How Agritech has changed the Agribusiness sector in India

How Agritech has changed the Agribusiness sector in India

Agriculture has always been a flourishing industry in India, but with the recent demand for agriculture and food commodities in the past year, we’re expecting to see an even more significant rise in the number of agritech companies venturing into the market. Just a little over 7 years ago, India’s agritech sector consisted of only a handful of agritech companies. As of now, the number reads well over 1000 agritech companies nationwide in 2020. Thanks to the pandemic, small towns and rural villages have also been blessed with the touch of technology and the internet. Trends and concepts that seemed like a faraway dream since the past few years were suddenly needed to put into action. After all, it’s the era of digitalization.

Despite the various constraints imposed on various industries, in terms of logistics, transport, lack of monetary support and supply chain losses, the agritech industry remained strong. Of course, the fact that agricultural and food products are considered to be ‘essential commodities’ helped various agritech startups remain afloat.

According to a recent survey done by Accel-Omnivore, 85% of agritech companies saw an increase in demand for their commodities in the past year, while 51% of the companies surveyed expect to see at least 50% growth over the financial year. As per a NASSCOM report, India’s agritech sector is expected to grow by 25% every year.

Over the last few years, agriculture’s main support is the approximate 600 million internet users, with the introduction of mobile phones and the internet across small towns and rural villages. Since 2016, India’s urban population has increased in size by an average of 2% per year and is expecting to contribute to approximately 40% of the overall population by 2022. This plays a crucial role in agritech. An increase in urbanization demands a change in the eating habits of the people. Consumer dynamics & behavior is an important factor in the agriculture business, and in the current age, the consumer wants more fruits, vegetables and healthier eating options. Not only are consumers worried about what they’re eating but also how it’s grown and transported. With the incorporation of biotechnology in agriculture, crops are now designed to be tastier and healthier.

From procurement to delivery, over 50% of food commodities are wasted due to supply chain inefficiencies. With the introduction of players in market linkages and supply chain technology, there is a significant reduction in food wastages and an increase in transparency across the supply chain. Market linkages are also beneficial to farmers – increasing their income by up to 10%.

Farmers have witnessed an improvement in their yields by up to 30%, thanks to precision agriculture and farm management. The rise of even a degree in the temperature can end up causing a loss of 4-5 MMT in wheat production, according to studies. This can mean just under 20% reduction in the annual agricultural income. Agritech brought with it climate-adapting technology which, along with data analytics and machine learning, can help tackle the challenge of the effect of sudden climate change on crops. Data analytics and weather forecasting also study soil health.

As of May 2020, the government made changes to the agriculture sector policy, such as:
As of May 2020, the government made changes to the agriculture sector policy, such as:

  • 1.63 lakh crore outlay
  • Changes to the Essential Commodities Act (ECA) in which regulations are removed on cereals, edible oils, oilseeds, pulses, onions and potato.
  • Risk mitigation measures for farmers
  • Inter-state trade restrictions have been removed so farmers can choose where they want to sell their goods

These amendments can mean a 25-30% higher income for farmers. It also ensures a steady flow in the supply chain and that trade of agricultural produce will continue even in times of uncertainty. “The stimulus and capital funds should be used for bringing in value addition for fishery and agricultural products to gain an advantage in international markets and boost exports.”, says Sanjay Kumar, CEO of Elior India. Along with this, we can expect to see more changes in agritech, along with a rise in active participation of the private sector in the supply chain.

We at Growthpal understand the aspirations of the agritech in India and help them identify the right partner to grow their business. With our wide range of coverage of early-stage startups across sectors, we will source and provide the best of the recommendations thus increasing your probability of winning the transaction. Are you ready for the next big leap in agritech? Let’s discuss at [email protected]