British investment body says India has a strong role in food security

UK development finance institution and influential investor British International Investment (BII) believes India has a “very powerful” role to play in food security in many emerging markets, BII managing director and head of technology and telecom Abhinav Sinha has said. .

“…Milk is an example of this. India is already self-reliant and also a big exporter. Basmati rice is an example, but in many such sectors we think that with the right approach to improve productivity, you (India) can make it (agriculture) one of the largest export sectors of the country,” he pointed out. business Line In an online conversation.

BII is excited about the investment opportunities in India, although it recognizes that there are many challenges to address. It believes that farmers’ working capital needs and credit access are critical. Central and state governments are supporting it.

“But with some of the tools that we’ve seen working in other areas, like credit ratings, direct connectivity between consumers and businesses, you can see quite significant changes,” Sinha said.

‘giant force multiplier’

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

On how agtech is evolving, he said yield improvements will be “accelerating” in the future. “It is no longer about whether I will hook the farm to the fork or anything else. Really this is how can I help the farmer to produce better? How can I actually increase yield, reduce over-irrigation, how can I get the most appropriate inputs,” Sinha said.

A real improvement in the yield of the farmer requires an increase in his earnings. Therefore, any business model that supports this would be better, said the BII managing director.

“I think we are already seeing an overlap between the fintech and agtech sector. I think it will get bigger. You will get real access to loans from financial firms focusing on the agricultural sector. It is farmers who are most affected by climate change,” he said.

huge challenge

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

Saying that climate change is a big challenge for India, he said that farmers and the government have to be realistic about it. He said that irrigation is the area of ​​focus and it should be utilized to the maximum.

BII, which is a trusted investment partner for businesses in Africa, Asia and the Caribbean, sees many opportunities in India despite the challenges. “But there is a way where good investments can be made. People can earn money from this and farmers can become rich,” Sinha said.

The British investment organization sees value-add as the way forward, while traceability and quality control can deliver better returns. For example, BII has invested in Captain Fresh, which helps fishermen get 15-15 percent more for their produce because of these factors, he said, adding that sustainability is also important.

new commitments

For BII, which invests in building a productive, sustainable and inclusive economy, Indian agriculture is important as it accounts for 15 per cent of the GDP of about $400 billion. “More importantly, about 150 million people work in agriculture. And if you think about the number of people dependent on this sector, it could be half a billion or more. So, it is a very big part of India,” Sinha said.

Indian agriculture is “highly fragmented” and lack of cold chain leads to food wastage through the supply chain. “At BII, we look at what is the best way to solve these problems. So we look at how we can use technology to address all these issues. Technology gives you the scale which is not so easy with normal infrastructure,” said BII managing director.

The BII, whose total new commitments between 2022 and 2026 will be worth at least 30 percent of climate finance, looks at the entire agri-value chain from the perspective of inputs going to farmers. It focuses on financing, which allows farmers to access various inputs, including post-harvest processing or value addition, in addition to market access.

The British investment organization has invested in many different value chains in an attempt to find which specific problem is being solved. “For example, one of our recent investments was a precision agriculture company and its entrepreneurs are asking how we build software to grow a variety of horticultural products,” he said.

looking at storage

The managing director of BII said the company shares advice through phone with farmers telling them about the timing and quantity of irrigation and use of pesticides, resulting in a 40 per cent increase in yield, adding that this is how agriculture is done. Do was an interesting investment with this idea. India’s next big export item.

BII, which has invested in more than 1,470 businesses in 65 countries and has total assets of £8.1 billion, also invests in funds such as Omnivore, which focuses on financing agricultural and agtech enterprises. It has funded companies like Big Haat – which enables traceability –, Jai Kisan – which provides credit to farmers for inputs like seeds and fertilizers, Agrium, which connects buyers of inputs – and Bharat Agri. .

The organization is also looking to invest in the storage sector. Farmers can use the produce stored in these as collateral, while it has invested in Cropin, which provides data on weather and crops in India as well as abroad.

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” About this $10 billion. And it invests in all sectors such as financial services, infrastructure and agriculture. “Agritech and climate in general are very important to us,” Sinha said.

Social Impact

Although the British organization makes commercial investments, its focus is on social impact. “As a development financial institution this is the nature of our funding,” he said.

Over the past year and a half, BII has been focusing on investing in Indian agriculture or agtech firms. “…We have started to make more direct investments in the technology sector. There are two-three reasons. One, in general, businesses are more mature now. There’s a good focus on profitability, rather than just trying to drive top-line growth, which makes it more interesting to us, because unless it’s a profitable business, it doesn’t have any social impact. That will not happen for what we are looking for,” Sinha said.

BII has made a shift from food technology to a greater focus on other parts of the agricultural value chain. “It addresses a wide swath of India, not just urban consumers,” he said.

The organization also focuses on “eliminating intermediation,” “If you are eliminating intermediation, you are actually able to do it more efficiently. The more specialized the company is, the better.” Agriculture is a huge sector. And we like it if people focus on one or two or three crops, but the sharpness of that focus is important,” said the BII managing director.