How Indian agritech startups can help address climate risks

Jeff Bezos committing $10 billion to fight climate change through his new Earth Fund could not have been more well timed. Climate change is for real with multiple data points surfacing, including increased occurrences of flood events, droughts and extreme temperatures. A recent report by Oliver Wyman estimates that losses to financial services firms alone will reach $1 trillion on account of climate-related risks.

If you look at South Asia -- India, Nepal, Myanmar and Bangladesh -- there were 232 floods, 129 storms, 48 extreme temperature events and seven droughts in these four countries between 2000 and 2017, according to a report by SEEDS and CRED. These four countries in south Asia account for more than 20% of the world population at approximately 1.6 billion.

More recently, the adjoining areas of the India-Pakistan border witnessed unusually large swarms of locusts causing significant crop damage in both countries. One of the prime reasons for this is climate change, including an extended rainy season, a change in wind patterns and heightened cyclonic activity in the Indian ocean. And, while at one end we are witnessing swarms of locusts, at the other end we see the honey bee population declining at an alarming rate due to high temperatures and expansive use of chemical pesticides, causing a decline in productivity for cross-pollinated crops.

Almost all sections of society are vulnerable to climate change, but I would put small-holder farmers in the ‘severe’ risk category.

Small and marginal farmers in India, with landholdings of less than two hectares, account for about 85% of the Indian farming population at approximately 120 million, with an average gross income of $1,500 per year. They have a huge challenge to derisk themselves from climate change as do the approximately 450 million smallholder farmers in other parts of the world.

Among the various climate-related risks, high dependence on ground and monsoon water for irrigation is a big risk factor for Indian agriculture. As per a study by Central Ground Water Board (CGWB), out of 5,723 groundwater assessment units in India, 839 are over-exploited and 226 are in a critical state, which can adversely impact the availability of water for millions of farmers. About 80% of the water consumed in India, estimated at 700 billion cubic meter (BCM), is for agricultural purposes compared to 55% in China. Indian agriculture also consumes 60% of groundwater resources, where the discharge rate is far higher than the charge rate. It is estimated that 50% of total borewells — about 45 million — will go dry in the next 10 years.

Solving for climate risk needs a holistic, collaborative approach through policy intervention, investment, and innovation.

Here’s a look at the Indian agritech innovations developed in the last few years that are trying to address climate change risks. The disclaimer here is that most of these Indian agritech innovations are not developed with the sole intent to solve climate risks but essentially to improve farm and value chain economics. Having said that, innovations that improve economics are very much synergistic with the solutions needed to address climate risks.

Three climate risk-related Indian agritech categories:

1) Building climate-predictive data-driven models

2) Solutions for resource conservation

3) Reducing carbon footprints

The three categories encompass data sciences, biotechnology, ecology, sociology, and many others.  Though these innovations are still at the nascent stage, it is evident that a multi-disciplinary approach will be required to address varied aspects of climate risks to scale them and increase farmer adoption of such techniques.

Some of the Indian agritech innovations under each bucket are profiled as below:

Building climate-predictive data-driven models

Use of weather stations and satellites in predicting weather events has existed for a long time. What has really changed over the last few years is improving hardware, the processing capacity of computers, access to cloud storage, and more importantly, the application of deep learning models. 

Startup entrepreneurial energy, ability to churn data to model risks, and user-centric approach is an advantage considering the high volatility and unpredictability of weather patterns and the need for accurate and timely hyperlocal estimation that can put models to the test.

Another challenge some of these startups are trying to solve is to co-relate weather parameters with other critical data sets such as water stress, soil nutrition, and crop health. The field-level data collected through sensors, IoT devices, and smartphones need to talk to data coming from drones, satellites and weather stations to enable a high degree of accuracy for building predictive models. 

Such complex modeling calls for teams with engineers, data scientists, meteorologists, hydrologists, and agronomists. These kinds of team combinations are probably too much to expect from a bootstrapped or barely funded startup. Having said this, we are seeing startups in India begin by specializing with domain expertise and gradually converging to multi-hardware and multivariate models.

Indian agritech startups such as SatSure, CropIn, Farmguide, Skymet have developed (top-down) models for large tracts of farmland using satellite imagery and weather stations, whereas startups such as BharatAgri, Fasal, Krishitantra, Cultyvate, Senseitout, AgSmartic have gone granular -- bottoms-up -- with the use of sensors, IoT, and smartphones with the objective of delivering real-time and accurate farm advice on the use of water, fertilisers, crop health, and preventive measures. 

The convergence of these two types of data models and approaches will further drive the accuracy and timeliness of climate risk predictions for the benefit of farmers and other value chain players.

Building such predictive data models needs patient capital, with developmental financial institutions, foundations and deep-tech funds most likely providing the first rounds of capital. The development of such models can be accelerated with participation from public institutions such as Indian Space Research Organisation (ISRO), Indian Council of Agricultural Research (ICAR), Indian Meteorological Department (IMD) and agricultural universities who have access to data and resources. 

Making data available to startups for training, standardization and testing their models– through public-private partnerships -- is much needed to derisk Indian farming.

Solutions for resource conservation

Among the prevalent water conservation methods in India, drip and micro-irrigation has existed for a long time but still reached only 15% of the potential in India despite significant benefits to farmers (water use efficiency of over 90% as compared to under 50% in flood irrigation). This can be attributed to the fact that water for agriculture is largely a free resource in India.

It’s not just water but soil conservation that also needs immediate attention with the decline in humus stock and soil fertility. There is scope for a quantum improvement in soil fertility through the customized application of fertilisers to correct the NPK ratio (skewed in favour of nitrogen -6.7:2.4:1 against desirable 4:2:1).

The conservation of water and soil can further be complemented by optimizing pesticide usage — about 60,000 tons per annum in India — using data-driven models, drone application and replacement with bio-pesticides wherever possible.

In such a scenario, we need a multitude of grassroots innovations to complement government efforts to promote micro-irrigation, soil health and regulate pesticide use. In the last few years, we have seen many such innovations. Some of the Indian agritech examples are as follows:

• BoreCharger– a low-cost model for borewell recharge to improve yield from deeper aquifers
• Distinct Horizon – a deep placement urea machine that can reduce urea consumption by 40% as well as GHG emissions with 10 to 60% increase in yield (in the case of paddy rice)
• aQysta – which has developed the “Barsha pump” to use energy from rivers and canals to pump water with zero fuel and electricity use
• EF Polymer – has developed a polymer from bio-waste extracts for higher water retention in the root zone of crops
• Barrix– has developed eco-friendly crop protection methods using pheromones

There are many other areas such as agricultural waste-to-energy, beekeeping, and sericulture where we see such grassroots innovation. 

These startups typically need more of catalytic capital and support at this stage to build their access to farmers to make these products mainstream. Grants, incubation support and capital from impact funds can go a long way in the initial years of product and market development to build critical mass before venture capital checks in.

Innovations to reduce carbon footprint

The majority of Indian agritech innovations that we have seen in the recent past in some way have contributed to reducing carbon footprints. 

For example, farm-to-fork startups, such as Ninjacart, DeHaat, SuperZop, ShopKirana, Kamatan and WayCool have brought energy efficiency through demand aggregation, scientific storage and route optimization in the supply chain.

Post-harvest interventions through dehydration, cold chain, logistics solutions, and farm-level processing — such as S4S Technologies, Ourfood, Ecozen, Tessol, Promethean, Inficold, Agrigator,Tan90  etc. — have also significantly reduced the use of energy and fossil fuels.

Greenhouse solutions, indoor farming, controlled agriculture sometimes in combination with hydroponics are not only improving productivity per unit of energy and water, but also reducing food miles given the proximity of such businesses to major consumption centers in India. Some Indian startups working on this include Clover Ventures, Triton Foodworks, Absolute Foods, Kheyti, Kosara, etc.

Conclusion

It’s very timely to see an upswing in climate-solving Indian agritech innovations in all three buckets. Climate-linked insurance products is another potential area for innovative models. In general, there is a need to build a strong public ecosystem and policy support for climate-solving agritech startups like the kind of interventions we see in other climate risk-related areas such as electric vehicles, mobility and pollution-tech.

Another important area of policy intervention could be to create awareness and sensitivity of climate risk among the farming community to improve adoption. This is possible through the continuous education of farmers about the subject. 

One more option could be to start building a ‘Climate Risk Index’ (CRI) of all 600,000-plus villages in India — or at least start up with 15 agro-climatic zones — and a package of practices for farmers in accordance with the severity of CRI.

Fortunately, there is enough tech available to capture, analyse and build a robust CRI. CRI can also drive much-needed development of a crop rotation policy for the country. At later stages, CRI can be factored in for deciding credit score, insurance premium and direct benefit transfers for farmers to take care of their vulnerability to climate risk.

There is a huge opportunity waiting for investors to invest in business models solving climate risks, though the colour of the capital may be different depending on the type of risks these models are trying to address, as discussed above. 

In the last decade, we saw a significant infusion of impact capital to build an agritech ecosystem from scratch. I think the time has come to attract and invest ‘climate capital’ to conserve natural resources for making agriculture sustainable in the long term.

‘Climate capital’ is not necessarily different from other forms of capital since it will lead to resource optimization and productivity improvement, and in the process, generate value and returns for the investors. It is essentially about re-orienting investors’ mindset to drive twin objectives of climate resilience and unit economics while investing in the agricultural supply chain.

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