JOIN USTech can change agri landscape
In India, technology is rapidly reshaping agriculture, creating investment opportunities, lifting up rural areas, feeding the world, and transforming India into a farming powerhouse.
When India became an independent nation 75 years ago, agriculture was the driver of the economy, contributing more than half of the nation’s GDP. India is still one of the world’s largest and most diversified food producers, the source of more than 20% of India’s income, and a central part of the economy.
However, there are significant problems holding back the nation’s untapped potential. If solved, a flourishing agriculture industry could both boost the economy and significantly improve farmers’ livelihoods and incomes. By 2030, agriculture could contribute around Rs 4,92,000 crore to India’s GDP, an increase of 50% over its contribution in 2020. But to get there, India must unlock growth and productivity for the sector.
The key to expanding India’s transformation into a farming powerhouse is agricultural technology, which lags behind developed farming nations. India’s farmers are competing at a disadvantage: half lack basic farming equipment, three of every four farms are at risk of crop damage from pests and weather, and 50% of India’s farmers lack access to traditional financing sources and marketing networks. Those who can get informal credit often pay inflated interest rates of 10 to 25% above market rates. The Government of India (GoI) may link credit with marketing for agricultural produce.
As rural India embraces modern farming, agritechnology can be a shot in the arm for farmers, making them more profitable and boosting the contribution of agriculture to India’s economy. Farmers are just one of the many stakeholders involved in a market that centres on local APMCs where farmers sell their produce. The use of digital and agritech has put the farmer right at the heart of the entire ecosystem. Solutions have begun to be more farmer-centric: each part of the value chain that is digitising, be it finances, inputs, or others, is directly targeting the farmer.
Between 2014 and 2023, more than 2000 agritech companies were set up in India, fuelled by increased farmer awareness, rising internet penetration, and the need for greater efficiency in the agriculture sector.
India’s regulatory environment is gradually evolving to facilitate the growth of digital technologies in agriculture. Farming supplies providers are using technology to create direct-to-farmer (D2F) sales channels that bypass middlemen and retailers. Banks and non-banks, primarily engaged in providing finance through farm and rural loans, are using technology to better understand the farmer, provide targeted products, and reduce loan risks. For example, SBI developed the YONO Krishi app to meet farmers’ finance, input, and advisory needs. Companies that sell farm equipment have also started providing mechanisation as a service to farmers. Firms that operate in the procurement, processing, and sale of agricultural products have started backward integration of their supply chains and creating market linkages. The E-Choupal network has expanded direct-from-farm procurement over the past few years. The agri-technology ecosystem has the potential to propel Indian farmers’ incomes to grow by 25 to 35% and add more than Rs 98,380 crore into the Indian economy, through reduction of input costs, enhanced productivity and price realisation, cheaper credit, and alternative incomes. The government should undertake policy steps and foster technology and innovation in the following agricultural sectors: Easier digital reach through farmer collectivisation; development of the agristack; digital soil-health cards; digitally enabled direct benefit transfer; E-NAM; digital infrastructure; linking credit with marketing; and what are investors looking for?
For the government’s initiatives to be successful, stable sources of funds and a supportive ecosystem are imperative. The agritech sector has raised roughly Rs 1650 crore, and VCs invested more than Rs 1,350 crore in 2023 alone. The average size is growing, indicating that start-ups are maturing in this space despite an economic slowdown during the past two years. The downstream agri-technology platforms are primarily B2B or B2C and connect farmers with businesses or consumers. The end-to-end ecosystem platforms play a role in the value chain and have a significant presence in multiple segments; digital solutions and precision agritech digital solutions provide services such as advisory, precision farming, and sensor-based solutions. Midstream agri-technology provides supply chain solutions to improve efficiencies in logistics and warehousing, while agri-biotech creates green and sustainable new products and food additives.
Digital technologies could enhance production at every step, from high-quality inputs to world-class agricultural outputs. This could help create sustainable growth for farmers, boost economic fortunes in rural areas, and benefit the entire economy.
(The writer is a former administrator at CADA Karnataka.)