ET: What are the big challenges that over 400 agritech startups are trying to solve in India?
MK: There are three big challenges to be solved in Indian agriculture. One is farmer profitability. It is the same thing as the government’s agenda of doubling farm incomes. For a long time, the focus was on the need to produce more. But if you can’t market it, then producing more doesn’t help. So the focus has to be on profitability.
You can do that in a couple of ways: increase output as long as overall prices don’t drop. Improve the prices farmers receive even from the same output through dissemination; and lower their costs of input and finance.
Look at every farmer in India as a micro entrepreneur with their own balance sheet and income statement.
Another is resilience — how do we lower the standard deviation of profitability so that during bad years they are still okay?
Third is how do we improve sustainability of Indian agriculture? Reduce greenhouse gas emissions, reduce water usage, reduce use of chemicals, reduce food wastage. These are the three things startups must focus on. Profitability, resilience and sustainability. Some startups are working in all three areas.
ET: What are the unit economics for agritech startups?
MK: Most of them are profitable. Agritech is not e-commerce. We think of agritech as having nine categories, including farmer platforms, B2B agriculture market places, rural fintech, post-harvest technologies and precision agriculture. These categories define the space and unit economics varies across these.
What has been the impact of startups on Indian agriculture?
MK: Bengaluru-based Stellapps, for instance, has 5 million dairy farmers linked to it. (Gates Foundation, Qualcomm and Bloom are among its investors.) They built a huge network of digitised dairy farming. They created a digital layer over the dairy ecosystem. Skymet has the largest network of weather stations in India —almost 7,000 of them. About 10 million farmers in India are linked through Skymet. DeHaat has direct links with 3 lakh farmers. These are still early days but the impact is there.
ET: Have you invested in aquaponics or hydroponics ventures in India?
MK: It is no use growing aloo and methi in hydroponics. These are good for greens but India is not a raw salad-eating country. These will be niche plays.
ET: What are some of the trends you see?
MK: I see three positive trends. One, development of the agritech ecosystem: at least 33-50% farmers will be connected to agritech. Two, the reforms announced last month (allowing farmers to sell anywhere) are creating conditions for take-off. We will see serious growth in the space. Three, we will finally recognise that the India story is not an urban story. Indian agriculture will see a V-shaped recovery. Mortality of Indian agritech startups will be less — some will succeed, some will become SMEs.