In conversation with Dr Vijayender Nalla

Dr Vijayender Nalla has a treasure of experience in the global food & agribusiness industry. He is the co-founder of agribusiness Academy, coaching and community facilitator at the Institute of Food and Agribusiness Leadership.  He works with high potential start-ups in AgriTech, food-tech and urban food space to help them scale ambitions through the organization’s domain expertise and talent development solutions. Prior to this initiative, he was a part of several core agriculture and food supply chain projects as an entrepreneur. He holds a PhD in Supply Chain Management from Nyenrode Business University, Netherlands and a Masters from Indian Institute of Technology, Chennai.

We had a free-wheeling conversation with Dr Nalla on many things agriculture – supply chains, start-up ecosystem, the role of Government. Do read on to find out more!

Agriculture supply chains

In one-line, the agriculture supply chain can be understood as to how food gets from farmers’ fields all over India to the plates of the country’s 1.3 billion people. This is no easy task, and despite commendable progress, agricultural supply chains in India continue to be throttled by a number of issues – lack to access to buyers, lack understanding of market/consumer preferences, not having timely access to quality seeds and fertilizers, irrigation inconsistencies, post-harvest losses, to name a few. This makes the idea of farming unfavourable. Even though agriculture as a sector employs more than half of the entire population of the country, recent technological advances haven’t made able to make an impact that’s proportional to this scale. Agriculture has lagged behind other sectors in terms of new opportunities and technological innovation. Specifically, agriculture supply chains have been seeing a spurt in innovation only in recent times.

Existing Challenges 

Dr. Nalla says “Agricultural value chains have been historically linear. The challenge is that farmers, who are the main drivers of the value chain, have had challenges in connecting with the buyers. If I am a producer, I should have access to my buyer; otherwise, I would not know if I have the correct market information or if I would get the true value for my product. I need a direct roadmap to my consumers if I want to have a business. If it’s not business, it’s not consistently profitable which makes it a less interesting investment case. On the other hand, food processors have a problem with sourcing - where to source the specific quality and quantity from. Consumers too have a very limited understanding of where the food gets produced, how it is getting processed and how it is getting distributed. If you really see, these two key stakeholders (producers and value-adding buyers/customers) are not able to engage each other and build upon the relationship and value! The opportunity in a digitalised world is to adopt appropriate technologies to establish and strengthen the producer-customer relationship and value creation potential. 

Agriculture value chains are inherently different from others because agricultural produce has a short shelf life. Often, farmers are forced to sell their produce at even below cost prices. This is because if they don’t sell, it is just going to go bad and won't fetch any price. Many a time, they are not able to sell their produce in the market, on time or at the anticipated price. This is because the farmers are not directly connected with the buyers and need to rely on a multi-layered system of middlemen that in turn drives prices down for them and up for consumers. There is a dearth of cold storage and processing facilities, which are crucial for farmers’ empowerment. Information and Communication Technologies (ICTs) that facilitate knowledge exchange, targeted recommendations, market integration and access to finance are all essential if agriculture is to become a profitable enterprise and attractive for youth in general.

Technology as a solution – the Agri startup ecosystem

According to Dr Nalla, “the problem in agriculture is not a tech problem, it is a market access problem. Rather, technology is a potential solution. Technology is a tool that can facilitate the access, information and transactions in a more open and transparent manner. The start-ups that use technologies and take a position in the value chain and establish more valuable buyer relationships would overcome the adoption and profitability challenges. This approach will help startups to build their own community and possible network efforts. However, the amount of effort invested and the dedication required cannot be underestimated”. 

Dr. Nalla feels that the need of the hour is to create individual value chains. He says “Many academicians and companies today are mapping the current value chain, figuring out the connecting nodes, understanding the efficiency and then offering a digital solution. A better approach would be to re-design the supply chains around value and create the product, information and financial flows in this new design.  The re-design value chain should be able to facilitate arbitrate opportunities for all the players in a value chain/network. In essence, the only way new players either tech and/or in the value chain have opportunities to create value in a re-designed value chain/network that facilitate arbitrage opportunities for everyone in the chain. Arbitrage opportunity for everyone in the chain is a necessary condition for the newly designed value chain to work and scale. 

He goes on to explain how some companies have been able to do this successfully. “If you are on a journey to creating your own value chain, like popular start-ups Ninjacart, Agri Udaan, you know exactly how to organise, how to structure the value chain for creating arbitrages. Once a player leverages technology to re-design the value chain and execute it for the benefit of everyone the arbitrage opportunities are going to scale because of network effects. Not many businesses design their value creation, delivery and capture processes around network effects which is potentially the most valuable opportunity. B2B marketplaces such as Ninjacart have the potential to create strong network effects on both the buy and sell-side. More about the network effects in another post and another day. 

Role of Government and investors

Talking about the role of public policymakers in agriculture value chains in India, he says “Government’s role should be that of a facilitator. They have to create an environment which is conducive for entrepreneurship and understanding agriculture as a business opportunity”.  

We can all agree that the Covid-19 pandemic has in a way created an urgency to amplify the digital agriculture growth in India. Google recently has pledged to invest $10 billion over a span of five to seven years to accelerate India’s digital economy, which is the need of the hour. “Agribusinesses must try and leverage AgriTech solutions to make better decisions on crop and input choices, knowledge partners and distribution channel partners. Additionally, they must also invest in developing knowledge of the industry and markets for the whole team. Online marketplaces with the right business models that align with the farmers’ needs would scale.” Dr. Nalla signs off…

We’d love to know your thoughts on our conversation with Dr. Nalla! Do leave your comments below.