A sector worth $370 billion while employing well over 40 percent of the population, the Indian agriculture industry is understandably a significant contributor to the country’s GDP (19.9 percent in FY 2021). A key highlight worth noting is how it accounts for 11.9 percent of the global agricultural Gross Value Added (GVA), which stands at $3,320.4 billion. Agriculture also contributes to 12 percent of overall exports from the country.
It is empirically clear how economically pivotal the sector is, but it is also steeped in one key issue: reliance on outmoded agricultural practices.
The limitations of the current agri model
The Indian agricultural value chain goes through various intermediaries before making its way to consumers. The sector is also heavily fragmented and unorganised, which adds another layer of challenges for small farmers who constitute 86 percent of the primary food providers in the country. The current structure also has limited access to credit, capital, farm inputs, and marketplaces for these farmers. Low technology penetration is another major constraint, since it brings with it transparency, trackability and predictability as a byproduct, which could greatly benefit the sector.
At the peak of COVID-19, $242 million was pumped into the agritech sector/
Agritech is here
Enter agritech, a much-needed plug-in solution for the Indian agri industry. Artificial intelligence (AI), the Internet of Things (IoT), Machine Learning (ML), farm robotics, blockchain etc are all great tools that can address inherent flaws in the current model of farming in India. Countries like the US, Australia, Israel, and the Netherlands have already embraced these new technologies and revolutionised their agriculture inside out. The benefits of agritech are clear and demonstrable.
Since 2020, the value of this emerging sector has caught the attention of VCs and equity investors. At the peak of COVID-19, an impressive $242 million was pumped into this sector and it continues to grow.
Data is everything
With technology comes monitoring and data collection, and this data is making all the difference. The government has made efforts to put this data to good use by sharing its repository of farm data collected since 2014, with industry giants like Cisco, Amazon, Microsoft, and several local players like Jio and ITC to bring a data-driven edge to the agricultural sector in the country and boost its overall productivity.
The introduction of the Indian Digital Ecosystem of Agriculture (IDEA) is also moving the industry towards transparency and traceability. The framework will house reusable sector relevant data which will be useful for both policymakers and industry experts in formulating strategies and solutions to address existing challenges in the system.
Key benefits to a data-driven approach
Agritech has the power to offset many uncertainties in farming through pure data, but it also comes with many other complimentary benefits:
- Traceability can be established during the storage and transportation of produce
- Helps reduce environmental impact through precision which reduces wastage/overuse of farm inputs
- Smart irrigation allows for efficient usage of water resources
- Farm data helps in improving productivity which lowers production cost
- Cut down on middlemen and connect farmers directly with customers or retailers through digital marketplaces
- Improved quality control since trackability is possible throughout the value chain
India has over 1,300 agri startups
Current initiatives driving agritech
With Rs 60 crore being allocated under the latest budget for furthering the ‘Digital Agriculture’ movement, the agritech business will continue to thrive in the coming years. Furthermore, the government is keen on establishing a Public-Private Partnership (PPP) scheme to facilitate improved access to farmers who wish to adopt agritech. The government also plans to launch a fund with blended capital for agri startups and rural enterprises that focus on the farm-produce value chain.
The Ministry of Agriculture and Farmers Welfare has been actively enabling and boosting technological adoption among farmers since 2013 through its development of two major digital applications. First, the National Agriculture Market (eNAM) helps farmers sell their produce without dealing with intermediaries via its digital trading portal. Second, the Direct Benefit Transfer (DBT) Central Agri Portal allows farmers to adopt new tech easily through government subsidies.
Additionally, the Agricultural Digital Infrastructure (ADI) data stack developed by Cisco is enabling data and knowledge sharing among farmers.
Implementation
The mere availability of technology isn’t enough to change things for the industry but requires certain challenges to be addressed for widespread adoption.
- Affordability: The average Indian farmer earns less than Rs 1 lakh annually, so purchasing expensive tech would be the last thing under their consideration.
- Education: Through systematic programmes and government initiatives, agri institutions and organisations can provide knowledge transfer and training related to new tech to improve overall acceptance and adoption among farmers.
- Plug-and-play: Most farmers work on small landholdings and often have leasing arrangements which makes them susceptible to relocation. The tech solution has to be portable and plug-and-play to be viable for Indian farmers.
- Tech on rent: Since finances and land holdings are a problem, Indian farmers would benefit greatly through vendors who can rent out equipment and provide sharing services.
Future lies in affordability and accessibility
The Indian agritech sector has shown immense potential as witnessed by the recent surge in investments but it will take more than that to make a significant impact. Data stacks like IDEA and ADI are stepping stones to creating a new breed of tech-savvy farmers but widespread adoption will only come with affordability and accessibility. Education is also a primary factor since most of the farming communities are still in the dark about modern solutions available to them.
With over 1,300 agri startups within India alone, the sector is working towards a middle ground where tech can easily change hands from the vendor to the farmer and help them run a sustainable farming operation, while also safeguarding the nation’s interest in food security.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YS.)
