India’s food processing sector is on the brink of transformation as it grapples with significant inefficiencies and underutilization. Currently, only 10% of India’s agricultural produce is converted into non-perishable items like oilseeds, cereals, and jute. This starkly contrasts with countries such as China, where the figure stands at 40%, and the United States, where it reaches 70%. The disparity highlights a pressing need for innovation and better market access in India’s agricultural landscape.
The challenge is compounded by the fact that India boasts over 2 million food processing micro-, small-, and medium-sized enterprises (MSMEs) that are operating well below their capacity. Many of these businesses struggle to find business-to-business (B2B) customers, particularly in the export markets. Alex Qian, a senior investment officer at the Emerge division of nonprofit Accion, emphasizes this point, stating that these MSMEs are crucial to the food processing ecosystem but are often hampered by a lack of demand and support services.
In a bid to address these challenges, Agrizy, a Bengaluru-based agri-processing platform, has emerged as a beacon of hope. Recently, Agrizy secured $9.8 million in a Series A funding round co-led by Accion and Indian venture capital firm Omnivore. The platform aims to connect processors and buyers of non-perishable food items through a digital marketplace, thereby streamlining the procurement process and enhancing market access for small food processors.
Agrizy’s founder, Vicky Dodan, notes that the Indian food processing sector is projected to reach $535 billion by 2025-26, generating an estimated 9 million jobs by 2024. He emphasizes the pivotal role of MSMEs in this growth trajectory, stating that their agility and innovative spirit are key to revolutionizing agricultural processing. Agrizy tailors its products and services specifically for this MSME audience, addressing their unique needs by offering global market access, advisory services for quality standardization, and financial support.
The platform also tackles broader issues within the food value chain, which Dodan describes as “an essential component” of India’s agricultural economy. MSMEs and farmer-producer organizations (FPOs) often find themselves struggling with demand access, quality certifications, and working capital. Meanwhile, brands face hurdles such as inconsistent product quality and unreliable supply chains. Agrizy aims to rectify these inefficiencies by organizing and digitizing the system for processed agrifood products, providing a fully managed B2B marketplace equipped with digital tools for quality assurance, delivery tracking, and financial health management.
The benefits of Agrizy’s platform extend to both buyers and suppliers. Buyers can enjoy competitive pricing, reliable supply chains, and enhanced visibility throughout the value chain. For suppliers, the platform promises consistent demand and timely payments, which are critical for their operational stability. The recent funding will enable Agrizy to expand its services and bolster its embedded financial offerings, further enhancing its value proposition.
Accion’s investment rationale is clear. Qian highlights that Agrizy’s innovative approach simplifies the fragmented landscape of raw and processed agricultural goods while ensuring quality and transparency. This is particularly vital for buyers and large producers who have historically faced challenges in procurement. Furthermore, the integration of financial services into Agrizy’s offerings aligns with Accion’s broader agritech finance strategy, enhancing the value provided to clients.
Mark Kahn, managing partner at Omnivore, underscores the significance of Agrizy’s contract manufacturing platform, which streamlines complex, export-oriented supply chains. This not only addresses long-standing industry challenges but also contributes to rural economic development, aligning with India’s agricultural reform goals. As Agrizy positions itself to become a leader in sustainable and efficient food processing, it may well set the stage for India to enhance its standing in the global agricultural market.