Startup Sunday Season 3 Episode 11 (Immediate need for Agri-tech startups in India)

A week into Conventus’18 where IMI New Delhi saw some of the best industry stalwarts come and put forward their valuable insights on innovation, the question we all have in mind is whether the boon from innovation would really trickle down to the lowermost sections of the Indian demography. The new age Indian startups are mostly tech-based and are working towards catering the needs of the emerging middle class of India in its urbanized clusters. Whether it is the e-commerce platforms, car rentals or food delivery services for that matter, the unicorns of the Indian startup ecosystem are mostly reaching out to the consumers in Urban India. Moreover, most of these unicorns have high funding from foreign Venture capitalists and banks to run their operations. This brings forth the long-term debate of the Make in India versus the Make for India initiative.

The vision of Digital India, Startup India and Make in India can only be a true success if and only if the rural sector is included in its framework. Mahatma Gandhi had said, “The soul of India lies in its villages.” Rural India which depends on agriculture and dairy farming as its main source of income and employment, generates 14% of India’s GDP and comprises 65 % of India’s employed population. This is in contrast to the services sector which generates about 53% of India’s GDP comprising 22% of the country’s workforce. These figures truly show that there is a disparity in the production efficiency of the agro sector which is majorly unorganized and suffers from information asymmetry. The vision of developing India as a true superpower can only be achieved when such disparity is eradicated and this untapped and unorganized sector is given priority by new age entrepreneurs and investment firms.

Agritech-startups

We are aware of the rapid urbanization that our country is facing today. Cities, which form the growth engines of the nation, are mismanaged and faces challenges when it comes to improving the ‘quality of life’ of its citizens. Unplanned growth, unforeseen migration and population pressure add further misery to the dream of clean and sustainable growth of urban India. The most prominent reason for ever increasing issues for planned development across Indian cities is the lack of employment opportunities in the villages. If employment and good living standards can be generated in these parts, it would lead to lesser migration and burden on the urban infrastructure. To end farmer misery and inspire the young workforce to take up agriculture, tech-based startups shall have to play an important role along with adequate support from the government. Farmers should be empowered and need to get a higher value for their inputs in order to boost this sector. This brings us to the story of Amul, which changed the landscape of dairy farming in India. Amul stands for a perfect example as to how a milk-deficient nation became one of the largest producers of milk in the world. A true story of how innovation can change the lives of millions ensuring a better and secure future.

The journey of India’s largest milk producing co-operative started as a protest to Polson Dairy in Anand, Gujarat. Polson Dairy collected milk from farmers at cheaper rates and used to sell them to the then Bombay Government at a higher price, depriving the farmers of their true value for inputs. The farmers took their plea to Sardar Vallabhai Patel who advised them to form a co-operative, and thus Kaira District Co-operative Milk Producers’ Union Limited was formed in Anand. The union saw growth with more farmers getting themselves registered. The rapid growth coupled with cutting down middlemen saw an increase in Milk production which could not be procured under the Bombay scheme. Hence a plant was installed to process the excess quantity into dairy-based products. Later in 1949, Prof Varghese Kurien, who arrived as a Government official to manage a dairy, saw the true potential of this venture and went on to create the White Revolution (‘Operation Flood’), the largest dairy development programme in the world. He helped farmers repair machinery and increase efficiency in their production. In October 1955, the milk processing plant was ready for operation and that year also saw the breakthrough of revolutionizing technology- buffalo milk was being used to produce dairy products for the first time in the world. Prof Kurien named it Amul derived from the word Amulya, which means priceless in Sanskrit. The name also stood as an acronym for Anand Milk Union Limited.

Prof Kurien had the vision to empower small-scale dairy farmers by offering them quality control units and centralized marketing. Both of them were absent from the dairy industry then. The movement gained momentum and the co-operative increased its membership base. In 1973 the Gujarat Cooperative Milk Marketing Federation (GCMMF) was set up to market milk and all milk products produced by six district co-operatives in Gujarat. Today GCMMF is the largest exporter of milk in India, and Amul is a ‘House of Brands’ under which a large line of dairy products are marketed in this country. Amul thus stands for an innovation of its era to which millions of farmers had responded.

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Indian agricultural sector has seen two game changing revolutions in its time since independence, the Green Revolution and the White Revolution. It now awaits the third revolution of its kind. This can be brought about by leveraging technology, especially digital technology such as Data Analytics, Satellite image processing, Geo-Information Systems, Big Data and Artificial Intelligence to name a few. In a world where technology drives innovation, Indian agro industry needs to come up with newer models to initiate growth. At the same time, the Indian Government needs to encourage more tech-based startups which can deliver solutions to the farmers, government and the financing bodies suited to their requirements. While data can be used by farmers to understand the day to day weather and climate changes, the same can be used by the Government to frame policies and streamline the value chain of agro-products. For the banks and financing bodies, it boils down to risk assessment and startups can help financial institutions to formulate credit lending schemes in a much better manner.

This being said, there are various startups which have been venturing into the development sector to create change and their products can bring in change by bridging the gap between the farmers, the government and the lenders. But startups venturing into this sector have yet not attracted funding compared to their contemporaries working in purely commercial sectors, largely due to the time-frame of these startups to realize high returns. This is indeed a matter of concern and it requires the intervention of startup boot camps and incubation centers to train new businesses to scale up their offerings bringing in more innovation to the way they can improve the ‘quality of life’ for the rural folks.

India still has a long way to go to be a developed nation, but the seed can be sown only by strengthening the rural population through innovation driven by technology and the right intent.

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