In order to enhance investment outlay into agribusiness, companies in the segment need to leverage existing infrastructure such as roads and railways, said panellists at News Corp VCCircle Food & Agri Investment Summit 2016.
The list of issues afflicting the space includes improving agri infrastructure and enhancing food and malnutrition security, said Rajesh Srivastava, chairman and managing director, Rabo Equity Advisors.
India has a larger workforce that is dependent on agriculture; so there is a need to find an effective way to bridge gaps in productivity, said Raj Ganguly, senior agribusiness specialist – food and agriculture global practice, World Bank Group. He said agribusiness can grow only if farmers’ income grows.
Mragank Jain, director, Standard Chartered Private Equity, said productivity, preservation and processing are key elements in food security.
According to Manish Mehta, managing director, Samara Capital, which manages a $600 million sector agnostic fund, businesses are underestimating changes taking place in the segment. There has been huge investments in the space. ”These businesses have developed over a period of time. It is a shift we have ridden on”, he said.
According to Jignesh Shah, founding partner, Omnivore Partners, early-stage investors would focus on technology for food and agricultural products. ”We reflect on successful business models in the western world before gauging the segment in India. Indian agriculture is going to see a data- and technology-driven revolution,” he added.
Michael Andrade, head agri finance, HDFC Bank, said the government wants to double farmers’ income by 2020. “To achieve that, we need to eliminate cash and get all the transaction data. A farmer’s loan data is not captured as much as a consumer loan in a city. Since there is a convergence of data from white label ATM, UPI, GST and Aadhaar, it throws up a lot of data. We need such information from the grampanchayat level. Only through such financial traceability, the agribusiness segment can be effectively served,” Andrade said.
World Bank Group’s Ganguly said the perception to see agri as business needs to emerge. “Subsidy is not perpetual. It doesn’t work always and innovation is required to create a business,” Ganguly said.
According to Standard Chartered PE’s Jain, investor interest in this space is focused on some pockets. Investors have tasted success. Some listed players have created value through innovation.
Existing companies that are successful have IP to protect; so it becomes a barrier for new companies to enter, said Samara Capital’s Mehta.
Rabo Equity Advisor’s Srivastava said aggregation in the industry is a big challenge. There are several successful models such as cooperative and cluster farming and that is where the focus should be.
According to Anuj Rakyan, managing director, Raw Pressery, traditional incumbents have too much focus on the hub-and-spoke model; they don’t have the required consumer connect. “There is so much data that is lost and they are not closer to the ground,” he said.
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