The channels that can do this efficiently are scarce, however. In a recent survey we undertook of more than 100 agtech startups in India, over half highlighted customer (farmer) acquisition as a major concern impeding their ability to scale.
Popular digital platforms like WhatsApp, YouTube and Facebook could help these startups reach farmers and other agri-value chain players and access the scale they need.
Indeed, one successful example is from China where agri-ecommerce giant Pinduoduo has integrated with WeChat, the country’s leading social media platform, to build its social ecommerce model.
However, this kind of integration has yet to be seen in the Indian context. While some agtech startups use media platforms to market their services or for last mile communications, more integrated approaches have yet to be explored.
Without deep digital integration, the time, cost and effort-intensive nature of reaching and driving adoption among individual farmers is a daunting task for agtech startups.
While farmer collectives, such as India’s Farmer Producer Organizations (FPOs), present a promising aggregation platform, they currently lack the scale and digital presence to facilitate broader access.
Given the current landscape, traditional agri-value chain players provide the next best option for agtech enterprises to address their scaling challenges.
Mutually beneficial partnerships
Agri-businesses are particularly compelling candidates to help boost agtech’s scale.
They have vast networks of farmers they sell to or buy from with the requisite financial and operational channels already in place.
This access can make it easier for startups to experiment with the scalability of their solutions at a low cost, while allowing agri-businesses to enhance their service offerings to farmers via digital channels.
It is also an excellent pressure test of the agtech operating model – answering the question, ‘Will it work at scale’?
Some agtech enterprises have identified this opportunity. Almost half of the more-than 100 companies surveyed have a business-to-business-to-farmer (B2B2F) offering as one of their business models.
In such a model, agri-businesses procure access to agtech services for farmers in their networks to facilitate improved incomes and, in turn, higher engagement with their own agri-business services.
Leading startups such as CropIn, Dehaat, BigHaat and NinjaCart have ventured into such engagements with agri-businesses such as agri-input giant Bayer, large agri-output players such as OLAM, ITC and BigBasket, as well as various financial organizations in crop financing and insurance.
These collaborations signify the sector’s movement in the right direction. However, they are still few in number and limited to nascent levels of engagement.
This is largely driven by structural dissimilarities, leading to mismatched expectations as to:
- Robustness of existing solutions. While startup models are premised on an iterative approach or rapid prototyping, agri-corporates tend to anticipate solutions that are deployable at scale and in diverse situations
- Level of sector knowledge. Corporate partners expect agtech startups to have a deep understanding of the agriculture sector at the outset. Meanwhile, many founders are technologists with prior experience in other sectors, learning the nuances of the space as they develop their own offerings
- Caution driven by brand risk. Whereas agtech startups prioritise agile decision-making to innovate efficiently with limited capital, agri-corporates are mandated to protect long established brands, and so adopt more cautious and deliberative approaches
Given that these challenges are inherent to the space, breakthrough solutions need to substantively alter the paradigm with new structures bridging these gaps.
For example, agri-businesses could carve out distinct vehicles that invest in building sector know-how among agtechs, expediting pilot programmes while building integration pipelines with their own service offerings.
Core to this will be identifying a designated, appropriately resourced agtech lead to champion engagement and adoption within the organization.
On the other hand, agtech startups developing point solutions at various junctures of the agri-value chain could come together to offer a platform of solutions to agri-businesses. This increases their options for integration while reducing the overall costs of doing so.
A largely untapped area
Bilateral partnerships are increasing in number. For example, warehousing startup Arya Collateral and precision quality assessment startup AgNext have partnered to provide doorstep services to farmers and FPOs who use warehousing and collateral services and want to be certain of their produce’s quality assessment before it goes into storage.
However, platform approaches that make a variety of agtech services available on a single platform remain relatively untapped.
A notable exception is Samaarambh, a recently initiated agri startup engagement platform from agri-financing startup Samunnati. It provides agtech startups with financial and advisory services and also promotes connections with potential farmer collectives and agri-business partners.
Centrally organized initiatives such as this will be crucial to a platform approach to engagement with agri-businesses. Platforms looking to improve agtech adoption and impact should look to play an active role in making this happen.
The agriculture sectors in India and in much of the Asia Pacific feature a dual set of challenges. While the more traditional issues of small landholdings and inefficient supply chains persist, their risks are compounded by the effects of growing populations, shifting demand patterns and a rapidly changing climate.
It is tempting to view agtech innovations that address these barriers as a silver bullet that will shift this paradigm, once and for all. For this to be realized, agtech enterprises must navigate the intractable hurdles posed by the landscape as it stands today.
Closer collaboration with agri-businesses could lower some of these barriers, giving some transformational ideas and innovation the oxygen they need to grow.
ThinkAg’s ‘AgTech in India: Investment Landscape Report 2021’ report can be downloaded here.