Indian Agriculture Market Analysis
As part of the due diligence service Fundie provides startups, our analysts create market analyses relevant to each startup. This article is based on a market analysis created for a social impact startup working in the Indian agricultural sector. Analysis written by Christian Leibold, Daniel Reshef and Adi Sekhri.
Over the past couple of weeks, we performed a business plan analysis of an Indian agricultural startup that aims to introduce technological solutions to supply-side stakeholders in India’s agriculture market. Through our analysis we gained insights into entry barriers, potential growth opportunities as well as operational inefficiencies of the market that we will explain in this article.
First, here are some basic facts about India’s agriculture market:
- India has a population of approximately 1.3 billion people, of which more than 50%[1] depend on agriculture as their main source of income.
- The country’s Gross Domestic Product (GDP) is expected to grow by approximately 7.4%[2] while the fruits and vegetables production is expected to increase proportionally.
- Due to barriers in the market’s supply chain, consumption of fruits and vegetables accounts only for 9% of the population’s caloric intake.
So why does India’s agricultural market have so much potential for growth?
India’s agricultural market remains largely unchanged from its original form and has lacked significant innovations. The supply chain remains inefficient and clunky, with multiple middlemen causing difficulties. In addition, there is little use of technology, specifically to match supply with demand. While the arrival of motorised vehicles and farm equipment has undoubtedly modernised the growing process, they only represent incremental changes that speed up an existing process.
A major opportunity exists within this environment to drastically modify the growing process, drawing from the new access to technology and big data. The leveraging of big data to draw insights in combination with an increased speed of information throughout the country (mainly due to high penetration of mobile telephones and internet) will allow for farmers to better recognise future market trends and predict crop yields effectively.
This creates new opportunities for social impact startups in the arena of agriculture technology.
In addition to technological advances, there exists an opportunity to shorten the produce supply chain in India. Currently, the process involves use of multiple middlemen as well as markets to get a product from farm to table. Elimination of these intermediate steps and processes will create a more efficient supply chain and reduce prices for the end consumer. In addition, the produce will be fresher and the chance of mishandling will be reduced.
Owing to the large size of the market and the dispersion of the major urban areas, capture of even a small percentage of the market will represent strong gains for a startup. The true test, however, will lie in scalability. It will be difficult to maintain services across such a vast country as India as well as replicating solutions across areas that can differ drastically in culture. A startup that can mitigate these challenges while improving agricultural outcomes will no doubt flourish.
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[1] L, Madhusudhan. “Agriculture Role on Indian Economy.” OMICS International. August 20, 2015. Accessed May 01, 2018. https://www.omicsonline.org/open-access/agriculture-role-on-indian-economy-2151-6219-1000176.php?aid=62176.
[2] “IMF Pegs India Growth at 7.4 per Cent for FY19.” The Economic Times. April 17, 2018. Accessed May 01, 2018. https://economictimes.indiatimes.com/news/economy/indicators/india-to-grow-at-7-4-per-cent-in-2018-imf/articleshow/63801741.cms.
