There is no sector of the Indian economy, which is immune to the climate changes
The climate crisis can possibly cure for the perpetual bipolar disorder of food value chain by bringing the “food” and “agri” ends closer
Intersection of clistack and agristack will help build many farmer-centric innovations with significantly low first/ last mile cost with negligible CACs
India has come out of a deficit monsoon and barely escaped a drought year. Despite 5.6% deficit in overall rainfall numbers (820 mm against average normal rainfall of 860 mm); monsoon in the year 2023 at best can be called as erratic, across months as well as across regions.
While the month of June was deficit (-9%) July witnessed surplus rains (+13%), August saw biggest deficit ever (-36 %), thankfully September rains (+13%) had something to cheer.
The regional and seasonal monsoon volatility is not a one-off event anymore but becoming a pattern from one year to another. The weather vagaries are not limited to ndia alone.
Europe has experienced heat waves like never before. The Hawaiian and Canadian wildfires are a testimony to the looming dangers to the biodiversity of the planet earth and humanity at large.
There is no sector of the Indian economy, which is immune to the climate changes. However, one of the most adversely impacted sectors continue to be agriculture as reflected in stagnating or declining productivity of the major crops.
It is fair to say that the sustainability of agri and food supply chain going forward depends on the acceptance and mitigation of climate risks, complemented by actions for building enough climate resilience and adaptation mechanisms amongst value chain actors.
The smallholder farmers (about 120 Mn in India and over 500 Mn globally) clearly share a disproportionate risk of climate changes than any other value chain player.
The consumers at the other end of the supply chain are equally vulnerable, but have not realised the impact in equal measures asmuch as farmers; thanks to the sustained food security and supply, even during pandemic years.
However, if perennial food inflation is an indicator to go by, the consumers cannot take food availability for granted forever.
The ongoing COP28 deliberations are likely to sharpen focus on policy drivers and collaborations to drive sustainability in the food sector.
India being one of the largest food producers and consumers has an added responsibility to drive the policy narrative at the global stage.
In this context, it’s time we start building a strong policy agenda as well as a vibrant innovation ecosystem addressing climate challenges in Indian agriculture. An enabling policy along with disrupting climate innovations is the need of the hour.
This article profiles some of the innovations in the agri-climate-tech space and how building a “public digital good specific to climate” for agriculture can catalyse the entrepreneurial ecosystem, to the benefit of farmers and other food alue chain participants.
Arrival Of Climate Entrepreneurs
Over last few years, there are enough deliberations at the industry and policy level to make food supply chain climate-resilient. The policy prescriptions and industry actions need to match with the emerging entrepreneurial energy to bring the desired change.
Thankfully, the sheer number and quality of entrepreneurs, trying to build business models to fight climate change are growing in proportions and that to me is the biggest hope to solve for the climate challenges that lies ahead for agriculture in India and globally.
If one looks at the history of Indian agritech, the dawn of agritech in India happened about 15 years ago but climate-tech remained peripheral to it for over a decade. It’s only in the recent past that climate-tech is becoming more nuclear and integral to agritech, not only to entrepreneurs’ business models but also to the investors’ thesis.
This is driven by entrepreneurs’ realisation that climate-tech ad agritech are not binary but essentially two sides of the same coin. Resource optimisation and unit economics go hand in hand in value creation for unlocking VC-friendly returns. It is fair to say that the winning models in agritech will have climate resilience as one of the key foundational layers.
Also, many customers and users of agritech especially the large food companies like Unilever, Nestle, Danone, Olam etc and retailers like Amazon, Walmart have made commitments publicly on making the supply chains net-zero over next 2-3 decades, so these companies have no option but to partner with their supplier base to honour their commitments.
The downstream players of the food value chain (retailers, food brands) which so far have largely remained oblivious to the challenges of the upstream players (specifically farmers), are realising the need for supply chain integration, more accountability, higher transparency and end-to-end traceability.
The climate crisis can possibly cure fo the perpetual bipolar disorder of food value chain by bringing the “food” and “agri” ends closer.
Landscaping Climate Tech Innovations In India
The canvas of innovations in agri-climate-tech is still evolving and irrespective of how much one paints; parts of the canvas will still look blank.
Let me still attempt to put a brush around the type of innovations the agri-climate space is witnessing.
Broadly, they can be segmented into three buckets- “largely digital”, “largely physical” and “supply chain innovations”.
Largely Digital
These innovations typically include capturing data about weather, soil and plant health from multitude of sources such as whether stations, satellites, drones, sensors, IoT devices, scanners, smart phones etc. The evolution of hardware devices along with growing data modelling capabilities is at the core of such innovations.
The use cases of such digital solutions are essentially in climate risk mitigation including farmer advisory to reduce crop loss; stimate losses on account of flood/ drought; estimate soil nutrition and moisture for optimising fertilizer and water use; build climate-linked lending and parametric insurance products, traceability solutions that can potentially facilitate carbon trades using audited and verified data points; cattle health management for nutrition efficiency resulting in less methane emissions etc
The examples of startups in this category include SatSure, CropIn, Leads Connect, RMSI, Bharat Rohan, Frugal Labs, Borlaug Web Services, Agnext, Boomiitra, Stellapps etc. This category has seen VC interest but data monetisation at scale remains a challenge despite relatively better margin profile.
Largely Physical
These solutions include a variety of physical interventions including products, devices, machines, biologicals to drive climate resilience.
The use of dehydrators, cold rooms, bulk coolers, CA storages, silos for reducing post-harvest losses; urea deep placement machines for optimising urea cosumption; hydrogels for water use efficiency; bio stimulants, plant extracts, drones for minimising use of agrochemicals; bore chargers to improve water table; polyhouses for resource efficiency etc would fall into this category.
Some of these physical interventions also have complementary digital tools for better efficacy of solutions like sensors / IoT devices in cold rooms, greenhouses or optical cameras mounted on drones.
Some examples in this category would include likes or S4S Technologies, Promethean, Inficold, Ecozen, Rukart, EF Polymer, GreenPod, Absolute, Bioprime, Sea6 Energy, Marut drones, Urdhvam, Distinct Horizon, Kheyti, Takachar etc.
This category of startups needs impact / catalytic capital/ blended finance support at the beginning of their journey before venture capital kicks in. Both margin and scale potential in this category is in the moderate to high range.
Supply Chain Innovations
These include tech-enabling supply chains for dis-intermediation to align suply with the demand. The market linkage startups operating in the – whole or parts – of farmers-to-consumer value chain, such as WayCool, DeHaat, FarMart, Samunnati, Falca, Bioveda, Innoterra, KisanKonnect, Maalexi, Mango Dairies, Digigrain are some of the examples.
Though the primary thesis for this segment of startups has been around building demand-driven tech-enabled supply chains, but in this process, these business models have contributed to shrinking food losses / waste thus improving climate resilience of food supply chains.
Likewise, factory-to-farm models focused on supplying quality inputs to farmers, riding on prescriptive farmer advisory models, end up optimising use of agri-inputs including chemical fertilizers, agrochemicals and water. Startups like Agrostar, BigHaat, Behtar Zindagi, Unnati, Upaz, Freshokartz, Hesa would fall into this category.
As many of these supply chain platforms are gaining scale, manging hundreds and thousands of tonnes of food on daily basis; hey are also becoming carriers, platforms or super-apps of climate innovations in the- digital and physical categories – as described above.
This category of startups has attracted the maximum amount of capital in the last decade invested in the Indian agritech (about 80% of the total $3 Bn plus VC investment). This segment of startups has demonstrated scale but margin improvement for many of them still remains work in progress.
In addition to the above three buckets, another category in climate innovations includes the package of practices (PoP), mostly driven by universities, research institutions and corporates.
PoPs have been existent for many years before the arrival of climate startups. These PoPs include drip irrigation, direct seeding of rice, zero tillage practices, ethanol production from agricultural byproduct, use of biodigesters, conversion of stubbles to biochar / fuel / packaging, use of cattle feed additives etc.
Many of these practices have been adapted in partsbut need more policy push along with entrepreneurial energy for mass adoption by farmers.
It’s Time To Build Climate-Stack For Indian Agriculture
Though there are plethora of innovations as discussed above in the climate-tech space; they are still far from wide scale adoption, required for catalysing a large-scale disruption to get closer to net-zero targets.
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Given the gravity of climate problems and the need for urgency to solve for climate challenges, it’s time to think about building a climate stack for Indian agriculture (we can name it as “Clistack” for the lack of a better acronym or word).
Though other segments of the economy also need a climate stack as much as it is needed for agriculture but probably agriculture needs it more urgently than any other sector.
So, the question is what could be the components of the Agri-clistack, potential use-cases and its ability to catalyse climate innovations at scale to drive climate risk mitigation, resilience and adaptation.
Components Of Clistack
The three most important parameters impacting the agriculture sustainability are: weather, soil and water from climate prspective.
Though it requires debate and rigorous technical discussions on whether these three variables are good enough to build a clistack; nonetheless these three variables can make a good start.
The best part about these three variables is that there is tech available to measure these variables accurately, at scale, at requisite granularity and almost in real-time. The hierarchy and weights of sub-parameters of these three variables needs further technical discussion.
