Mark Kahn, a venture capital funder, said online marketplaces are not a replacement for regulated mandis, but complement them by operating in niche areas
Online marketplaces are making a difference to farmers in the states they are active in, such as Bihar, Madhya Pradesh, Rajasthan, Gujarat and Maharashtra. But, they have not been able to make headway in Punjab and Haryana due to the proliferation of regulated mandis, says Mark Kahn, Managing Partner, Omnivore, a venture capital (VC) fund.
Kahn spoke to The Federal in a Zoom interview on the theme: ‘Are digital technologies changing Indian agriculture?’
The Federal Interview: Are digital technologies changing Indian agriculture?
Omnivore is focussed on agri-tech and has been investing in Indian start-ups since 2012. It has a portfolio of 33 entities, in which it has invested about $90 million. These start-ups span six themes: financial technology (fintech), business-to-business marketplaces, consumer brands that address the farming community, post-harvest technologies and agricultural life sciences.
Draw of agri marketplaces
Private equity investors have taken quite a shine to online agricultural marketplaces. In the financial year 2021, they invested $318 million in the segment, about the same as in the previous financial year, according to a report by AgFunder, a VC firm.
There are online marketplaces like Bijak (Hindi for ‘invoice’), which provide a platform for retailers, traders and arhatiyas or commission agents to trade among themselves and traders who consistently abide by the terms of the contract get higher rankings – and customer preference.
Start-ups like DeHaat provide full-stack services to farmers including agronomic advice, input supplies and access to finance. DeHaat helps institutional buyers to source fresh produce directly from farmers, thus bringing transparency in pricing. To these institutional buyers, it also provides services like grading, sorting, fumigation and ripening.
Complementary to mandis
These online marketplaces are not a replacement for regulated mandis, but are complementary to them, said Kahn. They operate in niche areas like fresh produce. They do not provide an alternative to e-NAM, which was launched by the Centre in April 2016.
Some of the start-ups in Omnivore’s portfolio take the drudgery out of farming and strive to make it efficient, explained Kahn. Stellapps Technologies tries to improve milk productivity, quality and safety with devices on cows and cans and at collection centres, bulk chilling points and processing centres.
Kahn said digital technologies are being adopted by horticultural farmers and those in the dairy, poultry and aquaculture sectors who have profitable operations and money to invest. Farmers engaged in broadacre crops like cereals, pulses and oilseeds are touched indirectly.
Agir-food life sciences
One area where there is frenetic VC activity in the US, the UK the Netherlands, Singapore and Israel is in agri-food life sciences. Start-ups engaged in developing innovative food and alternative proteins, novel farming systems or using transgenic and genome-editing technologies to develop plants with novel traits get a lot of funding.
Kahn said India’s contribution is negligible in this area. He said there was a dearth of talent. The doctorates in these disciplines go west like IT engineers used to at one time. To create an ecosystem for such enterprises, it was important for India to retain talent and make it attractive for non-resident agricultural life sciences scientists to return.