Agriculture is the lifeline of Indian economy, contributing ~16% of the country’s GDP. The agribusiness value chain is, however, faced with various roadblocks that inhibit the sector from realizing its full potential. In the last 6-7 years, various start-ups have mushroomed in the Agritech space, aiming to aid farmers and other stakeholders.
In conversation with Mr. Rajeev Jha, Founder & Director at Yuktix Technologies and inputs from Mr. Shailendra Singh, Co-Founder, we attempt to understand how their company is solving the gaps in the agribusiness value chain and the attractiveness of the agritech industry in India.
Q. What was the idea behind establishing Yuktix Technologies? Which pain points in the agribusiness value chain does the company solve?
Yuktix solutions fit on the production side in the agribusiness value chain. We provide tools to growers to forecast pest and disease attacks at the farm level. This is a significant problem as pre harvest losses are more than 25 percent of the production. The growers have no tools to assess the conditions at farm level, even though a vast body of research exists. That way you can also think of Yuktix as providing extension of disease management research at the farm level.
The idea behind establishing Yuktix was that there is a vast amount of research already available at the universities and can we apply it at the farm level to cut down on the risk and productivity gains. The main problems in such application were the cost of delivery and establishing a value proposition for the growers, where it was out of reach. Our work started with a lot of talks with researchers, the kind of people who have spent decades researching crops and we started our work with protected cultivation.
Q. Which geographic area are you currently focusing on? How many farmers/customers are you currently working with?
We are focusing on Karnataka right now. We are working with growers around Bangalore in Dodaballapur, Chintamani and Kolar. Through partner organizations, we are working in Jamshedpur, Kalahandi, Ganjam and Nilgiris as well. The technology is in use at research institutes and big corporates as well.
Q. How is the company working towards making the farmers aware of the service offering and what is the process of on-boarding the farmers/customers?
The current model is a two-tier approach. There is a certain segment of farmers doing a crop in a certain size of plots that we are targeting. For the current setup, we require 5+ acre farmers or the ones doing protected cultivation. The engagement can start at the local shops where we put our material and standees. Every area has our local contact that the farmers can approach. The digital channels like Facebook and YouTube also work to establish first contact and generate enquiries. We also conduct workshops at the panchayats. We then schedule a field visit where we demonstrate the product and explain the benefits to the grower.
Q. What business model does the startup operate with, is it a one-time upfront fee or a monthly subscription model?
Our model is to charge a subscription fees during the season. All our TLV and CAC calculations are based on that fact. Since we have developed a lot of technology in-house, our cost of delivery is half of the nearest competition who are still cobbling together an ad-hoc solution from different manufacturers. We are running at 50% gross margins and we can further lower the cost of delivery as our technology keeps developing.
Q. How has the overall growth been like for the company, since its inception in 2013?
Yuktix has 3 distinct phases. First was the initial contact with growers, trying to understand the challenges and coming up with a solution. We worked with 5-10 odd growers and couple of research institutes in that phase. The second phase was development of technology to bring down the cost of delivery. This work was supported by government grants from Karnataka, Govt. of India and a European innovation prize. If you look at us, we are the only ones having this level of technology in India and a commercial offering. We moved from working with a select people to wider distribution via partners like Gram Vikas, CSA and Keystone foundations along with B2B customers like ITC, Naturex, Bayer etc.
Now we are in third phase, where the technology is proven, we have the right cost of delivery and we are going directly to the growers. For anyone looking for farm digitization tools in in India, we always come up in the results. That way the story plot has grown a lot.
Q. As per our research, the overall Agritech industry in India (inclusive of Input Market Linkage, farming as a Service, Supply Chain Tech, Precision Farming/SaaS & Agri Fintech) in valued at around INR 1,500-1,700 crores basis revenue with around 500 startups in FY’2020. What is your opinion about the same? What growth rate do you expect in the next 5 years?
INR1,500-1,700 Crore is too less value of Agritech Market in a country like India where agriculture contributes to 19.9% in 2020-21. There are many startups but very few are focused on technology. Agritech as a sector in India is expected to reach USD 24.1 Billion by 2025 and we at Yuktix expect a growth rate of around 100x (in terms of operation, revenue, and presence) in the next 5 years.
Q. On the other hand, the Precision Farming, Farm Advisory& Quality Management segment which includes SaaS, Farm Digitization & Data Analytics is estimated to be around INR 100-150 crores. Do you agree with our estimates?
In my honest opinion, that is too low an estimate. If you look at the holding patterns, 86% of the Indian farming is marginal, however that still gives you 14% at 2+ acres in this country. Most of the estimates today are based on a very low dollar value assumption per farm. However as specialized products get established, the dollar value per farm will increase. You can also look at market proxies like current agronomist services market for pointers.
Q. Which other players operating in the Precision Farming/SaaS segment do you consider your biggest competitors? What are the major challenges faced by players in this segment?
Fasal and Fylo are our main competitors. The major challenge is to establish a brand and expound the value to the grower directly. There is no dearth of money, but you have to convince the grower that it is worth it for him/ her.
Q. What are the trends or technology interventions that the Agritech industry might witness in the future? What plans does Yuktix Technologies have for the future in terms of funding rounds or growth plans?
There are few trends that you can glean from government push of technologies. The governments are trying to bring in a diverse set of cropping away from wheat and paddy. There will be a lot of experiments in growing the kind of crops that were not grown earlier, like Moringa, Dragon Fruits, Millets and Straw Berries. Then there is a lot of emphasis on making FPO collectives on the lines of dairy collectives, which is not very successful right now but is a clear trend for the future. Contract farming looks set to grow. Then there is a lot of emphasis on growing more with less. If you compare the yield curves of India with the rest of the world, you will be shocked.
Our growth is tied to more growers looking to bring in a variety of crops that require expert advice and increasing the productivity of a farm related to above points. We look forward to bringing down our cost of delivery and bring in all 2+ acre growers within the reach.
Q. What factors should a company take into consideration before entering the Agritech industry or in particular the precision farming/SaaS segment?
There is multitude of areas, and agriculture by nature is a very fragmented industry. The challenges for a company working on market access and the one working on protected cultivation are very different. One should be very aware of this fact. The experiments in this industry require a long gestation period.
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