<New Publication Alert> Nine Mental Models for Agritech Founders and Investors
Agribusiness Matters is excited to launch its first e-book publication: "Nine Mental Models for Agritech Founders and Investors". These nine mental models will challenge you to think deeply about agriculture from a system thinking lens.
Because, at the end of the day, if we need to transform our food and agriculture systems, we need to start seeing them differently. As the traditional Indian tongue goes- यथा दृष्टि, तथा सृष्टि - How you see changes the very nature of creation. You can buy the book here.
State of Agritech - 6th August 2024
In Today’s Edition:
1/ Is DSR Spurring Big-6 Agri-Input Players Further Towards Their Avengers Moment?
Making Sense of Ricetec - Mahyco - JV Partnership;
India’s over-productive rice and wheat production have largely been relegated to subsidy-guzzling public sector business. With Climate Change threatening rice and wheat production systems, a new private sector opportunity is emerging with newer means of production tied to climate goals. What would it take to succeed?
2/ Double-clicking on Shunya’s Fodder As a Service
Can energy-guzzling hydroponics production systems become cost-effective for producing 365 days of green fodder on demand?
3/ Double-clicking on TAFE’s Agriculture as a Service
4/ Has Quick Commerce Killed F&V (Fruits and Vegetables) agritech startups?
5/ Fasal’s Pivot (courtesy FY23-24 results)
6/ Pondering Over Frank Eyhorn’s TEDx Talk on Food Systems
1/ Making Sense of Ricetec - Mahyco - JV Partnership
DSR production system is rapidly gaining momentum in India, thanks to wheels of partnership and strategic advocacy in motion, including the Bayer - ICAR Memorandum of Understanding, focused towards improving, “farmers' livelihoods by providing them with agronomic solutions, crop protection, mechanization for Direct Seeded Rice (DSR), and precision tools for water-positive practices.”
I went through the signed MoU. The objectives cover a gamut of policy frameworks, IP Management, digital platforms, capacity building, regenerative agriculture and precision agriculture tools.
With gene-edited rice lines going through multi-location trials (AICRPR Kharif 2023), courtesy of ICAR-NASF funded initiative ($), several efforts are underway to challenge the status-quoist policy regime in the Indian agri-input ecosystem, which is further getting stringent on the regulatory side of things.
Bayer wants to bring the DSR production system to one million hectares in India by 2030 through its DirectAcres program, extending the same formula they applied with Better Life Farming.
Corteva is following the same approach in Punjab and other regions. BASF is also following a similar approach, in partnership with IRRI, testing out their AgBalance Tool.
RiceTec and Mahyco came together to form a JV -Paryan Alliance Pvt. Ltd.- bringing together veterans of the agri-input industry- Venkata Subbarao Kolli (Ex-President Africa Middle East, Corteva), Shirish Barwale (MD, Mahyco), Ajai Rana (Chairman, Federation of Seed Industry of India, RiceTec APAC Business Head and CEO, Savannah Seeds) and Karsten Neuffer, (CEO, RiceTec)- to scale DSR production systems for rice and zero-tillage production systems for wheat.
The Avengers, known as "Earth's Mightiest Heroes," were created by writer-editor Stan Lee and artist Jack Kirby, making their debut in The Avengers #1 in September 1963. The formation of the team was a strategic response to the success of rival publisher DC Comics' Justice League of America, aiming to create a similar all-star superhero group that would include characters from the Marvel universe.
In these challenging times for the Indian Agri-Input industry, is this the Avengers moment for the Agri-Input industry, with so many coalitions and ecosystemic gameplays emerging across the agri-input market ecosystem? Or is this the best evolutionary response to today’s stringent regulatory environment? Mind you, we are dealing with decarbonizing production systems of rice and wheat at scale in smallholding contexts. Not simple, linear systems with yield assurance goals.
Paryan Alliance JV’s core offering is bundled FULLPAGE cropping solution with a tall promise aligned to its climate and water-positive goals:
"FULLPAGE cropping solution (Smart genetics + Squad seed treatment/enhancement + herbicide tolerance + crop safety) enabled direct seeded rice (DSR) is going to revolutionise rice production in India. DSR practice can save 35-40% water, Rs 4000-5000/acre transplanting labour cost, puddling operations machinery & fuel expenses and 35% reduction in greenhouse gases (GHG) emissions." - Ajai Rana (Source)
The herbicide-tolerant mutated gene makes sure that the plants “tolerate” the herbicide’s application and ‘allows farmers to spray Imazethapyr, a herbicide that can control a range of broadleaf, grassy and sedge weeds.’… thereby replacing water (natural herbicide) with Imazethapyr’.
Evolutionary trade-offs for herbicide-tolerant crops have received less attention than transgenic crops.
“We have introduced the herbicide-tolerance trait through mutation breeding, not GM. There’s no foreign gene here (unlike with Bt cotton or the still-to-be-approved GM mustard),” - Ajai Rana, in an interview with Indian Express
Given that herbicide resistance evolves with or without gene flow from crops to weeds, is there merit in concerns that there could be a rapid evolution of herbicide resistance, leading to superweeds?
In his book, Darwinian Agriculture, Ford Denison writes,
“Even without gene flow, greater use of herbicide-resistant crops may speed the evolution of herbicide-resistant weeds, if they lead to excessive reliance on one herbicide, thereby increasing the intensity of selection. Eleven weed species have already evolved resistance to glyphosate herbicides. Usually, this occurs in places where glyphosate is used as the primary method of weed control over a period of years. Herbicide-resistant crops make over-reliance on one herbicide more likely, but they are not solely responsible for this practice.”
Can Paryan’s agronomic package practices work towards mitigating excessive reliance on Imazethapyr? How do we understand the evolutionary trade-offs concerning weed resistance to Imazethapyr? Does the benefit outweigh the risk? Or is it the other way? I will try to find out.
2/ Double-clicking into Shunya’s Fodder As a Service
Hydroponics for human consumption has largely failed to take off, save those contexts where they are deeply coupled in consumption regions with the ability to charge a premium for the consumer (Hello Nutrifresh!!)
Can hydroponics production systems work for fodder production in a production region context? Can a village-level-entrepreneurship model work out in the fodder production context?
When I first learned about Shunya’s decentralized 365-day Fodder-As-a-Service model, although I was aware of fodder shortage concerns prevailing in the country, I had my concerns over the energy efficiency of hydroponics production systems.
It must be added that the Napier grass fooder cultivation model is picking up rapidly in the country, based on the FPO queries I see on Napier grass.
“Due to high biomass production qtl/acre in each cutting (5-6 cuttings/ year), napier is sown almost all over India, once sown & lasts for 5-6 yrs, it's best time now to plant napier due to better sprouting & growth.... Napier cuttings available @ Khanna
₹ 2.0/- cutting of Hybrid Napier. ₹ 2.50/- cutting of Red Napier. Approx 9,000 cuttings/ acre. Good for FPOs to process Napier as silage & hay”
I reached out to their CEO Vijay Singh and he responded:
“We are using a methodology, which is fairly low on energy costs. In fact, our unit can work off grid purely on solar power. We are also able to conserve and recycle water. We are not using traditional NFT (Nutrient Film Technique) systems as our focus is on fodder production.”
I further learned that their hydroponic solutions are housed in custom-designed Growth & Logistics Centers (GLCs).
“Shunya’s GLC framework draws inspiration from new-age power generation strategies, emphasizing distributed production over centralized mega plants. By harnessing local energy sources and focusing on local (mini-grid) distributed generation minimizes energy loss (line loss) during transmission.
In a similar vein, Shunya’s GLCs are strategically located within rural communities/geographies, positioned to serve dairy farmers within a 10-15 km radius, ensuring first-mile logistics times under 60 minutes. This proximity reduces logistics costs and optimizes the use of local vehicles like tractors and trolleys.”
In conventional hydroponics systems, size is directly proportional to energy efficiency, as ‘smaller facilities (under 1000 m2) incur significantly higher energy use per kilogram of product relative to their larger counterparts’.
How do we compute energy efficiency in the case of GLC? How to understand Shunya’s GLC systems deeper? Can they scale in a decentralized manner? How to compare these systems vis-a-vis Cornext? I will address them in the upcoming editions.
3/ Double-clicking into TAFE’s Agriculture as a Service
Mechanisation is shifting the definition of Farming-as-a-service. Earlier definitions relied heavily on the pay-for-use model. Newer B2B models are now emerging which clearly show a superior economic sense when compared to the per-acre/pay-per-use model.
TAFE’s Agriculture-as-a-Service is a clear case in point, with their B2B offerings (targeting agribusinesses) growing in scale from 9-10 acres/day to 22 acres per day, with better demand planning and utilisation of machinery.
The key insight here is that drones are the key mechanisation lever. In my State of Drones in Agritech Panel, you might remember me elaborating on this point at length.
“With advancements in AI happening at an exponential rate, we can imagine a near future in which farm machinery is smarter, fully autonomous and - counterintuitively - smaller.” - Mineral Blog.
Agrix is growing. Peepul Agri is coming up with a self-propelling sprayer. Sickle Innovations recently showcased a trailer of their upcoming electric tractor. Orbit farming is proceeding with farming-as-a-service besides franchise models.
And I haven’t talked about so many players in this part of the ecosystem. Mechanisation space is getting exciting!! I will do a sectoral deep dive soon.
4/ Has Quick Commerce Killed FNV agritech startups?
When Milkbasket’s ex-CEO Anant Goel launched Sorted, ‘an omnichannel platform for fruits and vegetables (F&V)’, I had critically dismissed this category (not the startup, which I am not privy to) in my analysis as a dead horse not worth flogging.
“On the unit level, Waycool spent Rs. 1.39 to earn a single rupee of operating revenue in 2020-21, operating largely in a limited-bandwidth F&V market context where the market is ~90% dominated by unorganized players.” - From my analysis of Waycool
Who would have thunk that quick commerce would merit such velocity in the market ending up accidentally pulling off the plug from agritech F&V completely?
In an interview with Zepto’s CEO, this caught my eye.
With the kind of margins they are dealing with, when the quick commerce market consolidates, would they end up cannibalizing F&V agritech firms? Looks likely. If you vehemently disagree, please reply. I am all ears.
5/ Fasal’s Pivot
Last week, I spoke about the mineralisation of agritech. Fasal is a contrasting case in point - pivoting from being an IoT player (comprising 9% of its revenue) to becoming a trader of fruits (comprising 91% of its revenue).
“On a unit level, the firm spent Rs 2.06 to earn a rupee in the fiscal year ending March 2024”. Contrast this with the higher margins Zepto is making towards its captive customers and you will realize how brutal this market is.
Trading is becoming a lights-on activity to keep funding taps on, while founders look for upcoming market niches. With the growth of horticultural/ agri-export clusters, there is potential for such models to scale.
In contrast to Fasal, Fyllo continues to march on with their IoT-led model, without doing trading so far.
Will this be the default playbook for sustainable funding? What are the unintended consequences? Will this create a winners-take-all approach? We will see.
6/ Pondering Over Frank Eyhorn’s TEDx Talk on Food Systems
If you want to make a quick dinner-table argument on why cheap food is expensive, consider this.
“We are paying for cheap food four times. First, at the cash counter. Second, when we pay taxes which are used for paying subsidies, third with our health bills for food-related health issues and finally as we pass on a heavy bill to future generations” - Frank Eyhorn
Frank Eyhorn makes a persuasive case for transforming the food system at large and briefly touches on the question: Can Agroecology feed the world?
Bruno Dorin (whom we encountered when I sketched Future of Agriculture) makes a powerful case of extrapolation, based on the APCNF model, in this paper.
He visualizes two scenarios and extrapolates these systems to 2050 making a stronger case for natural farming.
There are a lot of interesting aspects that are worth pondering over in scaling agroecological systems.
I don’t think we have figured out the appropriate mechanisation approach for agroecological contexts. While I see a few examples in Europe, I haven’t seen a good model that has cracked mechanisation in a smallholding agroecological context. Will delve further into this.
How happy are you with today’s edition?
I would love to get your candid feedback. Your feedback will be anonymous. Two questions. 1 Minute. Thanks.🙏
💗 If you like “Agribusiness Matters”, please click on Like at the bottom and share it with your friend.