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Agriculture - A New Frontier

Author: Manoj Gupta
Vice President, Nexus Venture Partners.
Agriculture - A New Frontier -By-Manoj Gupta
As I stand in the middle of a farmland somewhere in Baramati with a farmer who owns more than 40 acres of land there and see him smiling as his fortunes are changing, I wonder how much aware we are about this quiet revolution happening in agriculture in India. It is interesting to see that his land is today valued at close to one crore (10 million) rupees, his annual income per acre is more than fifty thousand rupees, his yield has increased by 2-3 times because of better seeds and drip irrigation, and his quality of life is much better than that of those in the so called plush urban dwellings. I have a strong inclination and urge to become a farmer as I stand there under the cool breeze and bright sun. Well, I cannot become a farmer now so I have decided to put more attention to agriculture investing and help the farming ecosystem in India in order that all farmers in India can smile like the one I met in Baramati.

Agriculture can be very distinctly divided into pre and post harvest spaces. The pre-harvest space includes inputs like seed, fertilizer, and pesticide from companies and the post harvest space includes procurement, processing, and marketing of agricultural produce. Both these spaces, especially the pre-harvest one is seeing a lot of activity principally in the seed and drip irrigation spaces. The post harvest space is still evolving but has the highest potential to grow as the warehousing, agriculture-logistics, and food-processing activities pick up. Also players like National Spot Exchange are creating platforms that will enable farmers get better price for agriculture commodities.

Agriculture in India is a more than 100 billion dollar market, which can easily double since our average yields are less than half of global averages. India has the highest arable land area next to the US, and therefore has a huge potential to become a global farm basket. Also with better irrigation and seeds, you can rotate crops multiple times in a year rather than 1-2 times, which can again increase the farm output of India.

But the fact is that agriculture in India is growing at a dismal annual average of 1-2 percent. There is lot of government involvement in agriculture, which hinders the growth of this sector. The farmers in India are among the least educated about different crop technologies and have limited access to capital. The farmer today gets only a minuscule share of the price of the farm produce. The subterranean water table in India is going down every year; 80 percent of the lands in Punjab and Rajasthan are already in a critical condition.

All these problems are also interesting opportunities if you sit down and think. Jain Irrigation captured it in drip irrigation, Monsanto in BT cotton, and players like KS Oils in mustard-based oil. As a budding entrepreneur, this may be a space that could yield you more money and more satisfaction in the long run.

Other areas that are interesting and may see lot more activity are e-commerce, cleantech, and healthcare. Education and healthcare are also interesting but are somehow more asset-based and may require lot more capital to scale. For first time entrepreneurs who lack access to sufficient capital, it is advisable to avoid such capital-intensive businesses.

As an early stage venture fund, we are open to meeting, mentoring, and investing behind entrepreneurs who are passionate and driven.
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Reader's comments(12)
1: From: Mrs. Mary David

This mail may be a surprise to you because you did not give me the permission to do so and neither do you know me but before I tell you about myself I want you to please forgive me for sending this mail without your permission. I am writing this letter in confidence believing that if it is the will of God for you to help me and my family, God almighty will bless and reward you abundantly. I need an honest and trust worthy person like you to entrust this huge transfer project unto.

My name is Mrs. Mary David, The Branch Manager of a Financial Institution. I am a Ghanaian married with 3 kids. I am writing to solicit your assistance in the transfer of US$7,500,000.00 Dollars. This fund is the excess of what my branch in which I am the manager made as profit last year (i.e. 2010 financial year). I have already submitted an annual report for that year to my head office in Accra-Ghana as I have watched with keen interest as they will never know of this excess. I have since, placed this amount of US$7,500,000.00 Dollars on an Escrow Coded account without a beneficiary (Anonymous) to avoid trace.

As an officer of the bank, I cannot be directly connected to this money thus I am impelled to request for your assistance to receive this money into your bank account on my behalf. I agree that 40% of this money will be for you as a foreign partner, in respect to the provision of a foreign account, and 60% would be for me. I do need to stress that there are practically no risk involved in this. It's going to be a bank-to-bank transfer. All I need from you is to stand as the original depositor of this fund so that the fund can be transferred to your account.

If you accept this offer, I will appreciate your timely response to me. This is why and only reason why I contacted you, I am willing to go into partnership investment with you owing to your wealth of experience, So please if you are interested to assist on this venture kindly contact me back for a brief discussion on how to proceed.

All correspondence must be via my private E-mail (dmary4love1@yahoo.fr) for obvious security reasons.

Best regards,
Mrs. Mary David.
Posted by: mary lovely david - Monday 26th, September 2011
2: Hi my dear,
My name is Mounace, i would like to establish a true relationship with you in one love. please send email to me at (mounace43@yahoo.com) i will reply to you with my picture and tell you more about myself. thanks and remain blessed for me,
Your new friend Mounace
Posted by: mounace love love - Thursday 09th, June 2011
3: Interesting article and interested in seeing your offer of funding agricultural entrepreneurs!
For the problem that is facing agriculturalists, I think we need a "farming AMUL" solution - a co-operative of farmers that really works.
My interests are first in education and second in agriculture.
I have seen the format that the proposal plan for Nexus Venture Partners will have to be in.
Shall keep the company in mind and send you a proposal when the time is right
All the best
Keep promoting these important ventures
Regards
Arun
Posted by: Arunkumar Balakrishnan - Monday 10th, May 2010
4: Country like India in which 65% of the population is direct/indirectly depending on agriculture,i feel that there should be more research and innovative things,entrepreneurs, and developments should be taking place...but here it is the different case...so it is a major issue really needs to addressed at the earliest...
Posted by: mahantesh biradar - Saturday 08th, May 2010
5: Perhaps a group should be formed of those inquiring minds and then a think tank approach should go forward with continuing questions and answers. How about a blog?
Posted by: Christie J Fox - Friday 07th, May 2010
6: so many people are asking for information here just as the writer of the article is, yet no one leaves their e-mail address for responses or assistance to be provided.
Posted by: Christie J Fox - Friday 07th, May 2010
7: The main topic of your article is better seeds and drip irrigation. I'd be interested in exactly what kind of seeds are considered better seeds, what they contain and where do they come from. Drip irrigation is great but also needed is a new type of soil that keeps water in during hot dry seasons and the USA offers it. Small loans start farms then the farms become prolific and can pay back that debt. Where to get the money (hint, from the World Bank) is the question. Agriculture information can be written in simple form and distributed to the farmers or posted at feed depots for their review.
Posted by: Christie J Fox - Friday 07th, May 2010
8: Really an inspiring Article !....Am an MBA grad and was always interested in Agri farming...but because of lack of knowledge and encouragement from Family i could not pursue it . Dear sir, could you kindly provide some guidance to me. am sure this will be helpful.My Mob num-9886670233
Posted by: syed sadath - Friday 07th, May 2010
9: Sir,
I have read your article on yhe topic. A realistic subject for about 65% of Indian population. I also gone through some other readers comments. I my self is a farmer by origin and presently a practing chartered accountant in Ahmedabad. I have still agricultural land in the state of Utrakhand. I would like to have some concreat suggestion and solutions for the betterment of the sector and to convert it into a industry rather then just farming.
Posted by: Rajendra Kumar Saini - Monday 03rd, May 2010
10: Hi Manoj,

I appreciate your interest in farming domain. I guess I had seen you in chennai startup Event.

Regarding Farming India: Apart from 40 acre farmer, In general villages most of the people have around 5 acres in common. Now a days in every home kids are studying and leaving villages, and it was not like earlier. So the same old people are struggling to get farming products out and not sure how India will do farming in future.

I used to watch the farmers very closely and I observed some points: It will give ground reality instead of assumptions.

1. First they will do farming only what they used to do and don't experiment new, because of fear of doing it new..
2. Without knowledge they use pesticides based on just local farmers or any other members advice which very commonly they do frequently, even though they don't have idea how that will helping farms.
3. After all these hurdles... finally they will come out at end.

And here there is a big hurdle in terms of marketing:

Farmers used to get debt outside for investment on farming and because of this on final phase they try to sell ASAP their product and get some money.

Here is the major hurdle where middle level buyers will play some tactics, like market is not good when all the farming products comes to market in bulk, eventhough normal market shows good rates. but these guys try to decrease rates as best as they can.

since farmers used to get debts outside and they can't wait long time for good rate and get fear of growing interest rates and they sell finally what they give at times even they are not interested.

I have little Idea but not sure how to implement it.
It's highly appreciated if anybody come up with a solution who can give guidance to farmers in terms of seeds, pesticides, any small scale loans, farming and finally marketing. Which really has a huge market and really can help farmers.

Thanks,
Ram.
Posted by: Ram Red - Monday 29th, March 2010
11: The issues discussed in the article are real. The Author has quoted a farmer with 40 acres of land. Such a farmer is considered a big farmer in India. The number of such big farmers is very small. A vast majority of the farmers own lands in the range of 0.4 to 4 acres. Hard work is their only asset and investment. That is their only way of life. Their choices for varieties of crops, water sources, technologies, markets, storages, everything is limited. Somehow they manage to produce a crop -high yield or low yield, high quality or poor quality- with the traditional experience. But an assured market for the product is all that they are unable to access. their whole labor and investment is lost once they fail to sell them IN TIME! Food processing industries are good sources of hope for the farmers to buy their produce. Entrepreneurs in these fields can really flourish well if they rope in the farmers with credit facilities, technology guidance and assured market. The proposal in this article of inviting entrepreneurs shall not end up simply with financing. That is what most banks are doing. The organisation can go in for setting food based industries with forward integration of farm products. this will also fulfill the desires of the author of becoming a farmer too!
Posted by: mani ramasamy - Sunday 28th, March 2010
12: Very good article sir ,this type of articles inspires the youth and bring them into this sector ,i am also interest in this sector ,my interest is to become a good entrepreneur in this sector , i want your valuable suggestions sir ,please give your contact details i will contact you sir,my phone no:9010027610 email id:subbareddyvani@gmail.com, i am waiting for your next communication sir
Posted by: Subba Reddy Vanipenta - Monday 22nd, March 2010
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