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Is it beneficial for startups to invest in the
agricultural farming business?

Editor's desk | Nov 26, 2020 11:00 AM IST

The agricultural farming business in India is estimated to be worth $400 billion post the Corona pandemic. But there is little application of technology to enhance productivity and lift millions out of poverty in India.

Now, a large number of entrepreneurs are looking out of their city offices to the country to improve this appalling scenario of farming business in India. The recent surge of agricultural entrepreneurs In India has been very much overwhelming. Nowadays young graduates are seeking startup opportunities in the Agricultural farming business by seed funding and bootstrapping to their agricultural startups. This indicates the massive amount of farming land required by startup founders to start their business.

For startups that mainly focus on cultivating and harvesting GM ( Genetically Modified) crops and seeds, they require plentiful farming land to start their businesses. So it can rightly be said that startup entrepreneurs should rightly focus on investing a lump sum amount in agricultural business to reap benefits in the long run!

India is an agricultural economy that holds its title pre-Independence and post-independence too with agriculture rendering 18.32 percent to the national GDP (at current prices) and employing a million farmers, It is one extraordinarily profession that has constantly been a priority area for the government of India but persisted on low growth projectile. The justifications may be frequent extreme weather events led by climate change, less adoption of contemporary farming technologies, lack of awareness amongst farmers for improved farming practices, shortage of powerful agricultural extension machinery and less number of entrepreneurial ventures, and many more. But over a decade, this scenario is improving with new Gen Z which is a boom full of budding entrepreneurs.

Entrepreneurs in Farming Business

In agriculture, generally, whenever there is a conversation about agricultural entrepreneurship, a resemblance of a farm arises in our senses. Now the scenario is altering. The startups that are appearing in, belong to the high-tech sophisticated epoch of agribusiness i.e., applications of robotics in agriculture, wearable computing and augmented reality in harvest production, exacting farming, etc. Farming Entrepreneurs are young, enlightened, and skilled risk-takers who don’t intrinsically belong to agricultural backgrounds relatively but they aspire to be powerful contributors to the agricultural economy of India and various domains.

Reasonably though agribusiness is an intricate domain-dependent upon numerous environmental and ecological parameters, there is a huge amount of money to be earned by startups. Moreover, the Government’s interest in stimulating the farming land sector makes it a golden heap cake pie for investors. Areas like irrigation, water, soil, warehousing, and cold logistics have also captivated public sector investments. Hence, the Agricultural farming business has evolved into a crucial theme of conversation in all startup exhibitions and investors’ meets.

Various areas of the agricultural farming business

The prime emphasis on which the agricultural entrepreneurship is getting magnified is Agri Inputs, Post-harvest and Food Processing, Farm Retailing, Natural Resource Management, Farm Mechanization, Precision Farming, Agri & Agri health services, ICT in Agriculture, Dairying, Biotechnology, Sustainable Agriculture, Agri Education, Supply Chain Management, Livestock, and Fisheries, etc.

Why are farming startups booming in India?

Let us explain this theme to you by giving a few instances where various agricultural startup founders were motivated by the desire for better and enhanced production of crops in India. With the advent of the Genetically Modified Concept and Green Revolution agendas by the government of India in the 1960s, all these concepts have very well been able to penetrate deep into the minds of agricultural startups. With food becoming the fundamental survival product for human beings, the urge for more farming land to be created has crept into the mind of young entrepreneurs. The investment in farming businesses is sky rocked in the post-Corona hit world.

The heads of various nations have realized the importance of food production, the significance of having large agricultural lands in their countries, No gadget, no money, no technology can replace the essence of a farmer who is feeding the burgeoning population of India every day!

Thus, we can rightly infer that investing in the farming businesses of India will always remain lucrative in the shorter as well as in the longer term.

It is generously accepted that technological advancement is a fundamental characteristic of agricultural development as well as economic development. One means of accomplishing technological advancement is by solely acquiring the technologies prevailing elsewhere in the world. alternatively, countries can moreover endeavor to improve their technical creation abilities. In the case of embodied technologies, where the technology is entrenched in a physical input, such as grain or machine or fertilizer, the prerequisite of securing the technology through patenting is huge. This also furnishes an alternative for flourishing entrepreneurs to commercialize agricultural concepts by marketing them and investing smartly in agribusiness startups of India.

Why Investors should invest in the agricultural farming business?

Investors choose numerous phases of the agribusiness company for investing as there is no set regulation for this. They have their domains regarding the various agribusiness sectors expansion cycle phase. These investors invest in majorly five stages banking upon their specialization i.e., Seed, Start-up, Early, Expansion, and Mezzanine. Some other nomenclatures are furthermore there in exercise. Nevertheless, they are a bit loosely distinguished when it comes to farming businesses. The amount invested in the farming business can be from 100 crores to 500 crores for a single large piece of farmlands. Government investment may even exceed this limit. Also, various mid-size startups might invest 59-60 lakhs initially.

Few changes in the agriculture farming sector should be kept in mind by startups while working in this sector:

  • Shortage of farming resources

Scientists calculate that for each 1.8°F gain in temperature, key crop yields drop 10%. Climate change has invariably provoked adversaries in the arena of agriculture. As the temperature surges so are the lowering of water level. The irrigation level is affected by it. So the entrepreneurs in agriculture should always be aware of this fact which has been a matter of concern for years. Out of the box, ideas could be cultivated to solve the water crises of farming land.

  • Biotechnological advancements

The invention of GMOs( Genetically Modified Organic) and multiple technologies in agriculture is boosting day by day which is dominating the enormous input of modern technologies in India. Agricultural Entrepreneurs should consider the significance of GM food farming and keep eye on it. This continuous analysis of new inventions in the field of technology and farming will undoubtedly pave the way for the progress of farming startups in India.

  • Technological transformations

Modern techniques like Artificial intelligence have provoked so extensive amenities in the area that it has now evolved so easy to anticipate the pest infection and crop diseases in your harvest at a very early stage. Numerous apps have been expanded which undoubtedly strengthen the standard of living and farming of our agricultural community.

  • Various Tax exemption for farmland Investment

Nowadays the government of several states provides various investment opportunities in farmland that requires lesser tax to be paid. Thus attracting a greater amount of investment in farmlands. Tax advantages have been given by various state governments for investing in farmland. There are numerous tax advantages for investing wealth in agricultural lands.

  • Changing commodity status

The existing status of crop products should be kept in mind particularly the market trends in commodities so that one can invest accordingly. The ratio of Rice to corn and other crops in an identical way can enable you to set up your prices in the market. The details regarding the export and import fall under this classification which has to be given due significance. Once you have known the real rate and market price of your crops you can accordingly sell the best wholesaler crops dealer and real profits accordingly

  • Livestock Transportation

Consumer demand and regulatory ruling on a range for raising livestock and cattle products, Farm animals meat are in ways supposed to give the biggest boost for livestock consumption among Indians do humans non veg diets are causing rapid changes in the food system. Large food companies and supermarket chains are phasing out the use of cold storage logistics for storing fresh meat, beef of various farm animals, and their supply chains. The changes also have been forced by state legislation to adopt the utmost precautions for handling of livestock products. Thus Livestock transportation paves way for young startups to invest in cattle rearing and dairy farming. Livestock is an important part of agriculture and keeping the data of livestock can give you the situation of agricultural growth.  

  • Legislation in the usage of pesticides

This has been made mandatory by the government of India. It should be obeyed at any cost to get a significant result in the farm fields and therefore saving the farm population from mal effects, and side effects of these chemicals

  • Specialized agricultural startups

Now farmers instead of doing plane farming are further concentrating on organic agriculture farming and other specialized agricultural startups which use non-GMO products, high-oleic soybeans, and high-starch corn and fleshy beef products, etc.

  • The trending on large scale size farms

Nowadays we have come across this trend where farming startups usually buy large pieces of farmlands to produce more harvests and increase crop productions thus generating a large number of profits on products sold. Large scale farmlands are being bought nowadays by entrepreneurs to raise agricultural animals on a large scale. Dairy farming is an excellent example of large scale farming. Many Buffaloes, cows, sheep, goats are raised maybe around 700-800 in numbers to ensure maximum production of milk to be exported to the countryside.


Capital Investments into the Agri-tech start-up in India remains robust throughout the year ahead as innovations will fuel the concept of digitization of the farm sector with more farmers adopting technology solutions. The farming segment is captivating interest from large mainstream venture capitalists such as Sequoia and Accel Partners, even as the existing agricultural startup players raise larger funds to invest in Agri-tech, which enticed an all-time high investment of around $400 million in 2020.

Agricultural startups employing in areas such as farmer platforms, precision agriculture, Agri-biotech, post-harvest technologies will be high on investors’ radar in the year ahead. As the world prepares to wrap up the corona effects, we will see skyrocketed investment in agricultural businesses in India. Also, inarguably farming industry was the only industry that remained unaffected by the Corona Pandemic in 2020. Food is the quintessential requirement of human existence . Agriculture is the backbone of our economy and smartly investing in agribusiness can prove out to be highly beneficial by sowing small investment and reaping large profits ultimately.

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