You would expect Karthik Jayaraman to be familiar with the nitty-gritty of sourcing agricultural products from around the country. It is, after all, the raison d’etre of WayCool Foods and Products, the five-year-old startup he co-founded. The company procures fruit and vegetables, dairy, and staples like rice and lentils from farmers across 12 Indian states, and sells to hotels, restaurants, and retailers.
Despite this, India’s Byzantine agriculture laws sometimes leave Jayaraman at a loss. Since agriculture is a state subject, the rules for marketing of produce vary widely across states depending on the crop. “I’ll be the first to tell you I don’t understand all the rules,” Jayaraman says candidly.
India’s latest agricultural reforms, the most far-reaching in decades, aim to fix this by replacing the complex web of regulation across states with a national law. Earlier this month, the Union government made it possible for India’s 146 million 146 million Agriculture Census 2015-16 Agriculture Census Read more cultivators to sell their produce outside the regulated markets, or mandis, designated for their villages. They can now sell to any buyer with a permanent account number (PAN) anywhere in the country.
“Any such system ossifies after a period and you need to shake it up. This is a reform whose time has come,” says Jayaraman.
For the likes of WayCool and similar businesses like Sequoia-backed Green Agrevolution (better known by its agri marketplace, DeHaat) and Tamil Nadu-based PayAgri Innovations, it’s a watershed moment. These companies finally have a chance to be a genuine alternative to the existing markets for both farmers and large buyers.
Unencumbered, aggregators can expand their procurement across the country and scale up faster than before. This will, in turn, mean more investments in the sector, which, despite its vast potential, has been held back by moribund regulation.
Even as investments have been on the upswing, between 2016 and 2019, only around $585 million was poured into agritech startups, according to startup tracker Tracxn. For context, B2B online marketplace Udaan raised a similar amount similar amount The Times of India Udaan gets $585 million, valued at $2.7 billion Read more in a single round in October 2019 at a valuation of $2.7 billion. By contrast, India’s highest valued agritech, Ninjacart Ninjacart The Ken Ninjacart’s jujutsu moves Read more , is worth only around $350 million.
Besides freeing up trade in produce, the government has also approved an amendment to the Essential Commodities Act, 1955, removing restrictions on the stocking of certain crops, and created a framework for contract farming.