Agritech was once hailed as the next frontier of transformation in food systems. Billions flowed into startups promising “Uber-for-inputs,” “Amazon-for-farmers,” and “AI-for-agriculture.” Yet today, funding is drying up, startups are shutting down, and even well-capitalized are scrambling to survive.
It is tempting to blame macroeconomic cycles, investor sentiment, or slow-moving rural markets. But the real reasons lie much deeper. Agritech is faltering because many of its ventures never created meaningful value for farmers or for the ecosystem. Instead, they positioned themselves to capture a tiny sliver of an already narrow supply-chain margin—without understanding the sector’s realities or building genuine partnerships.
Below are the structural reasons behind the failure.
1. Trying to Eat a Slice From an Already Thin Pie
Agriculture operates on razor-thin margins. Farmers, traders, and even input suppliers rarely operate with high markups. Yet many agritech models attempt to “capture value” rather than create it.
Instead of solving real productivity or resilience issues, they insert themselves between existing players—hoping technology alone justifies their cut. It rarely does.
When your “innovation” is a digital middleman layered on top of three existing middlemen, the economics simply cannot hold.
2. Startups Want to Own the Entire Supply Chain—Without Owning Any Responsibility
A common pattern is the desire to emulate multinational giants:
- control procurement,
- dominate distribution,
- own farmer relationships,
- dictate prices,
- and “optimize the supply chain.”
But agriculture is not a software stack that can be “claimed.” It is a complex socio-economic ecosystem built on trust, informal networks, seasonality, weather, and community dynamics.
Trying to occupy and control every link creates friction—and resentment. Instead of enabling the ecosystem, many agritech firms try to replace it. Farmers and FPOs see through this quickly.
The irony is sharp: those who add the least value often want the most control.
3. Solutions Designed in Air-Conditioned Offices for Fields They’ve Never Walked
A large share of agritech entrepreneurs and engineers have little exposure to farming realities. They build for an imagined farmer, not the real one.
This leads to predictable outcomes:
- apps farmers don’t use,
- advisory that is generic or impractical,
- logistics models that collapse during harvest surges,
- input delivery systems that ignore credit constraints,
- procurement systems that don’t appreciate local price discovery.
Good intentions cannot substitute for ground truth. Agriculture punishes theory and rewards experience.
4. Businesses Built to Be Sold, Not to Serve
Perhaps the most damaging trend is the “build-to-exit” mindset.
Many agritech ventures are not building durable value propositions. They are building valuation engines designed to attract acquisition by large corporations.
Their real customers are not farmers—they are future buyers.
This distorts everything:
- focus shifts to vanity metrics, not impact,
- rapid scale replaces sustainable unit economics,
- narrative becomes more important than performance,
- and solving real agricultural problems becomes optional.
When the business itself is the product, farmers inevitably become the collateral damage.
5. Failure to Partner, Collaborate, or Integrate
Agriculture thrives on networks—cooperatives, FPOs, SHGs, village traders, extension workers, NGOs, and local institutions.
Yet many startups behave as though collaboration is weakness. They often:
- refuse to work with existing supply-chain actors,
- ignore grassroots institutions,
- duplicate infrastructure instead of leveraging it,
- avoid listening to local leaders,
- try to centralize decision-making in cities.
This siloed approach not only raises costs but destroys goodwill. In agriculture, goodwill is a currency more powerful than capital.
6. Over-Financialization Without Agricultural Understanding
The surge in agrifintech, BNPL for inputs, and micro-credit apps brought easy capital into villages—but without due diligence or risk understanding. Many burnt cash to boost growth, leaving farmers with tools they didn’t really need or couldn’t maintain.
Financial engineering cannot substitute for agronomic value.
7. Innovation Plateau: Too Many Marketplaces, Too Few Actual Innovations
Many startups essentially build the same thing:
- input marketplace,
- output marketplace,
- farmer advisory chatbot,
- traceability QR code,
- drone-as-a-service.
These are useful but incremental. None fundamentally transform the economics of farming unless integrated into broader systems.
The sector is saturated with replications—not innovations.
8. Overpromising and Under-Delivering
Some agritech companies promise:
- 20% yield increase
- 30% cost reduction
- 50% better price realization
Reality is rarely that linear. Farmers quickly lose trust when promises fail—trust once broken is almost impossible to rebuild.
What Agritech Must Do to Course-Correct
Despite the grim trends, the sector can revive—if the mindset shifts.
1. Stop capturing value and start creating value.
Solve real problems such as soil degradation, climate resilience, low productivity, water scarcity, storage losses, and market volatility.
2. Work with the ecosystem, not against it.
Partner with FPOs, agri-input retailers, Krishi Vigyan Kendras, local institutions, and NGOs. Agriculture is cooperative by nature.
3. Co-design solutions with farmers, not for farmers.
Spend time in fields. Co-create. Co-own.
4. Build for long-term viability, not quick acquisition.
If your business only works when subsidized by venture capital, it is not a business.
5. Innovate at the intersection of agronomy, climate science, supply-chain design, and local knowledge.
Not just in code.
A Closing Thought
Agritech is not failing because agriculture is resistant to change. It is failing because too many players approached it with a mindset built for consumer tech—hyper-scaling, disruption, and aggressive control.
Agriculture does not reward disruption. It rewards stewardship.
The next generation of agritech will succeed not by becoming the next multinational monopolies, but by becoming trusted partners that enhance the dignity, resilience, and prosperity of those who produce our food.
If this shift happens, the revival predicted for 2026 will not just be a funding rebound—it will be a transformation rooted in real, lasting value.
(Part 2 will carry more details)
Recent Comments