among farmers to take an informed decision before buying. Agrihub told BE, “Farmers can easily find the products and interact with the suppliers on our website. End-to-end solution is also given to farmers.” Agrihub has targets of boarding 10000 suppliers and more than three lakh farmers in the next year.
Government initiatives and funding
Investing in an agricultural startup has its challenges. Governments’ support is crucial for product development and initial operations. Collaboration of incubators, agricultural universities, CSIR labs, engineering institutions, chemical laboratories and biotechnology labs also help agricultural start-ups to provide assistance to the agricultural sector.
Stellapps faced challenges to attract the right talent to upscale their research. The support from Omnivore helped them overcome this hurdle. Similarly it wasn’t easy for Omnivore Partners to raise its first-time fund of `260 crore It took them two years to reach their fundraising target.
Authorities have revised their policies in the last few years. Government bodies provide R&D and training support to the agro-preneurs. Governmental schemes provide ecosystem building and incubation support to the agri entrepreneurs via schemes of Ministry of Food Processing Industries (MoFPI) and Agricultural and Processed Food Products Export Development Authority (APEDA). Niche funds like Rabo Equity, Omnivore Capital and Small Enterprise Assistance Funds (SEAF) also focus on providing risk capital to agricultural companies.
In spite of all such challenges, entrepreneurs have been able to create innovative companies. If any start-up overcomes the multiple hurdles in the sector, they can scale heights and unlock multiple opportunities.
Experts are of the opinion that lot of investors are eyeing the sector for investment. Technological advances have also revolutionized the sector. The younger generations are taking a key interest. Startups are generally more innovative than large Indian corporates and their entry in this sector will accelerate its growth.