BII says: India has a ‘very powerful’ role in food security

British International Investment (BII), UK’s development finance institution and impact investor, thinks that India has a “very powerful” role to play in food security in many emerging markets, Abhinav Sinha, BII Managing Director and Head of Technology and Telecoms, has said.

“…milk is one example. India is already self-sufficient and also a huge exporter. Basmati rice is one example, but in many such areas we think that with the right approach to productivity improvement, you (India) can make this (agriculture) one of the biggest export sectors for the country,” he told businessline in an online interaction. 

BII is excited about investment opportunities in India, though it recognises there are many challenges to address. It thinks that working capital needs and credit access of farmers are important. The Union and State governments are supporting this. 

“But with some tools that we’ve seen work in other sectors, like credit ratings,  connectivity directly between the consumer and businesses, you can see quite an important change,” Sinha said.

‘Massive force multiplier’

Stating that farmers are now connected to their mobile devices, he said almost all of them have bank accounts and therefore, they can show their digital identity and some credit history. This is a “massive force” multiplier. “I think agriculture is the next where you will see some changes come through,” he said.

On how agtech is evolving, he said in the future, the yield improvement will get “sharper”. “It’s no more about I’ll connect farm to fork or something. It’s actually how can I help the farmer produce better? How can I genuinely increase the yield, reduce over irrigation, get the most apt input,” Sinha said. 

A genuine improvement in yield for the farmer needs to increase his earnings. Any business model that supports it will, therefore, be better, the BII Managing Director said.

“I think we are already seeing an overlap between the fintech and the agtech space. I think that will become bigger. You will get real access to credit from financial firms that focus on the agri side. Farmers are the ones who get affected by climate change the most,” he said.  

Huge challenge

Sinha said agtech companies will try and see how to mitigate climate change. Another area where there could be a wave soon is carbon trading and how it could benefit small farmers. 

Stating that climate change is a huge challenge for India, he said farmers and the Government will have to be realistic about it. He said irrigation is an area of focus and optimum use of it should be made. 

BII, which is a trusted investment partner to businesses in Africa, Asia and the Caribbean, sees many opportunities in India, though with challenges. “But there is a path where good investments can be made. People can make money off it and farmers can be richer,” said Sinha.

The British investment organisation sees value-addition as the way forward, while traceability and quality control can fetch better returns. For example, BII has invested in Captain Fresh, which helps fishermen to get 15-15 per cent higher for their produce due to these factors, he said, adding that consistency is also important.  

New commitments

For BII, which invests in creating productive, sustainable and inclusive economies, Indian agriculture is important since its share in the GDP is 15 per cent of nearly $400 billion. “More importantly, nearly 150 million people work in agriculture. And if you think of the number of people dependent on the sector, it might even be like half a billion or more. So, it’s a very large substantial chunk of India,” said Sinha. 

Indian agriculture is “very fragmented” and food is wasted via the supply chain due to the lack of cold chain. “At BII, we look at what is the best way to address these problems. Therefore we look at how we can use technology to address all these issues. Technology gives you the scale that is not that easy with normal infrastructure,” the BII managing director.

BII, whose total new commitments between 2022 and 2026 will be at least 30 per cent value in climate finance, sees the overall agri-value chain from the point of inputs that go to farmers. It looks at financing, which allows the farmers to access various inputs, including post-harvest processing or value addition besides market access.  

The British investment organisation has invested in many of different value chains trying to find out what specific problem is being address. “For instance, one of our recent investments was a precision agri company and its entrepreneurs are saying how do we create software for growing different sorts of horticultural products,” he said.

Looking at storage

The company shares advisory through the phone telling farmers about timing and quantity of irrigation and pesticide application, resulting in a 40 per cent increase in yield, the BII Managing Director said, adding that it was an interesting investment with the thought of how to make agriculture the next big export item of India.  

BII, which has invested in over 1,470 businesses across 65 countries and has total assets of £8.1 billion, also invests in funds such as Omnivore, which focuses on funding agri and agtech ventures. It has funded companies such as Big Haat- which enables traceability-, Jai Kisan – which provides credits to farmers for inputs such as seeds and fertilisers, Agrim, which connects buyers of inputs -and Bharat Agri. 

The organisation is looking at investing in the storage side as well. Farmers can use the produce stored in them as collateral, while it has invested in Cropin, which operates in India as well as abroad providing data on weather and crops. 

BII,  a founding member of the 2X Challenge which has raised over $33.6 billion to empower women’s economic development, has “a balance sheet of about $10 billion. And its invests in all sectors such as financial services, infrastructure and agriculture.  “Agritech and climate in general are quite important for us,” said Sinha.

Social impact

Though the British organisation makes commercial investments, it is focused on the social impact. “That is the nature of our funding as a developmental financial institution,” he said.

Over the past year and a half, BII has been focusing on investments in Indian agriculture or agtech firms. “…we have started doing more direct investments in the tech space. There are two or three reasons. One, in general, the businesses are more mature now. There is a good focus on profitability, rather than just trying to drive the top-line growth, which makes it more interesting for us, because unless it’s a profitable business, it won’t lead to any of the social impact that we are looking for,” Sinha said.

BII has transitioned to focus from food tech to more on other parts of the value chain of agriculture. “It addresses a broader segment of India and not just the urban consumer,” he said. 

The organisation also looks at “disintermediating”, “If you’re disintermediating, you are being really able to do it more efficiently. The more specialised the company, the better. Agriculture is a very large space, and we like if people are focused one or two or three crops. But the sharpness of that focus is important,” the BII managing director said.