Ploughing a Different Course

For almost 15 years, Pioneering Ventures, an incubator-cum-investment firm, has been silently solving the challenges in India’s food and agriculture system with bold bets and patient capital

Varsha Meghani

Bhagubhai Patel stands tall, hands on his hips, in the shade cast by his vivid green banana trees. “My income has doubled over the last two years,” says the 70-year-old, pot-bellied farmer. “Because we are doing so well my son left his clerical job and has joined the farming business,” he chuckles.

Just a few years ago, Patel struggled to cultivate even two banana crops in three years on his two-odd acres farm on the outskirts of Navsari in southern Gujarat. Poor farming techniques, pest attacks and postharvest losses would affect the quality and quantity of his crop. Besides, he didn’t even know how to package the bananas for export given their short shelf life, explains Patel.

Since joining hands with Desai Fruits and Vegetables (DFV) in 2016, his fortunes have reversed. The Navsari-headquartered venture imported best practices from the Philippines and helped Patel to change his growing habits. As a result, his productivity per acre more than doubled—he now grows three crops in two years—proportionally upping his income and creating a new, international quality banana.

As he speaks, a labourer deftly targets one of the banana trees’ uppermost buds, the size of two cupped hands. He pierces it with a says Desai, referring to Pioneering Ventures, a Swiss-and-Mumbaibased outfit that has been silently incubating and developing ventures across India’s agriculture and food supply chain for almost 15 years now.

The global population is expected to rise from about 7.5 billion to nearly 10 billion in 2050. The United Nations estimates that 70 percent more food will be needed by then, but it will have to be produced on just five percent more arable land. As sprawling cities gobble up farmland, climate change alters soil health and agriculture productivity reduces, supply is not keeping up with demand.

India, in particular, faces enormous challenges, says Ron Pal, chairman and founding partner of Pioneering Ventures. “We realised about 14 years ago the large disparity between agriculture production ability and market demand,” says the half-Swiss, half-Indian entrepreneur. The country has the world’s second largest arable land resource of 159 million hectares and fifteen agro-climatic zones, which means just about any crop can be grown. But small farm holdings, low productivity, high post-harvest losses and inefficient and fragmented supply chains are constraining supply. “What this means is that India not only has the largest production potential but tube-like device to which an injection is attached. It helps resist disease, says Patel, crediting his know-how to DFV. That green bud later grows downward, turns a deep purple and clusters of bananas sprout above it.

Over 3,000 smallholders across India, like Patel, are under contract with DFV, transforming the obscure farmer cooperative into India’s largest producer and exporter of bananas within a few years. The company shipped 850 containers of the fruit mostly to the Middle East in FY19, comprising 30-40 percent of the country’s exports. This fiscal, DFV is on track to ship more than 2,000 containers, says Ajit Desai, DFV’s reticent founder.

“The leap [from 850 to 2,000 containers] is possible because of PV,” also the largest overall improvement potential,” says Pablo Erat, Pioneering Ventures’ co-founding partner.

Therein lies the opportunity to create “industrial scale ventures” that “meticulously analyse and improve the entire supply chain— from farm to fork”, explains Pal.

Pioneering Ventures’ core strategy is to control the entire value chain from seed to end-buyer. Take the case of DFV. The thesis was clear: India was the largest producer of bananas in the world, but exports at the time, when Pal struck a partnership with Desai in the mid-2000s, were negligible because of critical gaps in the supply chain. Pal’s mission was two-fold—to improve farm productivity through modern practices and create access to new markets. In the process, he hoped to not just reap financial returns but also create lasting impact by lifting farmers out of poverty.