AGRICULRURE VENTURES-IN SPOTLIGHT!!!

A largely recession proof scaleable business which grabbed the spotlight long before
technology services did is the agriculture sector. Now as more and more consumers demand
organic fresh farm produce agriculture is surely emerging as one of the most profitable
ventures with huge entrepreneurial opportunity.

Demand for consumption is rising and is making agricultural ventures attractive owing to a
very simple and definite fact that demand for food will always be there. According to the
venture intelligence firm the number of venture investments in agribusiness firms and start-
ups rose to 11 in 2010 from 9 in 2009 and the amount of money going in this sector has
nearly doubled to $167 million this year from $89 million in 2009.

Although the agricultural venture still lags behind in terms of money flow when compared to
other sectors like health , technology etc yet investors feel that a lot is left untapped in this
area which provides employment to more than 60% of our Indian population.

ICICI bank reports that the agriculture and food processing industry is expected to grow at
an extremely fast pace and reach $280billion in the next decade and by that time the
opportunity for private investment will be somewhere $50 billion.

However given its size and large scale inefficiencies building a large company is not easy.
One requires domain knowledge, as local issues such as weather, pests, soil, water
availability and global factors like commodity prices. An agri-entrepreneur should recognize
that capital looks for the best risk return profile. Traditionally agriculture is seen as a high
risk/low growth sector and so the company needs to build market differentiation and strong
ability to scale.

This article brings forward recent stories of some of the agriculture ventures where the
recognition of the right need and right target led to the establishment of a successful
business. Most of these ventures started as a small scale business but then with a sharp insight
about the future profit these enterprises have turned out be a huge success. They were smart
enough to look for those areas where the maximum could be achieved not just in terms of
revenue but also as responsible entrepreneurs.
Kisan raja-

An invention of Vijay Bhaskar Reddy Dinnepu is an embedded device that enables farmers
to use their mobile phones to operate motor pumps and irrigate the agricultural land at fixed
times while sitting at home .Costing around Rs 3000 the device also conserves water and
prevents theft of the machine.

“There are 50 million motor pumps in India worth around $3 billion. If I succeed to address
10% of these pumps in next 5 years I can easily make a revenue of Rs 1500 crore.” says the
confident IIT-Madras alumini.

Sericare-

Bangalore based start-up Sericare is growing through developing products such as artificial
diet and growth regulators for silkworm to enhance their productivity. Working with around
250 farmers , Sericare has a model of selling the product directly to the farmer and promoting
through on farm demonstrations. It also has a cell phone based communication programme
called ‘Sericare Sahaya Vaani’ to reach out to the farmers on a large scale.

Ooty fresh-

Lawrencedale estates and farms works on a unique business model which includes
community based organised farming system, buying land and farm houses. It combines
organic farming, research farming, agro-processing, marketing and farm tourism.Based in the
Nilgiri hills the firm makes business by producing fruits and vegetables under the brand name
of “Ooty Fresh”.

Lt foods-

An Indian exporter of basmati rice which is presently growing at the rate of 15-20% annually
holds half of basmati rice market of America’s basmati rice market. Rabo has recently
invested $10 million in LT foods which also supplies raw material to the potato chips maker
Frito-lay. The company is expected to make a revenue of around Rs 1200 crore this year.

Anana fit-

Rajashekhar Mamillapalli has strictly adhered to the eco friendly techniques where his firm
Anana fit makes clothings made entirely out of banana silk.The Chennai based firm has
attracted environment conscious customers from all over the world .France, UK ,Australia,
Singapore. Without any machinery the firm aims to reduce the green house gas emissions and
increase the carbon credit. The company has recently bagged orders from china to make 8
lakh t-shirts purely out of banana silk. He had the insight of capturing the strength of being
the largest banana producer in the world.

Wynfarms-

The Bangalore based firm manages entire process from planning and procuring the raw
material for the quick service restaurants like KFC, Pizza Hut. With source of funding being
personal , the company with 100 employees expects to achieve a revenue of Rs 500 crore by
the year 2011.

Wonder grass-

An end to end solutions for bamboo based building systems. The firm which earned Rs 7 lakh
in the first year of its inception in 2007-08,is expecting to earn Rs 1 crore for the year 2010-
11.The rural end user gets a new home built by wonder grass for Rs 1-25 lakh in only 15
days.

Interested investors may still feel that Indian agribusiness still has a long way to go owing to
the large number of hurdles. Lack of adequate infrastructure presents the biggest drawback.
Also as India does not allow corporate farming, the fragmentation of land holdings have
scattered the needs across a large farmer base. Another challenge can be the non avalaibility
of senior and mid level talent, which combines domain knowledge and the business mindset
in the best possible manner. Wage inflation and availability is becoming an issue in recruiting
field level staff due to NREGA and urban migration.

Agribusiness sector can prove to be a highly sustainable and profitable venture only and only
if it gets the right exposure, where ordinary people also show interest in buying agri based
products. Doing business on a model of low margin-high volume will not only generate
employment for thousands but also save the future of agri business from getting bleak.

The above mentioned success stories should be taken as motivational examples where some
risk taking, socially conscious men stepped out to paint the future of the agriculture sector in
bright colours.We being future’s agribusiness entrepreneurs should take these examples as
our guiding principles and decide whether we want to become JOB PROVIDERS or JOB
SEEKERS???
PRIYANKA RAWAT

BATCH 2010-12