Farm to fork: case for agri-tech

India is predominantly an agrarian economy. After 72 years of Independence and 27 years of becoming a free economy, approximately 58% of the population is dependent on agriculture as a primary source of income and employment. At the same time, agriculture contributes only 17% to our overall GDP. Beyond this increasingly marginal contribution to GDP, the sector’s performance and the monsoon influence continues to have far-reaching consequences on the overall economy.

Part of the reason for the falling contribution of agriculture is the low yield per acre among farmers. While 85% of them do not have a land holding of more than five acres, the mass exodus of working population to the cities has created a labour shortage. On the flipside, cities are congested and are increasingly becoming unsustainable given the limited resources available in urban areas. Clearly, status quo in agriculture isn’t giving us enough bang for the buck. And yet, there is so much potential.

More jobs, more food

India’s demographic dividend means the need for more jobs to be generated at a rapid pace and scale — at least 10 million jobs every year. Indian agriculture differs from developed economies as the record 275 million tonnes of foodgrains it produces annually comes from its approximately 130 million farmers.

If each farmer and his farm is considered to be an enterprise, this could become a potential employment-generating sector. Those jobs could reduce migration to big cities encouraging jobs in villages and towns. This will lead to the country becoming self-sustaining in its food requirements and jobs as well.

The growing population of India supported with nutritious food will reduce our dependence on imports. While India has sufficient arable land, it is still unable to produce enough for itself, and depends on imports. Many experts estimate that India would emerge a market for processed foods like developed economies. But, there has been a reverse trend in this.

The Indian consumer has a greater propensity to consume fresh food. This pattern is mainly seen among the young populations, who have a greater desire to be healthy, have greater purchasing power and deeper consumer awareness. This is an opportunity to produce more nutritious food quicker with sustainable practices.

Jobs and food are fundamental to the economy and here’s where agri-tech and agri-startups can be game-changing.

The Green Revolution, termed a blessing for the country, led to several unintended consequences such as deterioration of soil health owing to indiscriminate use of fertiliser, pesticides and fungicides. Erratic
monsoons and irregular prices added to farmers’ woes. Increasing pressure to boost productivity and lower costs of cultivation, without compromising on the produce quality, has inflicted a huge burden on farmers.

Agri-tech startups have an important role in resolving issues that both consumers and farmers face. The biggest opportunity lies in maintaining a balance between a farmer willing to produce more at a lower cost and a consumer who wants a better-quality product at a lower price. They act as a catalyst to increase efficiency in the entire agricultural value chain (Pre-Harvest > Post-Harvest > Logistics > Storage > Distribution > Consumers). A complete traceability of farm to fork can be built.

Innovation through technology has played a key role in bringing in efficiency and optimisation across the value chain, thus benefiting consumers and farmers, alike. Technologies such as Internet of Things (IoT) aid in planning and price discovery of commodities, farm automation devices reduce drudgery on labour, alternate sources of farm power replace fossil fuels, satellite images/drones/sensors in precision farming, RFID tags help in traceability of foods and testing equipment ascertains the quality of produce.

For instance, Amul, India’s biggest dairy, through technologies deployed across its value chain from procurement to distribution has led to optimisation of costs, whilst keeping quality of the product intact.

Skymet, a private weather forecasting company with 3,500 weather monitoring stations across India and know-how on statistical analysis has been predicting monsoons and taking invaluable weather data to farmers to plan their crops. This has improved output and outcomes in terms of farmer income.

While the bulk of startup investments have been channelled in the last few years towards online/urban focused problems and opportunities, there’s a noticeable increasing interest in agri-tech as “the next big thing”. Everyone is searching for the next unicorn in this space, and this will be good for both farmers and consumers, and ultimately, the economy.

(The writer is Principal and Practice Head — Agriculture at Menterra Venture Advisors)