The Way Forward Post-Covid: √ Square Root Growth

The Way Forward Post-Covid: √ Square Root Growth

At what seemed like the height of the pandemic on 24 March 2020, and with the market reeling from a sharp pullback we sent a Covid-19 update to our investors.

Our broad message then was that it would be at least 2 years before growth returned for our sector. Specifically, we felt that companies in our sector could see anywhere from a 20-40% decline in operations this year and would spend the next year simply recovering from that decline. This is particularly unfortunate for the sector which was only just returning to growth after repetitive shocks for the last 5-6 years, including record back-to-back droughts, GST, demonetisation and a banking crisis amongst others.

More recently, I came across an article describing the expected growth in the market to be Square Root shaped (√). I think it captures what we have been saying since March quite well.

The initial spike in sales (post reopening) that some of the data is showing is the small spike at the start of the square root – this is likely to prove short-lived and I think there is already some evidence of that turning down as the virus response remains muddled globally. To be clear, the square root shape is meant to be indicative of what global growth will do – different countries and different sectors will have differing outcomes. Policies, societal behaviour and management skills will possibly separate the winners from the losers.

It’s a good time to highlight that our team has continued to work well from home and stay safe in all their various locations. All of our portfolio companies are fully operational and are practicing the necessary safety protocols to ensure a safe and healthy work environment for their workers.

Our companies have also been active in contributing towards CSR activities related to Covid-19 to support their broader communities. For example, we have helped with funding testing kits, ventilators and midday meal programs. Our sugar business has used its ethanol capacity to produce sanitizers. And some of the Hospitals we support have been in the frontline dealing with Covid patients.

We continue to be busier than ever with regular monitoring and new initiatives at portfolio companies.

We thank you for reading our letters and hope that everyone is staying safe during this period.

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Food for Thought During COVID-19

Food for Thought During COVID-19

We are constantly asked how the Food and Agri sector is performing in these uncertain times.

People expect to hear that the sector is resilient and not as affected as other sectors because surely everyone needs to eat. At a very high level, this is true. Most food companies across different countries have remained open during the lockdowns and farmers are still planting their fields. Barring issues caused due to logistics, there have been no food shortages across the globe due to the virus.

However, the value chain is complex and varies by sub-sector, country, and region. Making general statements about the industry is fraught with risks. I wanted to share a few observations that both the casual reader and the agri expert might find insightful.

Poultry Industry

The poultry industry in India has suffered greatly during the lockdown due to a perception that chicken can transmit Covid-19 when eaten. Despite efforts by the industry to dispel this belief, chicken sales in India were down c. 90% in the last two months. Globally, India is a top five producer of chickens and eggs making the drop significant for everyone involved in the industry including feed providers.

Fruit Juice Industry

The fruit juice industry in India has come to a virtual standstill as well. It turns out that most fruit juice is consumed “on-the-go” rather than at-home within India. To add on, home juice consumption is usually hand-made, as opposed to consuming from a PET bottle or tetrapak. Meanwhile, in the West, fruit juice consumption has gone up as more people stay at home and enjoy breakfast at home with a glass of juice.

Fresh Fruits & Vegetables

Similarly diverse reactions are seen in fresh fruits and vegetable consumption. India has seen a spike as more people revert to cooking at home with fresh fruits and vegetables, whereas the West has seen a growth in processed/ canned foods for home consumption over fresh fruits and vegetables.

Milk Consumption

The most interesting observation has been around milk consumption – which is surprisingly largely consumed in the office or by sweet makers in India. The unorganised and pouch milk segments in India have seen a significant drop in volumes while UHT milk has continued to perform well.

Ice Cream

Ice cream is another product that has shown diverging trends in India versus the West. Ice cream consumption has stayed strong in the West as consumers are accustomed to buying and storing ice-cream at home as well as consuming at home. On the other hand, ice cream sales in India have come to a virtual standstill because it is something people typically eat when out of the home. There is also a societal notion that Ice cream is linked to potentially catching a cold and thus being vulnerable to Covid-19!

So while the above might seem obvious to some and bizarre to others, I hope it has highlighted the differing trends and shifting landscape in the food and agriculture sector.

On a more serious note, these different locations and habits of food consumption are causing serious pain for the sector where one might least expect it. The recent woes of the dairy sector and meat processing industry in the USA have been well publicised in recent articles shared on our Twitter and LinkedIn accounts.

We continue to believe that the sector is a standout in times like this for its relative stability on the demand side. But not all value chains are built alike and identifying the right sub-sectors and the right parts of the value chain for investments will remain a key factor for successful investing in the sector.

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Impact Report 2020: Sustainable and Scalable Impact

Impact Report 2020: Sustainable and Scalable Impact

A message from Mandala Capital's Managing Partner, Mr Uday Garg

Our deep specialisation in the food and agribusiness sector means we are acutely aware of the heightened importance of sustainability, especially as growing populations, changing diets and urbanisation put increasing strains on our agriculture value chains to provide feed, energy, health and food. These strains have led to depleting resources and resulted in long term secondary lasting effects, often overlooked and not easily measured, such as climate change, degrading soil health, water pollution, seafood sustainability, chemical runoffs human health problems, and infant nutrition deficiencies.

We are committed to achieving the UN Sustainable Development Goals (SDGs) through our investments. In particular, our current investments are focused on SDG 2: Zero Hunger, SDG 3: Good Health and Well-Being, SDG 6: Clean Water and Sanitation, SDG 8: Decent Work and Economic Growth, SDG 10: Reduced Inequalities, SDG 12: Responsible Consumption and Production, SDG 13: Climate Action, and SDG 15: Life on Land.

Impact and sustainability are at the core of our personal philosophy and have been carried over to our investment philosophy. We have gotten better at incorporating Impact at every stage of our investment process and more importantly, we are now better at identifying ways to improve, track and monitor the Impact of our investments. We have maintained an integrated team for this exercise and the entire investment team has contributed towards the data, case studies, photos and commentary in this report.

I hope you enjoy reading our second annual Impact report and look forward to hearing from you.

Read Mandala Capital's Impact Report 2020

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Perspectives on the Ag industry – Part II:  How technology is driving change in the industry

Perspectives on the Ag industry – Part II: How technology is driving change in the industry

This article is part of a series by Rajendra Ketkar, Mandala's Sector Specialist and Principal Consultant at RDK Global Consulting LLC , as he shares his perspectiveand insights on the Ag Industry – namely how Consumers and Technology are driving change in the industry.  Read Part I here.

New Technology:

Over the last 5-10 years, several new technologies have been developed and are staring to make inroads into the input ag system.

  1. Molecular or Marker assisted breeding and advanced breeding techniques
  2. Precision Agriculture – data analytics
  3. Microbial or Biologics
  4. Gene editing
  5. Robotics
  6. New crops

Molecular or marker assisted breeding:

Advances in molecular or marker assisted breeding are resulting in delivery of new varieties at a much faster rate than traditional breeding methods. We see many new fruits and vegetable varieties with improved taste, colour and texture for example; smaller watermelons, a variety of sizes and tastes of peppers etc.

One of our companies, Arcadia Biosciences has used TILLING, a breeding technique, to develop high fibre wheat varieties and reduced gluten wheat varieties which are being commercialized now. Other companies have developed “heart healthy”, high oleic oils in soy, corn and canola.

Precision Ag - Data Analytics:

The power of data analytics has led to a whole new area of improved crop management methods and farmers are adopting these as a way to optimize their inputs and maximize yields. Companies like Climate Corp (Bayer), Farmers Business Network and others are providing data analysis services to farmers to help them determine when to plant, when to irrigate, apply inputs etc.

Precision agriculture equipment is being used to apply inputs at variable rates in fields. Drones are being used to monitor fields for pests, crop growth status, and predict yield.

Both data analytics and precision ag has been shown to increase yields in fields by as much as 15% using the same inputs as the farmer may use in his general practice. This technology can be used by farmers to increase income and improve his overall farm operations.

Microbial or Biologics:

In the last few years microbials (or biologicals) have been gaining ground in the ag input market as biopesticides, biofertilizers and biostimulants. Because these products are considered “natural” they have gained more acceptance in the horticulture and specialty crop markets. In the large, broadacre markets like corn, soybean and wheat these products have not gained as much market share as in the specialty crops.

Most large companies like Bayer and Corteva have invested in this technology. However, we see that many small companies are growing with new and better products. Marrone Bio, Pivot Bio, Joyn Bio are just a few examples of companies growing in this field.

Gene Editing:

This has been the major innovation in the last 10 years which is expected to make a huge impact in the world of agriculture and life sciences. This area has been a major focus of research and funding by venture capital. The first products from gene editing will likely get to market in the next 4-5 years. All the major ag companies are investing in this technology either directly or via investments in smaller companies.

The regulatory picture for gene editing is somewhat unclear as Europe and other countries like India have decided to regulate products from gene-editing as GM crops while the US, Japan and Australia have stated that products from gene editing will not be regulated.


This is a rapidly growing field and robots are being developed and commercialized for almost all aspects of the farming operation. There are robots now available for planting, spraying and harvesting. There are autonomous driving tractors being used for tilling and other operations on the farm.

Most of the companies developing and marketing these robots are smaller companies. Currently the use of robots is on a smaller scale but in the next few years this will expand as farm labor costs increase.

New Crops:

New crops are emerging that increase the opportunities for farmers to become more profitable. In 2018, hemp was legalized in the US after many decades of being illegal. The increasing demand for hemp products like hemp oil, CBD and the use of seed as a protein source has spawned new research in breeding of new and stable varieties. Our company, Arcadia Biosciences, is developing new and stable seed varieties of hemp with characteristics like increasing CBD content, lower THC content and disease resistance. Farmers in many states of the US have increased their acreages of hemp as a cash crop. Acreage has increased from 77K acres in 2017 to over 400K acres in 2019 and is expected to reach over a million acres in 2020.

Other startups are developing new crops for oil production for use as biofuel. An example is a startup in St. Louis called Cover Cress that has modified pennycress.

Future Perspective:

The food – ag system is starting to look different now with the emergence of these technologies, changing consumer behaviour and the increasing demand for different types of foods. The next 20 years the ag input world and the ag output world is expected to look very different from the last 20 years.

On the input side, the new technologies are spawning a large number of companies around the world that are using these technologies to develop new tools for farmers. We can expect that smaller companies may play a bigger role in the future. The large ag majors will continue to be the major suppliers of seeds and chemicals.

In the farming systems we are seeing more farmers growing specialty crops to serve the urban demand for fresh vegetable and fruits. Farmers are growing more organic produce. They are also switching to different high value crops including hemp. Farmers are also looking to buy directly from input companies as some suppliers start to emulate the Amazon model in ag inputs for farmers. The development of output traits like high fibre wheat, reduced gluten wheat, high oleic oil crops by companies also means that if farmers grow these varieties they will need to maintain a tight closed loop system so that there is good identity preservation. These crops must be kept separate and therefore storage facilities and transport systems are being developed to maintain identity end to end from seed to end product.

In the output ag system too we see a proliferation of new companies introducing new products to the market to meet consumer demands. The success of brands like KIND bars, Belvita, Blue Buffalo (natural pet foods) and many others shows that the big companies in the output side are not being able to innovate as fast as the smaller companies. We are already seeing these companies make a big impact on the food system and we can expect this impact to grow in the near future.

The last few years have seen unprecedented amounts of investments into the food and ag sector. AgFunder estimates that in 2016 there was $4B in investment into the ag and food industry which grew to $17B in in 2018.


The rapid changes in consumer behaviour coupled with the explosion of new technologies create a new world in the agriculture and food sectors. This creates opportunities for investments in a wide range of companies across the sectors - whether they are in the input system, farming system or the output system. Smaller companies are growing in this space and will likely have a bigger share of the market in the near future. The next 10-20 years will be a time of opportunity in this sector.

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Perspectives on the Ag industry – Part I:  How Consumers are driving change in the industry

Perspectives on the Ag industry – Part I: How Consumers are driving change in the industry


This article is part of a series by Rajendra Ketkar, Mandala's Sector Specialist and Principal Consultant at RDK Global Consulting LLC , as he shares his perspectiveand insights on the Ag Industry – namely how Consumers and Technology are driving change in the industry. 



Executive Summary:

The Ag and Food industries are changing rapidly as consumer demands and technology innovation drive change. The next 20 years promise to be an exciting time as we see a whole new range of foods and technology in the marketplace.

The last 60 years was mostly about productivity and efficiency in producing food – the focus was on yields. Technology was dominated by improved breeding, mostly for yield, and chemicals for increasing fertility and pest management. It was the green revolution from the 60’s to the 90’s followed by the gene revolution (GMO’s) in crops; again, largely to increase productivity and lower cost of production.

However, over the last 5-10 years we have seen significant changes as consumers demand healthier, more nutritious foods. Concurrently, a plethora of new technologies have emerged for growing food with improved quality.

This change is not a passing fad; all evidence shows it is real and we are on the cusp of significant change. Over the next 20 years these technologies will mature and offer opportunities for investment in a myriad of new companies and career growth for professionals in the field.


Historical Perspective:


The last 50+ years have been pivotal in dramatically increasing US and world food production – be it cereal grains, fruits, vegetables, dairy or meat. From a technology standpoint, much can be attributed to the green revolution in the 60’s and 70’s – the use of improved genetics, chemical inputs and advancements in mechanization and irrigation.

The period 1996 thru 2016 saw a dramatic change in the ag input industry. Bioengineered crops were first introduced in the mid 90’s and within a few years farmers in the US, Brazil, India and other countries adopted the technology in major crops like corn, soy, and cotton. Several countries are planting GM crops or importing produce from countries producing GM crops. Currently, approximately 450M acres of GM crops are planted around the world each year.

This demonstrated to farmers around the world the power of technology to dramatically increase yields and manage pests (weeds and insects). During the same period, huge advances in breeding technology including molecular and marker assisted breeding fundamentally changed how plant breeders develop new crop varieties and hybrids. Coupled with transgenic technology the period from the mid-nineties to the mid twenty-teens saw the fastest adaptation of these technologies by farmers.

By the middle of the prior decade (~2015) it became apparent that transgenic technology appeared to have peaked as novel trait introductions became less frequent. New products introductions were limited to newer versions of the existing agronomic traits and stacking of multiple traits.

Additionally, opposition to GMO’s impacted regulatory processes and slowed approvals in many parts of the world. Lower commodity prices have caused farmers to not invest in higher priced seeds.

Bioengineered seeds have been most successful in weed and insect management. Abiotic stress management traits have had limited success (drought tolerance). Resistance has developed to Bt traits in corn and cotton leading to increased use of pesticide use after many years of reductions in pesticide use. Similarly, development of glyphosate (Roundup) resistance weeds has also resulted in increased pesticide use after many years of reductions.

The world of ag and food is changing rapidly. Today; the consumer is driving the change and the entire industry is responding to the consumer.


Changes in Consumer Demands:


Consumer demands are changing rapidly. We want more naturally produced food, organically grown and non-GMO. There is more local sourcing or “farm to table” as opposed to food transported overt long supply chains.

Consumers are also demanding more nutritious (or functional) foods – higher protein, less processed, less sugar, more fiber, less carbs etc. Consumers are also demanding better quality – improved taste, color texture. Sustainable production and more plant-based foods are also a consumer demand.

Transparency in food is also a major concern. People want to know more about what they are eating and what is in their foods.

All of these changes are driving changes on how farmers are producing food. They are growing more organic crops, and more specialty crops which will give them a higher income as commodity process continue to be low.

Supply chains are also responding by developing improved ways of identity preservation – keeping the specialty crop separate from the commodity crop all thru the storage, handling and transportation.

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Recap on Food Future Funds Symposium 2019

Recap on Food Future Funds Symposium 2019

Bringing together thought leaders across the food value chain and the global investment community


In coordination with Singapore’s Rethink Agri-Food Innovation Week, Mandala Capital organized the first Food, Future, Funds Symposium with support from Temasek, NUS Business School, and the Singapore Economic Development Board.

Over 60 thought leaders across the food value chain and key members of the global investment community were exclusively invited to participate in this event. What ensued was a fruitful afternoon full of intriguing ideas and new collaborations fostered between industry players, all with the aim of accelerating growth opportunities within the Agri industry in India and Southeast Asia.

Keynote speakers and panelists ranging from prominent companies such as Lazada, Thai Union, Arcadia Biosciences, Jain Irrigation to emerging startups like Shiok Meats, InnovaFeeds, Sustenir Agriculture took the stage to share insights and challenges, a unique perspective on the entire food value chain from seed to shelf. The afternoon saw a broad range of topics covered, including traditional farming, Ag tech, and the latest news in online/offline retail.

Participants were encouraged to make connections during the coffee break and drinks session and ask further questions.

“Coming from Europe, it is very precious for us to get the opportunity to meet such a great variety of players of our industries at once. The challenges are huge, and the companies from our part of the world need partners like Mandala and its networks to grow their presence in Asia.” – David DA, Unigrains, Director

Mandala Capital hopes that all participants found the Symposium insightful and valuable. In keeping with our commitment to continually bring together an alliance of diverse thought leaders in the food value chain, we look forward to hosting future symposiums and events that foster networking. Sign up for our newsletter below to keep up to date with the latest news.

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