Transforming Indian Agriculture: Navigating Challenges and Seizing Opportunities | Mark Kahn from Omnivore

[00:00:00] Mark: I mean, during COVID, this was the only part of the economy that didn't implode. And so it's obviously very important and there's huge scope to make it more productive.

[00:00:10] Mark: If you want to solve malnutrition, give people eggs. They're great, highly accessible, inexpensive protein that you can fully digest that it's a game changer.

[00:00:20] Mark: There's not a country in the world. That doesn't have activist government in some ways in their agricultural sector, like that doesn't exist.

[00:00:29] Mark: Let's give cash to farmers. Let's stop influencing their behavior in ways that we don't actually want to influence anymore.

[00:00:38] Mark: We need to fix that. We need to fix that fast because India is missing out on the life sciences revolution because of this talent problem.

[00:00:46] Mark: You know, when you, whenever you think you've won, you probably haven't. Whenever you think you've lost, you're probably wrong as well.

[00:00:54]

[00:00:58] Rahul: Welcome back to Understanding [00:01:00] VC. I'm your host Rahul. Understanding MBA on a single subject, venture capital. Today, I'll be having an in depth conversation with Mark Kahn on India's agriculture and food system while exploring the opportunities and challenges for agri and food tech startups in India.

[00:01:15] Rahul: Mark is a co founder and managing partner at Omnivore, an agri tech VC firm based in India, which pioneered agri tech investing in India, backing over 40 startups since 2011. Let's start there.

[00:01:26] Rahul: Hi, Mark. Uh, thank you so much for joining me today.

[00:01:29] Mark: here, Ravel.

[00:01:29] Rahul: So the, the reason why I wanted to talk to you, is because I was looking at agriculture in India. like you noticed that around 40 to 50 percent of the Indian workforce, total workforce is in agriculture, but the contribution to the GDP is only 15%. So the productivity is not so great. but if you look at, the, The total contribution in terms of like, agriculture products, like, like a lot of these pulses or wheat rice, we're either number one or number two in the [00:02:00] world.

[00:02:00] Rahul: and also around 50 percent of the land is cultivatable. So it feels like there is a lot of potential and, India could essentially feed the world, but that's not happening.

[00:02:10] Rahul: so yeah. Why is this?

[00:02:14] Mark: look, I mean, why is this? The answer is millennia of history. Um, you know? Why, why are we the largest wheat and, and the second largest wheat producer, second largest rice producer and largest, largest producer of pulses, because we have 1. 4 billion people and everyone eats, right, dal, chavo. Roti, right?

[00:02:38] Mark: Like, I mean, we, the great, one of the great triumphs of the 20th, of the 20th century was the Green Revolution, right? Which, obviously, before anyone lectures me in advance, yes, had externalities, yes, was not perfect. But India becoming self sufficient was no guaranteed, food self sufficient was no guaranteed thing.

[00:02:59] Mark: It was a [00:03:00] Herculean effort, with a lot of heroes. Right, everyone from, from MS Swaminathan and Norman Borlaug, right, to, to the IAS, right, to, to the, to Krishi Bhavan, to, right, you know, to academics, it was an insane, and, and, of course, the Prime Minister, Lal Bahadur Shastri, right, so, you know, it was an insanely difficult thing to do, and we're still reaping, you know, we're still reaping the benefits.

[00:03:29] Mark: Of that in terms of food security, your point about like Indian agriculture, not being productive, right? Or as productive. I guess it depends on how you look at it. Um, so, you know, 1st of all, very difficult to feed 1. 4 billion people with minimal imports, right? India really only imports edible oil. Like, even the amount of pulses we import is negligible, right?

[00:03:54] Mark: The other foods that we import are. irrelevant, right? Kiwis from, you know, New [00:04:00] Zealand. it's, it's, you know, and then India has become a net exporter, right? India is a very serious exporter of, of Basmati rice, non Basmati rice, right? Of spices, of shrimp, number, you know, number one or number two at any given moment, of other seafood products, of caribbeef, right?

[00:04:20] Mark: Buffalo meat. Um, you know, of lots of things, cotton sugar, you know, depending if the government wants to ban it. right. We obviously have domestic considerations for a lot of our export policies, but, um. You know, net net, it's a huge agricultural economy, but we have a huge population. And so, you know, if you ask the question, is this the most productive part of our economy?

[00:04:42] Mark: No. Is it, you know, an absolute tank, a beast in its own way? Yeah. I mean, during COVID, this was the only part of the economy that didn't implode. During those first, you know, 6 12 months of COVID, um, that kept kind of chugging along. [00:05:00] And so, it's obviously very important. And there's huge scope to make it more productive, right?

[00:05:06] Mark: And there's two parts of that equation. One part of that equation is to make individual farms more productive. And the other part of that equation is to get people out of agriculture. Right. I always find it, um, annoying and patronizing when, when people are like, Oh, we're, we're losing our agricultural workforce.

[00:05:26] Mark: This is terror. Are you joking? Are you joking me? You're kidding with me? Like, like, no, this is not terrible. You shouldn't have 40 percent of your economy on farm. That is insane. That is because we missed out on the, you know, on having, having manufacturing being as big as it should be. Right. Those people on farms should be in factories.

[00:05:47] Mark: Those factories didn't get built. Right. And so now, right, I feel like India is having another opportunity at that because of kind of people finding alternatives to China to get [00:06:00] manufacturing. Right. And my hope is right that we should be losing, you know, I don't know, 5 to 10 percent of people on farms every decade.

[00:06:10] Mark: And that's not a bad thing. Right. You know, if they're finding if those people are finding good jobs in manufacturing in services, right? Great. That's winning, right? And hopefully, a lot of those manufacturing jobs are agri linked, right? If we can get food processing kicked off fully in this country, if we can get exporting kicked off fully and value addition, right?

[00:06:31] Mark: And the life sciences economy, then a lot of those, those jobs will be agri related jobs, but they will be manufacturing jobs. And, and, yeah, I mean, that's, that's our hope. Anyway, at all.

[00:06:43] Rahul: Yeah. So one thing is to move people away from agriculture and the second thing is to improve. You mentioned, uh, improving the productivity of the farm, right? So from a tech investment perspective, what are the opportunities there?

[00:06:57] Mark: Lots. Um, I [00:07:00] mean, it's our, our perspective is really looking at these kind of, and we've talked about this before for sort of big things that need to change in Indian ag, right? Farms need to become more profitable. Farmers need to become more economically resilient. Ag needs to be more sustainable, right?

[00:07:18] Mark: And we need to address this challenge of climate action. Um, there's innumerable things to work on, truly innumerable, right? There is helping the farmer produce more. There's helping him get paid more for what he produces or she produces. There's lowering their cost of inputs. There's lowering their cost of finance.

[00:07:37] Mark: All of those things combined. Can drive additional bottom line to this micro enterprise that we call a farm. And then there's a ton of other stuff, right? In terms of of new innovations around sustainability, right? You know, breakthroughs in food processing and value added processing. Material science.

[00:07:58] Mark: There's all sorts of stuff. Omnivore [00:08:00] sort of wears kind of, I would describe it as a couple hats simultaneously, right? When I try to explain what we do to non agri people. You know, there's sort of six themes where we've been focusing on a lot these days, right? We've been focusing on agri platforms and marketplaces.

[00:08:20] Mark: That looks like the tech enabled stuff that other generalists back. Okay. We spend a lot of time on rural fintech. That's a big theme for us. Um, and, and in that sense, we have a lot of FinTech capabilities in terms of the Omnivore team. We do a bit of farm to consumer, right, at what we call F2C brands, you know, akin to the kind of stuff that a Fireside or a DSG would back.

[00:08:44] Mark: Um, so you've got consumer VC focus with an Omnivore. Then you have, right, climate deep tech, right? So, so we, we are, we've done a ton of stuff in hardware and satellites and robots, remote sensing, all of that. then [00:09:00] you've got agri food life sciences, and we're also doing a bunch of stuff right now. We just did all them and we're doing another deal in, sustainable and novel materials.

[00:09:10] Mark: So material science is becoming something we're spending a lot of time with. So it's a real mix. Um, between tech enabled and digitization, fintech, consumer, deep tech, and life sciences.

[00:09:25] Rahul: Yeah. And life sciences is something that you're, uh, a lot keen on and,you mentioned that there is not enough talent. So, could you explain this, uh, a little bit more detail when, when you say life science, are we talking about something like, uh, you know, lab grown meat and things like that?

[00:09:41] Mark: Am I, I'm, I'm not, I'm very keen on, on a variety of life sciences, but I wouldn't say lab grown meat is one I'm especially bullish on. I, I have been sort of a voice, in, in, I won't say opposition to alt protein, because I think it's very relevant in the United States, I think [00:10:00] it's very relevant in in China.

[00:10:01] Mark: I don't think it's relevant in India. I don't think it's, it makes any sense in an Indian context. I think it is a California copy paste, right? And if you, if you look at India and say, Okay, first of all, do we eat a lot of meat? No, we don't. We just don't. Objectively, we don't eat a lot of meat, okay? Even the non vegetarians don't eat a lot of meat, right?

[00:10:25] Mark: It is, I, I, I try to describe vegetarianism in India as the default setting in the operating system of Indian society. Okay, I'm non veg. I have lots of friends who are non veg. Okay, do we mostly eat non veg? We plenty of veg meals. Okay, right there, you know, sometimes I eat non veg, but I don't eat It's India's kind of the the the non veg population of India in the West would be called flexitarian.

[00:10:53] Mark: Okay So the point is, in this mix, who's the customer for all [00:11:00] protein? Okay? It's definitely not the vegetarians, right? Give a shakahari person something that tastes like hamburger. They don't want it. They've never grown up with that taste. Right? And then for people that are non veg, like, if we're gonna eat veg, we'll just have Dal and rice, right?

[00:11:19] Mark: We don't need a meat analog.

[00:11:20] Rahul: yeah, um, but curious to understand, but there is still a challenge of, um, lack of protein in the general Indian diet,

[00:11:28] Mark: that is sociocultural. You're not going to fix that. That, that is, if you want to ask why is there not enough protein in the Indian diet? Uh, so the first answer is vegetarianism, okay? Like, just is, right? It is a carb heavy, carb centric diet, okay? Like, it's not salads and steaks, right? It's, it's, it's, let me, let me chuck carbs at everything.

[00:11:56] Mark: And they're delicious, trust me, I love them. but if your source [00:12:00] of protein is a katori of dal, okay, and some dahi, Yeah, you're gonna be protein deficient. Okay, like I don't know what to tell you other than Desikana, right? Like that's what it is. Okay, If you want, but how I don't know how how alt protein is gonna solve that right like where what's the use?

[00:12:24] Mark: Okay, so you're gonna have a Katori of what alt protein chicken keema that's gonna solve It's what I'm, what I'm saying is it's like, it's just structurally different if you think about people that get enough protein, right? Think about like Europeans, right? That sit down for a steak, right? A giant steak.

[00:12:44] Mark: And then there's a little bit of vegetables on the side. Think of how different that is from the, the thali that is the Indian diet. Which is all about carbs, carbs, carbs, carbs, carbs. And a little something else. right, like think about like breakfast food, right? Let's just like compare breakfast [00:13:00] foods, okay?

[00:13:00] Mark: The English breakfast versus South Indian breakfast, okay? The English breakfast is eggs and beans and sausage and, and bacon, okay? it's all this of it. Let's go through what I have for breakfast in Bangalore. Dosa, okay? Idli. Vada. Wonderful, delicious stuff. It's all fucking carbohydrates, okay? There's no protein, I mean there's a little bit of dal, right, in those things, but like, not much. So when you're like, oh, India's protein deficient. Yeah, boss, because the diet's protein deficient. What people want to eat is protein deficient, right?

[00:13:40] Mark: If you're going to fix that, you have to structurally fix the diet. You can't fix that by, by, by changing out. Right. A, a, a kaori of doll for a kaori of, of alt chemo.

[00:13:52] Rahul: So, are you seeing any signs of that structural change in diet,

[00:13:56] Mark: I listen in, in, [00:14:00] in the, in the rarefied world of the top 1% of India. Sure. Right there, there are, I, I have keto friends, I have vegan friends. I have all sorts of, like, that doesn't represent Indian society or, or the numbers or anything. It just doesn't matter. Okay. I think there's a recognition. A broader recognition, I would say, in the top, you know, quintile of Indian society that there is a protein deficiency, right?

[00:14:26] Mark: So you're starting to see that, like, people getting into fitness are having, like, whey protein, right? Because they know they don't get enough through their diet, right? And, and there are some, there's sort of a growing recognition that, like, unlimited carbohydrate consumption isn't great for you, right? So there's some people that are thinking about, Right, you know, um, what is it called again?

[00:14:46] Mark: Um,

[00:14:46] Rahul: continuous glucose monitoring and stuff?

[00:14:48] Mark: it's GI, right? Um, yeah, like,

[00:14:52] Rahul: Lycemic index.

[00:14:53] Mark: sorry. So there's a, there's more awareness of all of this, which I think is really good, right? You know, [00:15:00] but no, man, like, I don't see people meaningfully moving away from the diet of their ancestors. Okay, I just don't think that's going to happen, right?

[00:15:10] Mark: Yeah, you have. Right, you know Bombay and Bangalore and Delhi have some good places to get a salad But like it's it's just you know, I always describe it this way.

[00:15:19] Mark: Okay, like so if you look at Swiggy and Zomato, okay What happens when Indians are told hey, you don't have to make dinner tonight. You can order anything you want any kind of food It's like 60 percent biryani, okay? It's like 50 60 percent biryani, right? It's like, give me more carbs! I'd like more carbs, please, okay? Let me have carbs and a little bit of meat, okay?

[00:15:46] Mark: I don't know what to say, like, other than I think people that think the diet is changing radically are Delusional. Okay. It's just not like top 1%. There are changes and there are certain changes that slowly structurally [00:16:00] happen.

[00:16:00] Mark: Okay, like, you know, in the top 10 20 percent people drink better beer today than they did 10 years ago. Okay. Right. Like there, there are health trends for sure. And there's more going to the gym and there's more paying attention to what you eat. But like, no, like, you're not gonna, India's never gonna be a salad country.

[00:16:20] Mark: It's never gonna be a sandwich country, other than grilled sandwiches on the street, which are, of course, freaking delicious. you know, it's, it's just that, that change, like, hoping for that change is, is unrealistic, and, and, and illogical. Like, if, if you're gonna say, okay, how do you structurally change, right, to increase protein consumption?

[00:16:42] Mark: You know what the greatest increase in protein consumption is in India over the last five decades? eggs.

[00:16:48] Mark: Just eggs. Just the NECC. That's it. That's literally it. Okay? It was basically the NECC convincing vegetarian parents to give their children, who do not eat eggs, to give their [00:17:00] children eggs. Okay?

[00:17:01] Mark: Massive social experiment, incredibly successful, okay? Incredibly successful, right? Eggs, and eggs are the best protein, okay? The easiest, cleanest, you're, you know, it's like the, like, doll, I, I realize, like, there's gonna be a bunch of, like, hardcore vegan people that are gonna hate me right now, but, like, your body can't process all the protein out of doll, okay?

[00:17:25] Mark: It can't, right? It's like a cow chewing grass. Like, you can get, extract value from it. But it's, there's a huge loss, okay, in waste. I won't get any more details about that. But, um, but like, when you have an egg... That is like protein right into your bloodstream. Okay, and and and that's and so if you want to ask like what what we could do we can eat more eggs.

[00:17:51] Mark: Okay, like, be like the Parsis eat more eggs. Okay. Um, and by the way, that's also that mean there's there's a whole fight about Angad Varese. [00:18:00] Right. And, and, and, and, you know, the, you say, and, and whether they're veg or non veg or should children be given eggs? Yes, children should be given eggs. If you want to solve malnutrition, give people eggs.

[00:18:12] Mark: They're great, highly accessible, inexpensive protein that you can fully digest. It's, it's, it's a game changer. Right? the thing that pisses me off is like, like, people bring this, like, you know, meat is destroying the world.

[00:18:28] Mark: No, no, DeVos, cows are destroying the world. I completely agree. The methane emission of the dairy industry, of the cattle industry, of what the U. S. does with these insane herds of animals. Right. That's not efficient. Okay. It's not right. The, the F, the feed conversion ratio, right. Of, of, of beef is terrible, but by the way, that's not what we're doing in India.

[00:18:48] Mark: Okay. We have chickens with 1. 3, 1. 4 FCR, right? Like just like everyone needs to like, get off their, their California trip and [00:19:00] recognize the realities of the country that we live in.

[00:19:02] Rahul: Yeah. Yeah. So, in terms of opportunities that you're interested in life science, what are those?

[00:19:07] Mark: interested in biologicals that create alternatives to chemical insecticides and fertilizers and pesticides, okay? I'm interested in, in biofactories. I'm interested in how we take, you know, we have a portfolio company, Loopworm, that's working with the waste from the silk industry and building biofactories.

[00:19:29] Mark: Right to to transform biorefineries to transform that waste into peptides and value added ingredients and other stuff. So the whole circular economy thing is very, very interesting. I'm definitely interested in, you know, in people that are creating. You know, solutions for food waste using, you know, innovative biochemicals, right?

[00:19:50] Mark: Like there's all sorts of cool shit you can do. I'm just specifically not interested in all protein because I think it's irrelevant in India.

[00:19:58] Rahul: Yeah. [00:20:00] So, in terms of opportunities in climate change, what would be some of those?

[00:20:04] Mark: Um, I mean, from our portfolio, right? If you look at all 10, the deal that we just did right there, they're basically taking waste products from agricultural produce and converting it into value added ingredients that remove plastic from a variety of industries. Okay, so big decarbonization play there. you've got Varaha from our portfolio that is, that is building out a, you know, a platform of nature based solutions that, that drive carbon credits towards smallholder farmers and help them realize, um, the benefit of those carbon credits.

[00:20:40] Mark: There's, there's tons of stuff to do across climate adaptation and resilience, and then also mitigation, reducing the footprint of Indian agriculture from a carbon perspective. There's no lack of opportunity. There's no lack of things to work on

[00:20:54] Rahul: Yeah. So, uh, I read this book, How World Really Works by Vaclav [00:21:00] Semel. so he, he makes this argument that you mentioned plastic, and also ammonia, our reliance on these are not going to change at least in the next 50 years is what his argument is.

[00:21:10] Mark: I maybe I don't know. I think there's lots of people working on trying to disrupt that that ammonia thing. Okay. Right. In the States, there's pivot bio and a couple other companies, right? That are trying to radically reduce the amount of nitrogen fertilizer that we use. I think there's I think there's definitely opportunities to do that. Um. You know, I think the, the getting plastic out of our ecosystem is very, very important. I think there's lots of people working on, on cool alternatives to plastic. I think, like, do I think we're going to eliminate them totally? No, but do I think we can cut them 10, 20, 30, 40, 50%? Yeah, absolutely.

[00:21:45] Rahul: Yeah. And when you talk about, opportunities in resilience, we're talking about like making this more predictable, right? As in like, to remove the. the kind of unpredictability associated with agriculture. [00:22:00] Those are the opportunities that

[00:22:00] Mark: I mean, I think a big part of that is, is rural fintech. I think a big part of that is making it easier for farmers to access insurance, risk management solutions, inexpensive credit, right? So that's one part of it. And then the other part is. Building out these value chains of food processing and exporting and value addition, right?

[00:22:19] Mark: So farmers are not so dependent on the local Arctia for, for, for liquidating their, for marketing their crop.

[00:22:26] Rahul: Yeah. And, uh, the, the profitability side of things is basically,

[00:22:32] Mark: Production, price, cost of inputs, cost of finance. It's literally a formula. Okay? It's, you just, just think of it as an income statement. Okay? Every farmer has an income statement. The top, the revenue is volume times price per unit. So those are two levers you can play with. Less cost of inputs, another thing you can play with.

[00:22:54] Mark: Less cost of finance, another thing you can play with. Less cost of labor, [00:23:00] okay, equals profit.

[00:23:02] Rahul: Yeah. And so in terms of, uh, this right profitability, I think the policy could really help, um, make a difference here, right? Like, why is there, I mean, not just in India, even in the US, why is there a lot of policy intervention

[00:23:19] Mark: Because you're talking about feeding a society Because the alternative is famine, okay? I mean, there's two reasons. One, the farmers are a vote bank. And two, if we don't get it right, we starve to death. So yeah, we're always, there's not a country in the world that doesn't have activist government in some ways in their agricultural sector, like that doesn't exist.

[00:23:43] Mark: There's no free market in agriculture perfectly in any nation, even the kind of Australia, New Zealand examples that have less. Other places, places still have some. And in India when 40% of the population, when we're a democracy and 40% of the population lives on farm, by default, you're [00:24:00] going to have farm policy.

[00:24:01] Rahul: yeah, yeah, yeah. I mean, I've already mentioned two policy changes that you would like to see, um, which is one is decoupling the farm welfare to price controls. Uh, And also the land reforms, uh, I'd love to hear you, um, talk about why these two are important.

[00:24:22] Mark: so, so one is we have a system of, you have to understand that, that the, that the system of farmer welfare that was built in India, Was very much linked to the Green Revolution, okay? The idea behind a lot of it, behind the FCI, the minimum support price, the fertilizer subsidies, right? This was all a coherent logic.

[00:24:47] Mark: In the 60s farmers were not using fertilizer. Okay, cool. We're going to subsidize it. So that they use it. Cool. Makes sense. Like we should do that. It's very important. So we don't starve to death in 1966. We subsidize fertilizer. [00:25:00] Okay, cool. Then. All right. How do we convince farmers to grow more wheat? And it was okay.

[00:25:06] Mark: We create minimum support prices. So they know that if they grow it, it's not risky. Cool. This made sense in 1970. It also made sense probably in 1980 by 1990 stops making so much sense. It's less of an issue. Farmers are just doing this by nine, by 2000. It doesn't make sense. By 2010, we're an exporter.

[00:25:24] Mark: Okay. And, and our major concerns are the environmental degradation of Punjab and the wa and, and, and the lever, you know, the water table and all that stuff. So it has stopped making sense. Okay, this system has stopped making sense. I'm a big believer that, that farm welfare is very important, okay? I have no issue with, if the government wants to take the PM Kisan, right, of 6, 000 some odd rupees a year and make it 60, 000 rupees a year, okay?

[00:25:57] Mark: Do it! Freaking do it tomorrow, but get [00:26:00] rid of the rest of the crap, okay? Like, let's give cash to farmers. Let's stop influencing their behavior in ways that we don't actually want to influence anymore, okay? Don't subsidize fertilizer. Give them cash and let them decide what they want to use. Don't encourage production of certain things, more or less.

[00:26:24] Mark: Let the market do its job there and, and deliver welfare directly. Okay. And deliver more. Put a lack in the farm of, you know, give, give every farmer a lack. Okay, here's a lack, here's a lack. You get a lack, you get a lack Oprah style. Okay. Get rid of everything else.

[00:26:43] Rahul: Yeah. And this also has unintended, unintended,

[00:26:47] Mark: unintended consequences, Massive unintended consequences.

[00:26:51] Rahul: I'd lived in Delhi for a couple of years and then I was looking at why the pollution happens. It's because, you know, the over usage of what water and [00:27:00] irrigation costs the water table to be really low, which costs the Punjab government to Past the months of April and May, which caused him to change the, the farming period to June.

[00:27:14] Rahul: Then the harvesting is right before the winter where, yeah, this whole thing happens. So

[00:27:19] Mark: Yep.

[00:27:19] Rahul: things like this. And also, uh, so yeah, this would really help change the, the incentives for farmers to, uh, move away from rice and wheat and to other crops. Right.

[00:27:33] Mark: Absolutely. It would, it would be a game changer.

[00:27:36] Rahul: And also, what about carbon credits? You know, I was just reading about this. That would also massively incentivize

[00:27:43] Mark: Certain things. Yeah. I mean that's, that's our bet with raha. Is that, is that can go, is that can be big as well?

[00:27:50] Rahul: Yeah. and you also talk about land reforms. This is something I don't understand. So we still don't know who owns the land and [00:28:00] what is the problem there and who cultivates.

[00:28:03] Mark: the problem there is, is first of all, that our land data is very incomplete. Okay, so only some states have digitized. Those that have digitized have done so because of a lot of pressure. Right? so we have incomplete digitization, incomplete knowledge of who owns what, okay? And that's just ownership.

[00:28:23] Mark: Then you have this whole issue of who's actually cultivating the land, right? So you could have a land parcel in Telangana of two hectares. That is being cultivated by, by, like, a smallholder farmer who has an adjacent land parcel, but when you do subsidy, it goes to the owner of the land who might be living in Cupertino, California.

[00:28:45] Mark: Okay, so you need to, you need to, I mean, to be clear, Telangana on the road are working on, on actually this decoupling on, on land on giving benefits to the person who is actually the cultivator. So ideally what you [00:29:00] should have, and this is the being built, it's called the agri stack, right? The Ministry of Agriculture is working on this.

[00:29:05] Mark: There's some NGOs that are helping with it. A sort of, I don't want to say NGOs, like, like activist NGOs, but social, society kind of organizations that are working on supporting this industry is also involved in this, where in a perfect world, you would have the master database of land in India, every single parcel.

[00:29:25] Mark: Who owns it? Okay, who, where it is, what are the boundaries, right? Some of this stuff is legally debated. Right, but you would have total knowledge of what there is, total knowledge of ownership, okay? And then, right, if a person wants to lease that, who they leased it to, what the terms are, okay? Not necessarily the money, because that's a private transaction, but saying I am, I'm the owner, but I'm not the cultivator.

[00:29:54] Mark: This dude's the cultivator, okay? And then the subsidies would go to that dude. Okay? [00:30:00] The, you know, and, and, and so you would start having this, and, and, but, but this would be a game changer. This would be the, and, and to be clear, this isn't, like, my idea. People have been working on this for a long time. The government is working on this.

[00:30:11] Mark: The Center is working very hard on this. It's good. It will be a game changer. It will unlock credit. It will get subsidies into the right hands. Right? It will bring tons of transparency. It's, it's a very good thing. And I think it's one of the big initiatives that's, that's happening right now.

[00:30:28] Rahul: Yeah. And, you also talk about, you know, now, now it's not possible to lease the land. what is the

[00:30:35] Mark: It, it varies by state, again, because agriculture is a state subject. there are, there are states where it's very easy to lease. There are states where it's very difficult to lease. Okay. so it, it really varies state by state, but there's no, there's no central law for how leasing of land should be done.

[00:30:53] Mark: and lots of states make it very, very difficult. They also make it very difficult to sell land, land, right? You have to, you can only sell to a farmer. [00:31:00] Karnataka has actually changed this. Karnataka has now said you can sell it to whoever the hell you want. Okay. And that's a very recent reform, from the last government.

[00:31:07] Mark: But, like it's, it's, it's this bizarre. Kind of overregulated space. Right. And I understand the purpose. The purpose was, you know, the whole the origin of this goes back to the fifties, right? And the attempt to, like, get rid of some in Dari culture, right? To end the whole some in Dari system, right? So that was a good thing.

[00:31:27] Mark: But, like, a lot of things, like, you know, ending the some in doors in the fifties, the Green Revolution in the sixties, like, it's been a long time. We can do new things now. Okay, so our problem in India now isn't some in doors. Right. It's that the farm size is so small, it's borderline uneconomical. So actually, we want to start moving in the opposite direction.

[00:31:46] Mark: That doesn't mean people should be able to own 20, 000 hectares. Okay? But it does mean that maybe we don't need to be worried about too big farms. We need to be worried about too small farms.

[00:31:57] Rahul: and one thing, uh, during the farm laws that I [00:32:00] thought would be really useful was, you know, there's this regulation which prevents, uh, warehousing or

[00:32:05] Mark: Yeah, yeah. Let's not get into the farm laws. Yeah. I mean, all

[00:32:11] Mark: that is to say is it's kind of a dead letter right now. The government tried to reform it. They didn't communicate it especially well. I don't think they expected the opposition. That they got they back down. I hope they get those were all good laws.

[00:32:23] Mark: Those laws should all happen. But, you know, it's also a bit ironic because, you know, in the last 12 months. Right. They've, they've gone because of this food inflation, right. They've, you know, this thing of, of, you know, stocking and, and, you know, they have been very heavy handed on banning exports on banning stocking limit, you know, lowering stocking limits.

[00:32:50] Mark: Right. All of that kind of stuff in a huge way, in the last 12 months. So I think there may be their opinion on that stuff has changed a bit, perhaps.

[00:32:59] Rahul: [00:33:00] Yeah. Uh, in terms of, uh, the talent, entrepreneurial talent in the agri tech sector, right? So who are those founders? Are they somebody who's closer to the

[00:33:10] Mark: I think what we largely see in our portfolio is that most of our founders grew up in our, most of our founders are IIT, IIM, NIT, you know, work, great work experience, but almost all of them grew up in rural India. There's not a lot of people that grew up in Malabar Hill that want to build an agri company.

[00:33:32] Rahul: Yeah. It's not

[00:33:34]

[00:33:34] Mark: But you also make this argument that there is not enough talent, um, in life

[00:33:39] Mark: Yeah, I mean, that's just a thing, okay? It's, it, that, that's very specific to, That's, that's very, very, very, very specific to The life sciences space. and I've talked about this a lot. basically, if you think about digital and managerial talent in India, it's, it's very global. [00:34:00] Okay. Right. Look at who's running the World Bank. Look at who's running Google. Look at who's running Microsoft. But you also have lots of people that have moved back to India in the last 10, 20 years. You have lots of people.

[00:34:11] Mark: You see young Indians going and doing their MBAs in the U. S., working for a couple of years, moving back. There's a recognition that, like, You know, Hey, us is great. Like, think about the guys at Alt M that we just backed. They're both, they both spent like five years at Tesla. Okay. And moved back to India about a year ago.

[00:34:29] Mark: So that I would say that in digital talent, right. Engineering talent, in, in, in, in tech, okay. And product with product managers, with MBAs, it's, it's a, the, the, the highway goes both ways. Right. You have people, I'm not saying that there are not, they're not, there are no expats in India, tiny, tiny, tiny expatriate population.

[00:34:52] Mark: So India is a net talent exporter, right? So it's not, it's not that like lots of Western talent comes to India. That's simply not true. [00:35:00] Okay. But Desi talent is very global in these spaces of industries, right? You know, in, in marketing, in, in software, right? In, in hardware. in finance. Okay. That comes that goes. That is not true in life sciences. It's not. Okay. First of all, nobody prefers staying in India. Almost no one prefers getting their PhD in India versus going abroad in life sciences. Okay. Unlike the IIM versus US MBA debate, which is like really a debate, right? Like that's actually like there are people who are like, no, I want this.

[00:35:39] Mark: But other people are like, no, no, no, I am. I am. See, I am B. I am a like, I don't need to go to HBS. Okay. Okay. So, but there's not a person in the world that, that, or maybe they're not, or maybe there's going to be some alum who's going to be like, no, I totally disagree with you, but like if you have a choice between your PhD at the Indian Institute of Science or Oxford, most people can choose Oxford, [00:36:00] okay, or Harvard, or Princeton, or Stanford, or whatever.

[00:36:02] Mark: Okay, that's not to say ISC isn't great, it is. But there is a vast preference for doing, in life sciences, for doing your PhD, your master's and your PhD abroad. And the problem is then those people don't come back. They just don't, right? It's like the IITs in the 70s and 80s where everyone went to the US.

[00:36:23] Mark: Okay, literally everyone, IOTs, 70s and 80s, everyone went to the U. S. and the U. K., okay? Very few people stayed in India. So that's what life sciences is still like. We need to fix that. We need to fix that fast. Because India is missing out on the life sciences revolution because of this talent problem.

[00:36:41] Rahul: Okay, one thing that you mentioned is that the lack of diverse business model in Agritech, is one indicator of how nascent the sector is. So, love to know why you say

[00:36:53] Mark: yeah. I mean, listen, we see a lot of people, you know, if I, people keep coming to us with the, I am going to buy [00:37:00] subsy from farmer and sell to, you know, consumer. And it's just like, boss, this is not five years ago or 10 years ago. Like lots of people are doing this. It hasn't been very successful generally.

[00:37:10] Mark: you know, hasn't been profitable. So there's there. I think we are more excited by things that are truly, truly disruptive rather than just taking venture capital dollars and recycling them through working capital. You know, we don't necessarily think that's very interesting anymore.

[00:37:28] Rahul: Okay. So what are roughly the business models that are interesting?

[00:37:32] Mark: Um, rural fintech, the stuff that I talked about, right? It's not, you know, climate deep tech, agri food life sciences, right? Sustainable materials, right? Platforms and marketplaces are still interesting, but there has to be more than just this notion of insane arbitrage between one point and another point there.

[00:37:54] Mark: Because, by the way, you're just a glorified trader, okay? Like, that's not actually that interesting,[00:38:00] or sustainable, or profitable.

[00:38:02] Rahul: yeah. but , this is something again that you've written somewhere. Um, That you say that, you know, the, the business models are easy to understand for a retail investor. So which might make it interesting for, you know, a lot of IP

[00:38:19] Mark: think so. I mean, I think there's going to be, I think a number of IPOs will happen in the next few years in the agri tech space. I'm quite bullish on that.

[00:38:26] Rahul: Yeah. So, Is there a lesson in Agritech that you've learned in the past that is not relevant anymore?

[00:38:37] Mark: A lesson from the past that is not relevant?

[00:38:41] Rahul: Yeah, specific for Agritech.

[00:38:45] Rahul: Um, something that you thought, for example,the opportunity of a domestic SaaS market in India, it was not a thing maybe 10 years ago,

[00:38:54] Mark: Sure. I, I, I think, yeah, I mean, I, I would say, you know, we [00:39:00] earlier, we took a bet. We took our first biotech bet in 2013, company called Barracks. We just sold it to Sumitomo a few weeks ago. Okay. We then waited another, till 2021 to take another biotech bet. Okay. Because for so long we just saw like, there's no talent, no one's interested in funding this.

[00:39:19] Mark: Right. Like investors don't get it. Right. And now we feel like that's changed. That's, there is an increasing amount of interest in the life sciences among the investor class in India. So we are doing lots and lots of life science y stuff now. But yeah, that was something that we had parked for a while because man, it was really hard for Barracks.

[00:39:38] Mark: and, and we're glad they got this amazing exit. It's great. But yeah, it was, it was, it was really, really hard. Um, on, on domestic SaaS, I'm still skeptical about domestic SAS. I think you can, I, I think you can monetize through commerce, or you can monetize through finance. I don't think you can really [00:40:00] monetize domestic SAS especially well. Through, through subscriptions.

[00:40:04] Rahul: Okay. Uh, so you think that small holder, small holder farming can change farming? so we'd love to know why you think

[00:40:15] Mark: I think we have smallholders, and I think those smallholders can be made much more profitable, much more sustainable, and much more, you know, resilient. I don't think smallholders are going anywhere. I don't think that we're going to have, again, a zamindari system in India. I don't think we're going to go and have 20, 000 hectare farms. But I think smallholder farmers, right, can be very productive. There's a lot of research on that. And I think that's what we should be going for. and I, I don't think that's going to change anytime soon. So we have to deal with reality rather than a fantasy.

[00:40:45] Rahul: Yeah. I think growing up, I've learned that, you know, uh, this will not achieve economies of scale. And plus also you cannot make a nice small farms.

[00:40:56] Mark: You absolutely can mechanize small farms. Mahindra is [00:41:00] the largest tractor volume by, you know, largest tractor seller by volume in the world, right? You, you have seen the mechanization of small farm, right? It doesn't mean the small farmer owns the, the equipment, right? You can have a, a village level entrepreneur own the equipment, but no, I think the, the, the process of mechanizing small farms has been very successful.

[00:41:21] Mark: Still early, but very successful.

[00:41:23] Rahul: Okay. And one last thing, uh, you know, uh, you talk about this line from, uh, Rudyard Kipling's poem, if you can meet, with triumph and disaster and treat those two imposters just the same, uh, yeah, I, I, I mean, my interpretation of this is, this is a perfect analogy for, uh, early stage venture, um, because it's very difficult.

[00:41:48] Rahul: Uh, to predict what is going to turn out to be big.

[00:41:51] Mark: just think it's my mantra for VC and startups in general. You know, our biggest exit so far [00:42:00] was Aruvaka. Returned half of our first fund. know, it was great. I remember when it had five lakhs in the bank and was about to wind down. Okay. And then things turned around, right? Like, like turned around, like Lord of the Rings style.

[00:42:16] Mark: Like you think everyone's going to die. And then suddenly everything turns around and we've seen some companies that were looking amazing, that crater. Okay. Nobody. Knows the future the future isn't written yet. Okay, and and as a result, right? You know when you whenever you think you've won you probably haven't whenever you think you've lost you're probably wrong as well Right.

[00:42:43] Mark: It's a really long game and the outcome is uncertain And so I think the biggest thing is like don't have too much confidence, but don't give up hope right and so Yeah, I mean, listen, again, like, think about where we [00:43:00] are in 2023, right? There was a period where, you know, some of these things, you know, Baidu's the best edtech company in the world.

[00:43:08] Mark: Okay, cool. Mm hmm. Yep. Yeah, yeah. Totally. Right? Like, it's just like, okay, like, like, and there's shit that people wrote off that comes roaring back like a phoenix, okay?

[00:43:23] Mark: So, everyone calm down and, and, and just try to understand that, like, the future's not written yet.

[00:43:29] Rahul: Yeah, this was great. And that's a great note to end this conversation. Thank you once again for taking the time to do

[00:43:37] Mark: Cool, man. Thanks for thanks for doing this. This was terrific.