Emerging ecosystem of agritech startups and FPOs

This paper is authored by Ashok Gulati and others from ICRIER.

Agriculture markets in India are beset by a number of well-documented problems. These include fragmented and non-compressed value chains with multiplicity of intermediaries, non-transparent price discovery mechanisms and a lack of scientific storage and logistics systems. But this space has witnessed a number of reforms in recent times. The reforms framework has encompassed the broad themes of allowing direct trading between farmers and buyers, encouraging contract farming, incentivizing private participation in building market infrastructure, warehousing, cold chains and other logistics, and moving towards one nation one market. To allow farmers to benefit from such reforms, the need to mobilise them into groups was also deemed important, which brought into focus institutions like Farmer Producer Organisations (FPOs).

Regenerative agriculture (X/ @anandmahindra)

Within the revamped space of legal and institutional reforms and presence of FPOs which can potentially offer scale, innovations have tremendous scope in getting markets right. Innovations in the agricultural sector are not limited to big box ideas; increasingly, it is startups that have been first movers in providing important plugins to address issues related to farming, post-harvest supply chain management, participation of farmers and linking them to markets.

Agritech startups have been offering disruptive technology solutions in the agri-marketing space. There are startups that have created online mandis, so that players can directly quote requirements and source from other players with the requisite quantity and quality. Many of the online models boast features such as rating systems that allow participants to rate each other and others to see the rating. Some startups have done digitization of entire FPOs so that produce can be traced back to individual farmers. Some startups tie up FPOs to traders, while others tie them up to kirana stores or to the hotels/restaurants/cafes (HoReCa segment). Some startups offer intelligent vision, using which it is possible to segregate F&V produce or staples as per specifications of the buyer. Technology is being used to offer modular, energy-efficient storage systems at farmgate. Fintech products that allow warehousing to be layered with credit and insurance are getting created. Startups use combinations of sensors, IOT, blockchain and ML driven data systems to create end-to-end traceability within the food chains.

The paper can be accessed by clicking here.

This paper is authored by Ashok Gulati and others from ICRIER.