Bengaluru-based Falca has raised $3 million in pre-series A funding to expand its marketplace for farmers in rural India. Improving and sharing knowledge, technology and procurement could make Indian farming more sustainable and resilient.
- Falca aims to provide farmers in rural India with all of the resources and guidance they need to increase their profits while enhancing the country’s productivity.
- India’s economy is highly dependent on its agricultural sector, but the market’s fragmentation threatens the livelihood of the smallholders who make the greatest contribution.
- New policy measures and public-private partnerships indicate India’s growing demand for the digitisation and integration of its agricultural sector, suggesting that Falca’s successful fundraising may be part of an ongoing trend.
Falca plans to use its latest investment, led by Inflection Point Ventures (IPV), to scale its marketplace, expand its staff and develop its technical infrastructure. The start-up claims that it is already working with over 100,000 farmers, more than 60 agricultural input manufacturers and around 65 corporate buyers.
As Santosh Danegoudar, Falca’s co-founder and chief executive explains, “We directly work with farmers and offer them end-to-end farming solutions through a tech based Phygital [a blend of physical and digital] platform”.
“Falca aims to educate the farmers through its platform and make them well versed with the usage of technology for cultivation and the benefits that Falca has to offer to make a better living and profitable farming business”, adds Vinay Bansal, founder and chief executive of IPV.
Falca’s blend of physical resource centres and online services
Falca aims to offer smallholder farmers a range of resources and services that cover every stage of their operations from the seeding of crops to the direct sale of products to consumers, thereby removing the need for costly intermediaries across the value chain.
It blends its physical presence, which reportedly comprises 30 rural resource centres, with a digital platform through which farmers can source tools, machinery, chemical inputs and storage solutions while also gaining access to services including advisory on weather conditions, pest infestations, imbalances in supply and demand, and agricultural best practices.
Through this one-stop-shop approach, Falca intends to educate rural farmers and empower them to become more profitable through the adoption of new technologies and avoidance of unnecessary costs.
The fragmentation of India’s agricultural sector
As an agrarian economy with 54% of its land categorised as arable, India is highly dependent on its agricultural industry. The sector represents more than half of the country’s labour market, and accounted for 18.8% of its gross value added in 2021-22, up 3.9% from the previous year.
Indian agriculture is challenged, however, by its current fragmentation. Around 86% of the nation’s farmers are categorised as small or marginal, typically holding less than two hectares of land.
Despite being the country’s primary providers of food and nutrition, they remain constrained by their limited access to technology, inputs, credit, capital and market connections.
The agricultural value chain is instead dominated by various middlemen, providing resources, transportation and distribution while each taking a cut of the farmers’ potential profits.
India has started to prioritise the integration and digitisation of agriculture
In September 2021, India launched its ‘Digital Agriculture Mission 2021-2025′ and signed a series of memorandum of understandings (MOUs) with partners including Cisco (NASDAQ:CSCO), ITC (XNSE:ITC) and Ninjacart.
The agreements are expected to accelerate the digitisation of Indian agriculture and its value chain through planned pilot projects including the creation of a nationwide data pool to enhance knowledge sharing, the launch of an AI-powered platform to provide tailored farming advice and an electronic trading portal to establish a unified national market for agricultural commodities.
India’s Ministry of Agriculture and Farmers Welfare had previously signed a MoU with Microsoft (NASDAQ:MSFT) to create a ‘unified farmer services interface’ that would involve the creation of unique farmer IDs to help smallholder farms gain access to various government schemes.
The country’s national budget for FY2022-23 further establishes its prioritisation of digital agricultural practices, and makes provisions for the funding of agritech start-ups.
Although such policy measures suggest there is support available for India’s smallholders, there have been certain contradictions. In September 2020, the government introduced a series of laws to deregulate the sector which were met by nationwide protests by smallholders who said the new rules would leave them vulnerable to competition from larger businesses. The laws were eventually revoked in November 2021.
A tech-enabled, collaborative approach could ensure the resilience of Indian agriculture
Digital platforms can support collaboration between farmers by bringing them into direct contact with solutions-providers and helping to match supply with demand.
By increasing smallholders’ access to, and awareness of, optimal farming practices and emerging technologies, India’s agricultural sector could also improve its resilience against the increasing risks of climate change and deliver a just transition by ensuring that vulnerable communities are included in the overhaul of its farming system.
The policy measures and public-private partnerships introduced by India’s government demonstrate the growing demand for the digitisation and integration of the country’s agricultural sector, with Falca’s successful fundraising reflecting an ongoing trend.