The biggest challenge the food and agriculture sector is facing is not unavailability of funds but lack of disruptive ideas that can elicit interest from investors, said panellists at News Corp VCCircle Food & Agri Investment Summit 2017.
The growth of the agriculture sector is vital as it contributes around 13% to gross domestic product (GDP) and employees roughly 50% the country’s population, said Nara Lokesh, Andhra Pradesh Minister of IT, Electronics & Communication, Panchayat Raj and Rural Development.
“We are focusing on technology so that small farmers will have better access to modern equipment. To boost innovation and entrepreneurship in the sector, Andhra Pradesh government has assigned a fund worth Rs 100 crore,” said Lokesh.
According to Lokesh, Andhra Pradesh government is also working with Bill & Melinda Gates Foundation for carrying out soil testing throughout the state with the help of drones.
“Globally the agriculture sector has seen consolidation but it is not yet happened in India because it is still largely a family oriented business and hence investors are facing difficulty in closing deals,” said Manish Mehta, managing director of Samara Capital.
According to Vipul Mankad, MD, SEAF India Investment Advisors, the sector is vulnerable to unpredictable changes in seasons including rains. “Two straight bad years in terms of monsoon and you will see prices of raw material going up which makes the local produce less competitive globally and we need to address this challenge,” Mankad said.
“We have aggressive plans for India and there is a dedicated team that looks at opportunities. We aim to invest in 15 Indian ventures in five years,” said Pablo Erat, partner, Pioneering Ventures.
S Venkataraman, partner of Rabo Equity Advisors, said there is a huge opportunity in seed and biotech, agri infrastructure, food processing, dairy and commodities. However, the low-lying fruits have already been taken and now investors will have to look deeper to find gems.
Agriculture is a slow growth sector. “You have to go through the crop cycle and that is a slower process. The companies in the sector witness 12-15% growth annually which is lower than startups in other segments,” said Ramesh Ramachandran, senior vice president of strategy and precision farming at Mahindra & Mahindra.
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