The Future of Agritech in Bangladesh: From Vertical Solutions to End-to-End Platforms

June 29, 2024

Reading Time:

Views: 96

A growing number of agritech startups, once content to solve isolated problems in the agricultural value chain, are now setting their sights on a more ambitious goal: to become end-to-end platforms that address multiple pain points for farmers and other stakeholders in the sector, finds a new whitepaper titled The Future of AgriTech in Bangladesh, published jointly by CES-ULAB and Future Startup. 

This shift, while still in its early stages, has the potential to transform Bangladesh’s agricultural landscape, much as super apps have reshaped digital ecosystems in other parts of Asia.

The motivation for this transformation is clear. Bangladesh’s agricultural sector, despite its critical importance to the economy—contributing 11.66% to GDP and employing 45.3% of the workforce in 2022—faces a litany of challenges. From fragmented supply chains and limited access to finance to low productivity and inadequate market linkages, the problems are as diverse as they are daunting. In this context, a growing batch of agritech startups has emerged as potential disruptors in the sector, with startups raising nearly $15 million in total funding to date, according to the CES whitepaper.

Initially, these startups focused on specific verticals within the agricultural ecosystem. Companies like iFarmer, for instance, zeroed in on access to finance. Others, such as Fashol and Agroshift, concentrated on output market linkages, connecting farmers directly with retailers and consumers. Still others, like WeGro, tackled the thorny issue of agricultural finance.

However, as the sector has matured, a new trend has emerged. Startups are increasingly looking to expand horizontally, creating integrated platforms that offer a suite of services across the agricultural value chain. This shift is exemplified by iFarmer, one of the pioneers in Bangladesh’s agritech space.

iFarmer’s journey is instructive. The company started in 2018 with a focus on agricultural finance, connecting farmers with retail and institutional investors. But it didn’t stop there. Recognizing the interconnected nature of agricultural challenges, iFarmer has steadily expanded its offerings. Today, it provides not just financial services, but also input linkages, output market connections, and advisory services. In essence, iFarmer is evolving into a one-stop shop for farmers, addressing multiple pain points through a single platform.

This pivot towards end-to-end solutions is not unique to iFarmer. The CES whitepaper notes that “as the agritech ecosystem matures, players are likely to expand horizontally across agritech segments to own the end-to-end relationship with farmers.” This trend is driven by both strategic considerations and economic imperatives. 

Strategically, end-to-end platforms offer several advantages. It allows companies to capture more value across the agricultural value chain, reducing their reliance on any single revenue stream. It also enables the creation of network effects, as each additional service makes the platform more valuable to users, potentially leading to higher retention and lower customer acquisition costs.

Economically, the move towards integrated platforms is a response to the challenging economics of single-vertical solutions in agritech. As the whitepaper observes, “thin margins across segments make it challenging for players operating in single verticals.” By offering multiple services, companies can potentially improve their unit economics and achieve economies of scale more quickly.

However, the path to becoming an end-to-end platform is not without obstacles. It requires significant capital investment, which can be challenging in a market where agritech funding, while growing, remains limited. It also demands a diverse set of capabilities, from technological expertise to deep domain knowledge across various aspects of agriculture.

Moreover, the success of this model is not guaranteed. As platforms expand their offerings, they risk losing focus and diluting their value proposition. There’s also the question of whether farmers, many of whom are smallholders with limited digital literacy, will embrace comprehensive digital platforms.

Despite these challenges, the trend towards end-to-end platforms in Bangladesh’s agritech sector appears set to continue. As the whitepaper notes, “the number [of end-to-end players] is only going to increase in the coming years.” This evolution could have profound implications for the sector.

For farmers, integrated platforms could simplify their operations, providing a single point of access for various services and potentially improving their productivity and profitability. For the agritech ecosystem, it could lead to consolidation, as companies seek to acquire complementary capabilities or merge to create more comprehensive offerings.

For investors and policymakers, this trend underscores the need for a holistic approach to supporting the agritech sector. Policymakers will have to be vigilant to ensure a balance in platform power and maintain parity between platforms and farmers’ relationships. Whether aggregation creates monopolistic behavior and disadvantages for any party involved in the trade will be a major point of contention. For investors, whether to go niche or expand across verticals will be an important question to address in their investment thesis. 

As Bangladesh’s agritech sector continues to evolve, the emergence of end-to-end platforms represents both an opportunity and a challenge. If successful and operated ethically, these platforms could play a crucial role in modernizing the country’s agricultural sector, improving efficiency, and boosting farmer incomes. However, realizing this potential will require not just technological innovation, but also a reimagining of how agricultural services are delivered and consumed in the digital age. It also raises important policy and regulatory questions. The seeds have been planted; now it remains to be seen how this crop will grow.

LATEST FROM OUR BLOG

RECOMMENDED FOR YOU

Pin It on Pinterest

Share This