Right time for traditional agri enterprises to embrace technology, says new report

While traditional agriculture companies lag behind in most categories, large agrochemical players benefit from in-house R&D and a greater investment capacity and are therefore ahead in developing, producing, and marketing sustainable and specialized inputs such as bio-fertilizers and organic fertilizers. This was highlighted by the Agritech Report 2022, “What’s next for Indian agri-tech? Emerging opportunities and the way forward for India’s agricultural technology sector” launched by FSG, a global mission-driven consulting firm that partners with corporations and foundations to create equitable systems change.

However, traditional agriculture companies focused on the upstream and midstream value chain, including in-farm mechanization solution providers, lag behind start-ups in most other agri-tech innovation categories. The time is right for traditional agriculture enterprises to embrace technology – whether they choose to deepen their expertise as specialized solution providers, or to expand into adjacencies.

The report points to how agri-tech start-ups will need an acute focus on profitability and sustainable growth to survive an emerging `battle of platforms’. This situation will be exacerbated by a funding slump in the medium term amidst an overall slowdown in global investment activity. The report also indicates that the next phase of India’s agri-tech growth story will be driven by categories such as bio-stimulants, farm management software, remote sensing and advisory, farm automation, novel farming systems, seed-to-fork traceability, and agri-carbon.

Speaking on the occasion, Rishi Agarwal, Managing Director, Head – Asia, FSG, said, “New developments in engineering and technology are changing traditional farming practices. Innovations in agricultural technology have the scope for improving not just agricultural yields, help adoption of sustainable farming practices, but also help farmers improve their lives. Legacy agricultural businesses need to make calculated and fast decisions to keep up with this rapidly evolving environment. Irrespective of whether they want to become a professional solutions provider or expand geographically, they will need to leverage technologies such as data analytics and digital networks.”

“While these recent positive developments are encouraging, agri-tech companies should also pay attention to medium- to long-term trends in order to make informed business decisions. India’s agri-tech advances, if properly harnessed, present a golden opportunity for sustainable and equitable growth that will not only ensure agribusiness profitability but also improve farmers’; livelihoods,” he added.

The report also suggests that the influx of capital over the years has created 5-7 late-stage start-ups (i.e., Series C+), such as Ninjacart, Dehaat, WayCool, Jumbotail, and Arya.ag, each valued between US$ 300M and US$ 800M. These start-ups leveraged early opportunities to transform the traditional supply chain through technology and business model innovations that addressed inefficiencies and gaps such as input shortages, wastages, and a low share of the final sale price for farmers.