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Many niches are opening up in Indian new age farming (vegetables, flowers, etc.) - find a niche and dominate.
Mushroom farming in India grew 48x between FY14 to FY18 but is still only 2% of global mushroom production.
Union Budget 2021 specifically mentioned seaweed farming as an emerging sector that can transform coastal communities and wants to set up a multipurpose seaweed park in Tamil Nadu.
Farming is changing around the world with the adoption of technology. These changes have made The Netherlands, that tiny country in Europe, the “globe’s number two exporter of food as measured by value” with $111 billion of agri exports in 2017.
People are calling this New Age or High Tech Farming.
Our own interest in high tech farming started several years ago - Siddharth even tried to start a hydroponics farm. We were reminded about this trend with the announcement in the Union Budget to start a multipurpose Seaweed Park in Tamil Nadu.
We took this as a cue to speak to India’s largest Seaweed farmer, the 3rd largest Mushroom farmer and others. We’ll release all these conversations on our podcast.
Talking to these people, we realised that there’s a revolution happening at the niches of farming in the country - new floriculture, hydroponics, aquaculture, seaweed, mushroom, etc. farms are being set up across the country and providing riches to the people who can correctly exploit these niches.
Even the face of farming is changing - urban dwellers are moving back to the villages and taking these new farming concepts along with them. From growing flowers (floriculture) in polyhouses to growing vegetables without soil (hydroponics), these new styles of farming are bringing with them new opportunities to build businesses.
In today’s Newsletter, we explore the opportunities to build profitable businesses in the high tech farming segment in India.
🌽 What is High Tech Farming?
“High Tech farming uses technology to increase yields, ensures high quality (usually pesticide-free) and realizes increased market value. Growing temperate vegetables in a tropical climate and developing disease-resistant plants through genetic engineering are common examples of hi-tech agriculture.
Advantages of high-technology farming
Increase in yield up to 5 to 8 times – high productivity per unit area
Significant saving in key inputs like water (up to 50%), fertilizers (25%) and pesticides.
Better growth and uniformity in quality
Feasible even in undulating terrains, saline, waterlogged, sandy & hilly lands.”
High Tech farming is far more capital intensive because of the need for specialised equipment, maintenance of assets, training of labour, and more.
🧐 Market Gap
The increase in wealth in the country is driving the demand for new types of vegetables and fruits beyond our Indian staples.
The Green Revolution in India significantly increased farmers’ incomes and crop yields for staple crops but largely ignored lentils and vegetables.
Did you know a significant chunk of our dal comes from the frozen lands of Saskatchewan, Canada? I knew a guy who moved to Saskatchewan to get into the lentil business and I was just like 🤔
Check out this list of the differences between exports and imports of various agricultural products. A few interesting notes from FY19:
Floriculture Products: $82 million exports & $25 million imports (low numbers for a giant industry).
Pulses: $259 million export & $1,140 million import.
Fresh Fruits: $125 million export & $1,987 million import.
Consistent demand for certain vegetables (tomatoes, strawberries etc) at a consistent price points around the year from food processing businesses is giving rise to farming techniques like Hydroponics, Aeroponics, etc.
The Global Floriculture market size was approximately US$ 43.23 Bn in 2018 while “India's total export of floriculture was Rs. 541.61 Crores/75.89 USD Millions in 2019-20”.
50% of the floriculture units in India are based in Karnataka, Tamil Nadu & Andhra Pradesh.
Fish catch in FY18 was 9% less than the previous year mainly due to overfishing leading to reduced catches in the coastal states.
Aquaculture has boomed in East Asia but it’s picking up in South Asia too.
Aquaculture now accounts for more than half the fish produced in India.
From the 2021 Union Budget:
“substantial investments in ... modern fishing harbours and fish landing centres … Kochi, Chennai, Visakhapatnam, Paradip, and Petuaghat … also develop inland fishing harbours and fish-landing centres along the banks of rivers and waterways.”
Niche products like Seaweed and Mushroom are cash crops in the rest of the world with India producing a small percentage of global supply.
“And now, the government has allocated ₹637 crore for the cultivation of these nutrition-rich marine plants … to be spent over the next five years, mainly as subsidy support.” - Source
The impact of fertilisers and other farming techniques has a large impact on soil health and the environment in general which has caused several people to seek alternatives such as Natural Farming or Agroforestry.
I personally know 3 people working on Agroforestry - one of them made me farm all day while I was badly hungover 🤢.
India became the first country to launch a National Agroforestry Policy.
“It was created to counteract limited agricultural productivity due to consistent decreases in the land-holding share of farmers, which was caused by rapid population growth and agricultural activity dependent on seasonal rainfall.”
💰 Market Size
Floriculture: Global market of $43 Bn in 2018 & India exports only $75 million.
Aquaculture: $5 billion export market size in India already.
Mushrooms: Worldwide market of $17 billion, miniscule in India right now.
Hyperlocal farm in a 1,000 sq. ft. space in Andheri East, Mumbai
Takes you to a list of prices of differently sized Hydroponic farms.
Hydroponic solutions for consumers.
Karuturi Global - 45cr Market Cap
Karuturi bought a Kenyan Rose producer in 2007 for 50 million euros.
What happened to this company? Something went seriously wrong.
Look out for our upcoming podcast episode with the founder.
“biofuel company based in Bangalore, India that focuses on the "macroalgal" fuel source of seaweed.” - Wiki
Helps you build your own Mushroom farm.
Check this link for project costs and production volume.
Salubrious Mushroom Farm is Punjab’s first Hi-tech Mushroom grower
🙏 Our Predictions
Capital will enter this market in droves as high tech farming provides a modern opportunity for a necessary and age old business.
As capital enters, these high tech farms will become streamlined - similar to the factory-like efficiency in The Netherlands.
International capital and technology will flow into this industry.
Food processors look for consistent supply - look for backward integrations into these high tech farms.
Food processing & food brands are a booming business themselves with a lot of venture capital money flowing into this market.
Agri Exports from India is still an under exploited source of foreign income.
As we become more efficient in growing, look for an increase in exports across the board - especially vegetables & flowers.
Flowers especially are an export potential that is widely underexploited. We only export $82 million of flowers - even East Africa has done far better at flowers than us.
I have a friend who started a hydroponics Rose export business 3/4 years ago which is doing quite well.
Urban dwellers will increasingly demand locally produced, high quality vegetables driving Urban Farming (not just on the side of train tracks in Mumbai).
Home gardening is growing - my wife’s gardening instagram where she makes fun of me. There has been a proliferation of plant ecommerce stores in the past few years (Nursery Buy, Soiled, Plant Wagons).
Stories like these of city dwellers moving out and starting a farm will become commonplace.
Climate change will make traditional farming difficult due to more extreme weather events, changing rainfall patterns, desertification, etc.
Growing food in controlled environments will mitigate most of these issues.
As the government focuses more on improving Ease of Business, entering this industry will get easier.
At this moment, you require a tonne of licenses to start any type of farm.
Build high tech farms like Hydroponics/Mushrooms etc. for others - either on a commercial scale or terrace gardens for co-op housing societies.
Learn high tech farming from The Netherlands - lots of that happening right now. You’ll have many options to leverage these skills in the future.
Build your own Urban/peri-Urban farm using Hydroponics or other high tech farming techniques to serve urban demands.
Start floriculture or mushroom farming - the export potential is huge.
75% of the CapEx for Mushroom farming is land and building. So if you already some space, starting a mushroom farm shouldn’t be too expensive.
Develop IoT or SaaS solutions for various niches in the high tech farming industry.
High tech farming can use IoT in a big way for environment monitoring and many other applications - these can be customised for different niches.
A SaaS application for analytics for tomatoes in hydroponic farms in The Netherlands? Or cucumbers or some other plants?
🧐 Looking to explore this market?
You can drop us an email and we’ll do our best to connect you to relevant people.