The 8 F framework of Indian AgriTech investing

Written jointly with A B Chakravarthy. 

AgriTech investments in India in 2020 were worth $1.1 Billion. In 2013 this figure was only $89 Million. In an economy that contributes to 15% of the gross domestic product and employs close to half of the workforce, AgriTech came as a rather late entrant to mainstream venture funds’ portfolios. Well, better late than never.

Undoubtedly, agriculture poses a massive opportunity. Typically, the sector is segmented using a ‘Farm to Fork’ approach with technology layers (AI/ML, IOT, etc.) added on top. In this piece, we take a fresh approach of looking at Indian Agri with a product lens. This will allow the reader to grasp and appreciate the vastness of the sector, and also get a sense of the startup activity in Indian AgriTech.

The 8Fs of AgriTech investing are Food, Fuel, Fibre, Feed, Forestry, Farm inputs, Financing and Ferry. Let’s look at what each category encompasses and what the past, present and future look like for each space.

Note: We have attempted to give examples of companies that are innovating for the future. It is not an exhaustive list.

 

Food

This category encompasses everything inside the kitchen and fridge cabinet of a consumer. It includes the following items:

• Fruits and vegetables
• Meat and seafood
• Pulses, Cereals, millets, oil,
• Spices, flowers, medicinal plants
• Dairy, Honey, Algae

Two main types of changes have been happening to these products : how they are produced and in what format.

Category	Past	Present	Future	Startup examples
Meat	Chicken, Mutton	Hygienic, traceable meat	Plant-based meat, Cell-based meat	GoodDOT, ClearMeat
Dairy	Milk, curd, butter	Flavoured milk, ice creams, cheese	Milk with active ingredients, Flavoured ghee	Milk Mantra
Groundnut	Fresh nuts, homemade confectionaries	Peanut butter	Energy bars & Super foods	Yogabar, The Whole Truth

There are 250 other commercial crops that are consumed by Indians. How are they going to be reimagined?

Fuel

There are three types of fuel relevant for agri:

• Non renewable: oil, natural gas, coal, nuclear
• Renewable: Solar, wind, hydro, biofuels, etc.
• Organism based energy: algae, cell-based energy, animals (bullock cart), ethanol (plants)

Category	Past	Present	Future	Startup examples
Fuel	Animal and human based, fossil fuels	Renewable sources- solar, wind, hydro, nuclear, biomass	Plant-based, microorganism -based	JSP Enviro

Today, 80% of the energy generated in the world is through fossil fuels. Given the large size of the market, and potential for impact through plant-based and other clean sources of energy, we feel this sector is severely overlooked.

Fibre

This category largely includes whatever we wear today and what we use to store/protect goods that we consume (packaging).

Currently, there are three forms of fibres in wide use:

• Synthetic: typically made using petrochemicals
• Natural: cotton, jute, banana, pineapple, opium
• Blend of both synthetic and natural fibres

Category	Past	Present	Future	Startup examples
Apparel	Cotton, indigo (colours), wool, silk	Synthetic cotton, wool, silk	Hemp, Banana, Pineapple fibre	BoHeCo
Packaging	Cardboard, wood	Plastic and styrofoam	Biodegradable/ plant-based and / or renewable resource based	Bambrew, Kriya Labs
Bags	Cotton and jute bags	Polythene, leather bags	High strength, water and fire resistant cotton, jute, and hemp bags	LaFabrica Craft

Consumer durables, furnishing, housing- anything that today uses plastic can potentially be displaced by natural materials and fiber.

Fodder/Feed

This category includes all types of feed for livestock, fisheries, sericulture (silk) among others.

Category	Past	Present	Future	Startup examples
Animal feed (poultry, fish, cattle, etc)	Grains, oilcake	Pellets, fish meal	Sustainable protein feed	StringBio, Keetup

Mary McCarthy writes: “45 percent of global greenhouse gas emissions from livestock production are related to feed production and processing. About half of global agricultural land is used for feeding animals, and more than a fifth of wild-caught fish is fed to animals. In many countries, livestock production is accelerating deforestation and biodiversity loss, as well as water scarcity — irrigation of feed crops consumes 12 percent of global groundwater and surface water.” Sustainable methods of production of animal feed are hence a large market opportunity for AgriTech startups.

Forestry

Forestry consists of timber and non-timber forest products (NTFPs). NTFPs include fruits, nuts, medicinal plants, fibre, firewood, resins, honey, etc.

Category	Past	Present	Future	Startup examples
Furnishing	Wooden	Plastic	Paddy straw based alternatives to wood	The Bio Company

Indian forests and the biodiversity hosted by them are under pressure for many reasons, ranging from fuel wood collection, extraction of resources, fodder, wood, and non-timber forest products (NTFPs). The wooden furnishing industry by itself is estimated to be worth $18.46B and is growing at a CAGR of 30%. Clearly, this is yet another sector waiting to be disrupted.

Farm inputs

This category includes anything that goes into growing agricultural products:

• Seeds
• Fertilizers
• Pesticides/ insecticides/ weedicides
• Irrigation systems and monitors
• Farm machineries and equipments

Category	Past	Present	Future	Startup examples
Seeds	Farmers grew their own seeds	HYV seeds	Climate and disease resilient seeds	Tierra Seeds
Farm Tools	Manual tools	Mechanized improvements	IOT, Robotics	Fasal, GRoboMac, Tartansense
Crop protection	Intercropping, natural methods- fire as a trap for insects	Chemical, synthetic inputs	Blended/ sustainable inputs, eg: pheromones, biopesticides which only targets the pest and not the crops	Barrix
Crop nutrition	Farmyard manure or biomass	Generic chemical based products like Urea, Muriate of Potash	Bio-fertilizers and products that provide targeted nutrients	FIB-SOL life science technologies

Agriculture in India is marred by low levels of productivity. One of the reasons for it is because of the lack of adoption of effective farm management practices and high quality inputs. The Agri inputs market and farm management tools market is expected to reach a market size of $1.5B and $3.4B respectively by 2025 per a report by EY.

Finance

Here we include both financing and financial protection (insurance) for farmers.

Category	Past	Present	Future	Startup examples
Farmer financing	Self financing, moneylender	Banks, NBFCs	Consumer financing the farmers, contract farming, digital platforms for lending to farmers	Farmart, Jai Kisan
Crop insurance	Communities covering risk	Government provision and financing of insurance	Digital insurance distribution	Gramcover

As farming increasingly gets digitized, financial institutions will be better positioned to provide financial services like credit and insurance for farming activities in the country.

Ferry

This category includes all logistics from farm to fork including aspects of discovery between a buyer and seller.

Category	Past	Present	Future	Startup examples
First mile transport	Bullock carts	Unorganized shared transport, fossil fuel based vehicles	Tech optimized shared transport, EV-led logistics	Tessol
Trading – grains	Home based storage and bartering	APMC (Agricultural produce market committee) Mandis and private market places	Digital market places	Bijak
Trading – livestock	Trading based on personal networks	Informal middlemen, semi-annual trade fairs	Hyperlocal online platform based trading enabling better prices and quality	Animall

With 1.3 billion consumers, 235 million cultivators and agricultural laborers, and a rapidly growing interest in AgriTech from both entrepreneurs and investors, the future of Indian AgriTech looks more promising now than ever.

Photo by henry perks on Unsplash