Introducing Inquisitorial by Indianaut, a long-form newsletter where we explain and analyze important stories stemming out of the Indian entrepreneurial ecosystem & economy. New articles every Saturday & Sunday.
India's Operation Flood starting in 1970 revolutionized dairy production in India. It helped the dairy industry sustain itself economically while employing poor farmers. As the program came into force, India escalated from 50th position to the peak in terms of milk production in just a couple of decades.
Ever imagined how you shall be buying milk in the future, will the dairy industry in India evolve to something better, organize to maximize profits? In a country like India, with massive milk production and consumption, the dairy sector is highly unorganized. As indicated by investigators, the Indian dairy industry includes more than 300 million groups of cattle held by more than 75 million dairy farmers. Most of the small dairy farmers do not get access to veterinary help, counseling on cattle's sustenance, admittance to ideal nourishment, and animal health items.
Not only this, the highly restrictive markets for trading cattle and, in some cases, market access for their milk. Even the large Private Dairy owners have to deal with multiple issues pertaining to sourcing milk, managing farmer payments, building traceable supply chains, and ensuring quality.
Getting this disorganized sector organized is the need of the hour and the next step towards starting the next white revolution, continuing the legacy of the 1970s. Many startups have come forward to digitize India’s Dairy sector seeing a profitable venture.
Agritech for the Rescue
Agritech means to go beyond end-user services, into solving scientific challenges by using artificial intelligence, blockchain, and robotics. “In the coming years, you should expect to see various dairy-focused agritech startups tackling these problems and building a stronger future for India's dairy ecosystem," said Mark Kahn, managing partner, Omnivore, which has backed startups including Stellapps.
Bengaluru-based Stellapps uses IoT for efficient milk production, milk procurement, and cold chain management. It assimilates this data on a cloud platform, analyses it, and provides real-time, actionable intelligence to all stakeholders via mobile devices.
Country Delight has been delivering milk and dairy products directly from the farmer to the customer, building a fresh food brand with milk as the mode of entry to the customer's doorstep. They have effectively removed middlemen from the picture giving the benefit to producers and consumers as well.
“We are a customer-obsessed business and a product-focused organization, we identify where the problem is at the farmer level, cold storage level or last-mile level," says Chakradhar Gade, co-founder, Country Delight.
They have built tech-based solutions to monitor milk production in real-time, monitor its nutritional value, temperature and also integrated technology in their logistics.
Blockchain is being used increasingly in the Dairy Industry and is set to make the future of the Dairy Sector digital. It will reduce costs to compete more aggressively in local and global markets. It will also allow greater knowledge of what happens to a farmer’s milk once it leaves their farm, and will provide consumers with trusted information about where their milk comes from.
During the covid lockdown, Stellapps witnessed a 46% spike month-on-month in its order value, as the number of farmers spiked from 1.98 million to 2.3 million across 30,000 villages in 18 states, 16.6% more than pre-covid times. This spike essentially depicts the importance of digital organization of the Indian Dairy Sector.
Rise in Funding
Chiratae Ventures, a venture capital firm that backed Flipkart, Myntra, Policybazaar, and many other popular startups, is looking to invest in deeptech. Agritech is one of the major areas where deeptech startups will be functional and therefore there has been a rise in the funding by multiple firms towards organizing the dairy sector which entails lots of profit.
Recently, India based Agritech startup MooFarm has raised €500K in series pre-Seed round funding from Navus Ventures and Rockstart. Moofarm in its statement said, “The company plans to use the funding to strengthen their product-market fit and hire key technology talent to launch new services to farmers.” The major reason behind this funding was to bring about a positive change and provide the Indian Dairy farmers with more economic opportunities.
JioMart has started looking forward in this direction and is looking for locations to set up its foundation in the digital dairy sector. Milkbasket's vision is to become the default mom and pop shop for over a million households by 2021. Several other apps in the delivery business use a subscription-based model and offer services like customers can order dairy items, veggies, and other products as well as the newest edition of Supr Daily.
The biggest challenges facing the dairy ecosystem are all rooted in scarcity—lack of labor, lack of green fodder availability, lack of high-quality cattle genetics.
Not only this, with so many big names entering this market, competition is bound to increase. While traditionally the big names have chosen the route to white-label dairy products of reputed dairy players, the challenge brought about by new-age Agritech startups might push them to either increase investments in their own partnerships or acquire one of the startups. This increase in competition will reap benefits for the unorganized farmers who struggled to market their produce.
Dairy tech startups are currently stressed over rivalry and various market players can coincide. However, all things considered, it is still early to imply anything. It's an exceptionally huge and intense industry as it includes a short-lived item, many moving parts and there is a lot of uncertainty with regards to the related items. Mastering this field will involve huge practice and experience.
The greatest difficulties confronting the dairy market are totally established because of scarcity be it labor or quality farm animals. These new advances will bring about more farmers deciding to make dairy a full-time business instead of a side hustle. Deeptech and Agritech are the new future for bringing the next white revolution.
This revolution will create new economic opportunities and avenues for both producers, intermediaries, and consumers. Digitizing Dairy is the new trend that will soon gain traction, large enough to reform how we receive and buy milk.