Hi Friends,

Greetings from Hyderabad! Welcome to the November edition of fortnightly Saturday Sprouting Reads!

My name is Venky. I write Agribusiness Matters every week to grapple with vexing questions of food, agribusiness, and digital transformation in an era of Climate change. Feel free to dig around the archives if you are new here.

About Sprouting Reads

If you've ever grown food in your kitchen garden like me, sooner than later, you would realize the importance of letting seeds germinate. As much as I would like to include sprouting as an essential process for the raw foods that my body loves to experiment with, I am keen to see how this mindful practice could be adapted for the food that my mind consumes. 

You see, comprehension is as much biological as digestion is.

And so, once in a while, I want to look at one or two articles closely and chew over them. I may or may not have a long-form narrative take on it, but I want to meditate slowly on them so that those among you who are deeply thinking about agriculture could ruminate on them as slowly as wise cows do. Who knows? Perhaps, you may end up seeing them differently.

[Subscriber-Only] How to Succeed in the Era of Studio Agriculture

Last week, I published a subscriber-only post, as a follow-up to my earlier piece, The Studio Era of Agriculture Begins. This was my first foray into making friendship with the albatraoss called Logistics around the neck of Indian Agriculture.

99% of the agriculture markets in developing countries work on bundling trade and logistics. You will never find any agricultural output buyer in India, no matter what size his operations and turnover is, who doesn’t own transport. Much like China did in the golden age of containerized ocean freight, owning both manufacturing and transport of ocean containers, agri traders have historically owned logistics and trading of agricultural produce.

Now, what happens when trade and logistics get bundled together? Produce becomes incidental to the transaction. Traders will always call the shot over farmers.

How can agritech startups in the era of post-pandemic studio agriculture move beyond this marketplace design that is structurally designed to benefit traders over farmers?

In this article, I introduce the idea of a Fat Supply Chain (as opposed to Lean).

In a mostly unorganized market, you are rewarded disproportionately for being fat and when shit hits the fan, you discover more nuanced ways to be antifragile (and eventually) lean.

[Subscriber-Only] Farmart, Plantix Dukaan [Store], DotPe and Agri Input Retailing Platform Wars

Agri-Input Retailing has come a long way.

For the longest period of time, whenever agri-input manufacturers thought of agri-input retailers, the easiest way they solved their problems was by offering them a loyalty app. Soon, every agri-input manufacturer wanted the retailer to order their respective products from their respective apps. Can you imagine the plight of an agri-input retailer owning 15-20 brands?

From 2015 onwards, aggregators like Agrostar, Dehaat, Unnati, Gramophone came to the fore with a business model in which they owned the customer and suppliers followed the suit. They went for the hub and spoke model. They went full-stack in order to control the value chain and aggregate demand faster than the supply, paying the price by commoditizing the supply.

Today, with the advent of Farmart, Plantix Dukaan, we are seeing a new wave of decentralized platform play.

Forty Years of Agritech

The folks at Leaf Agriculture have a great post tracking the forty years of evolution of Agtech.

Their argument, in nutshell, is thus:

Breakthrough Agtech applications drive digital infrastructure.

Digital infrastructure drives breakthrough Agtech applications.

To unpack this, I would first overlay Apps and Infrastructure onto my favorite evolution model from Simon Wardley for a simple reason: Many tend to conflate evolution with diffusion. The former includes the latter. And not the other way.

If you map the supply competition and demand competition for every technology value chain, you see how its characteristics evolve in a spectrum that spans the new, uncertain, and failure-prone to finally being old, boring, and reliable.

Here is a quick primer, in case you want to quickly come to speed with this model.

Now, if you were to categorize each of the players operating in these evolution phases, you could call them pioneer, settler, and town planner, to borrow again from Simon Wardley’s model.

Now, what are the typical characteristics of these Pioneers, Settlers, and Town Planners?

Now that the context has been set, who are the pioneers, settlers, and town planners in agritech?

“Pioneers” are brilliant people like Carl Lippert, working on undiscovered concepts. They are working on DAOs for coops, NFTs for warehouse receipt financing, building “Prosumer”, “Consumer to Manufacturer” models that directly link producers with consumers. Our typical responses to their core innovation work typically go like this: "Are you kidding me?”, "I don't get it ", "Is that magic?", or “How do you solve X {Insert your favorite intractable problem}”?

“Settlers” are those brilliant people running agritech startups, with some iota of comfort of having discovered a “product/market fit”. They are working on proven models: B2B2C models agfintech models, farm-to-fork marketplaces. They evoke trust because they have their operations in place. They are keen on building organizational muscle that will go a long way.

“Town Planners” are those brilliant people who have a unique set of resources to industrialize the trailblazing innovations painstakingly put together by “Pioneers” and “Settlers”. In a core agritech context, agri -input manufacturers, Big 6 players, ACBD Traders fit this category. They know what it takes to build the ground infrastructure that will be used by the upcoming “Pioneers”. They are keen to partner with “Pioneers” and “Settlers” for this reason.

Whenever “Settlers” partner with “Town Planners”, you can read a lot into it those partnerships.

1) Bayer partnership with Agrostar

2) Plantix partnership with DCM Shriram

3) PayAgri’s partnership with Summaya Industries

It helps to remember that "Settlers" are going to steal from the pioneers and their R&D efforts. "Town Planners" are going build core, volume operations based, low margin but highly industrialized services & commodity components, by stealing from the work of “settlers”.

Harder though it may sound to the ears of agritech founders, this stealing creates a very good virtuous cycle. You are continuously reinventing yourself and the market rewards you for breaking the inertia of change.

Open Source Agriculture

Now that we are talking of evolution, a fundamental lesson I learned from Herbert Simon is that the evolution of a system depends on the evolution of its subsystems.

In other words, it is only when activities become commoditized, boring, and reliable, it is possible to build new “pioneering” innovations on top of it.

What makes Canva a fascinating tool for any layman to create a graphic design is the very fact that it has commoditized good design templates.

Now, where is the Canva of Agriculture?

As much as standard sizes of bricks, pipes, utility services, and other architectural building blocks led to a faster rate of house building and a wider diversity of housing shapes, we need standard size data ingestion models of crops, pests, weather, and other data sets to build newer innovations on top of it.

Rhishi Pethe, in his latest newsletter edition, does a neat job covering Open Source Agriculture and the community that drives it. In addition to the agriculture angle that Rhishi covers in his newsletter, I would add that open-source becomes extremely critical in the Traceability context.

Today, a vast majority of clueless equate “open source” with “free resources” and naively believe that by the very act of opening up their internal systems, the developer community would be so moved by their benevolence that they will adopt it and would make it successful.

Today, I see many firms publicly talking about Traceability in 2021 in the same la la fantasy land wavelength as Open source was in the 2010s.

Many seem to think that by tracking and tracing the genealogy of everything we drink and eat, we can hit three birds (ouch!) by one stone: a)Food Sustainability (even though one can never be sure what we really mean by sustainability) b) Assured Farmer Incomes c) Food Quality.

If agritech founders want their traceability systems to scale, they need to factor in componentization and commoditization. In the coming years, when web3 movement catches fire, we will understand its importance even more, in context with composability.

Event Updates:

After a brief hiatus, I am kickstarting Agritech Samvaad (Dialogue) events.

On 10th June 2021, NCML announced that they are no longer National Collateral Management Services Ltd, but National Commodity Management Services. This is no ordinary change. The warehousing industry is in the midst of a momentous change. How do we understand the evolution of warehousing?

Siraj Azmat Chaudhry needs no introduction. Agribusiness Matters is excited to host this deep-dive dialogue to delve deeper into the changing nature of the warehousing industry, the impact of farm laws, the future of WDRA, and lots more.

I am excited to host the next edition of Agritech Samvaad with Siraj Azmat Chaudhry. You can RSVP here. The event will be live-streamed live on Youtube and LinkedIn.

So, what do you think?

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.🙏

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