AgTech Businesses & the Sharing Economy
Ploughing ahead with sharing & as-a-service models in India
A field in rural India might seem an unusual environment for cutting edge technology. However, enabled by increased interest and investment in developing AgTech centres, small farmers are beginning to experience the benefits of quality tech enabled services. Through pioneering startup EM3 AgriServices, farms can rent equipment and machinery via a pay as you go system. EM3 considers itself to be a FaaS (Farming as a Service) company, using sharing economy values to maximise resources. How will this enhance AgTech in less economically developed areas, and what are the wider implications of this communal business model
Home grown innovation
Since 2013 EM3 AgriServices has helped over 8,000 farms and, since 2015, has received over $13 million in investment. Their success can be attributed to their response to a serious business requirement. By matching well equipped farms with small farmers in need of resources, the company is helping to alleviate poverty in rural districts. “The need wasn’t there in a lot of markets,” says Rohtash Mal, CEO and cofounder of EM3 AgriServices. In developed countries, even small farmers can get hold of the machinery they need to grow and harvest produce. And in any case, their attitudes represent a distinct contrast to those in developing countries, where sharing is a necessary part of life. Many small farms in India are only a few acres in size, meaning that capital is incredibly low. But what this also means is that, if a farm pays per acre, the cost of using advanced machinery is entirely affordable. Without companies like EM3 to facilitate a sharing economy, access to resources would be impossible. At the moment, they claim to be the only company offering this service. Nonetheless, competition is arising from other agricultural firms like Gold Farm and Trringo, who have set up apps for equipment lending. But will traditional agriculture change as small farms begin to adopt these services?
Will FaaS disrupt developing AgTech?
There is clearly a higher demand for FaaS in developing countries, which means that disruption is likely have a greater effect on these communities. Easier access to tech is likely to increase productivity, leading to the expansion of AgTech – as well as technology on the whole. In much the same way, sharing economy values are far better suited to environments where sharing is key to survival. In developed markets, sharing is about saving money, not scraping together a living. Ironically, this disadvantage has a silver lining for businesses in the developing world, and could create more advanced sharing economies than in the Western world. That being said, larger farms across the globe could also benefit from this approach to resources. Even in largely developed countries like China, the gap between big businesses and SMEs can be huge. Bridging this gap could be a step towards greater equality within AgTech, and consequently higher production levels. The effect of FaaS on manufacturers will be less positive, however. Just as car hailing apps like Uber have accelerated the decline of car ownership, sharing farming equipment between users will lead to a decrease in production demand.
In developing countries, quality resources can be difficult to come by. But by applying sharing economy values and an on demand business model, EM3 has opened up a new opportunity for both well and under equipped farms. The Indian AgTech sector appears to be attracting increased attention from startups and investors, all to the benefit of underprivileged farmers. FaaS also has potential outside of India, in both disadvantaged and advanced markets. However, as sharing is an integral cultural norm in developing areas, companies that follow this strategy may find greater success in places that are not exactly considered to be technology hubs. The irony, of course, is that an influx of innovation and investment will transform them into promising centres for postmodern economic values. Instead of attempting to crack difficult American and European markets, companies will increasingly look for opportunities within less developed countries. Silicon Valley, be warned.
Will sharing economies in developing countries leapfrog more economically developed markets? In which other countries does the FaaS business model have potential? How will the rise of equipment rental services effect manufacturers? Comment with your thoughts.