It is now known widely that technology is one of the biggest enablers and is facilitating a disruption across industries. Although it has been a key disruptor in numerous sectors, it can play a pivotal role in making a significant difference to India’s agriculture sector, which remains a priority with 60 percent of its population still dependent on it. Transforming agriculture will thus be a game-changer to facilitate the transition at the bottom of the pyramid.
Agriculture in India has structural peculiarities with the average landholding size witnessing a decline in the last decades. A whopping 68 percent of farmers in agriculture are marginal in nature, making them susceptible to the whims of the climate, underdeveloped credit system, and low adaptation of the best practices and latest technologies. India’s rural ecosystem is huge and growing steadily with the rural economy contributing almost half of the entire GDP as of 2019. Thus, the agriculture sector needs a thrust to move to the next stage of development and improve the livelihoods of about 100 million people dependant on farming and 2.5million MSME units engaged in the agriculture and food-processing sector. This is where technology will play a crucial role in addressing the various challenges engulfing one of the most pertinent sectors.
A report by Bain and Co had estimated that about USD 30-35 billion value pool can be created in Agri-logistics, off-take,and Agri-input delivery by 2025. As per the Niti Aayog, Artificial Intelligence in agriculture is expected to grow at a rate of 22.5 percent CAGR and is likely to be valued at USD 2.6 billion by 2025. It can improve yields, reduce risk, and increase efficiency. Right data can thus enable timely decisions, crops to be sown, timing and the methods to be used. This becomes more pronounced as adverse impacts of climate change are driving to a loss of USD 9-10 billion annually, as per the GOI Economic Survey (2018-19).
The World Bank study affirms that agricultural growth is in general two to three times more effective at reducing poverty than an equivalent amount of growth generated in other sectors.
Optimisation of the production and supply chains can be achieved by using disruptive technology. This can solve challenges of scale and lower information irregularity, which can make farming more inclusive and profitable. The use of GIS maps, satellite data for weather forecasting and newer methods of use of pesticides is already helping connect farmers to non-traditional markets.
Redefining Traditional Agriculture
As per a report by PwC and FICCI, ‘Redefining agriculture through artificial intelligence: Predicting the unpredictable’, the diverse set of challenges faced by the sector need disruptive interference that can be provided by technological solutions. The report noted that the complete system needs to adopt a comprehensive approach integrating traditional farming with transformative smart farming practices, including adoption of AI tools and techniques.
Such tools can ensure higher production using optimum resources and predictive analytics and enhance quality as well as traceability. The report stated that innovative technologies such as IoT, Machine Learning, Virtual Learning, and Augmented Reality are overcoming challenges of productivity and carbon emissions. Furthermore, drones are being harnessed in farming methods to support farmers, enhanceknowledge, and generate youth employment. Access to data has enabled credit growth enabling improved decision-making. In addition, digitisation is expected to result in robust lending, better visibility, and credit scoring of borrowers. Weather data also enables lenders to predict crops and probable defaults.
It is anticipated that the diverse technology solutions can add significant value to the ecosystem (USD 62-76 billion on an annual basis). This will translate to farmers earning about USD 34–42 billion (50-60 per cent) benefitting 75-91 million farmers. The value creation linked with the solutions in a two-decade timeframe, will almost benefit 35-43 per cent of the farmers in India.
Start-Ups Heating it Up
It is estimated that about 1,000 start-ups have emerged in the Agri-tech space with more than USD 3 billion in PE/VC investment in the last one decade. The Ministry of Agriculture published concept note on India Digital Ecosystem of Agriculture for starting work on Agri stack. The note suggests an ecosystem approach with farmers at the core- taking cropping decisions with knowledge and precision agriculture to sell the produce. Furthermore, it said that supply chain players can plan logistics on accurate and timely information. The IDEA envisages action on building the platform and bringing out a data policy in agriculture on data privacy and exploitation.
While Krishi hub has made an advisory platform for providing farmers with information, BigHaat has made online inputs marketplace for improving access to agricultural machinery, fertiliser, and seeds. On the Harvesting front, Bharat Agri is enabling smart farming practices through algorithm-based advisory. Fly bird Farm Innovation lowers water and electricity consumption through sensor-based irrigation. Start-ups working in processing and distribution include Start Agri providing warehousing, collateral management as well as logistics solutions for augmenting farmer realisations and supply-chain efficiency. Indigo Ag gives agronomy advisory services as well as storage and transportation services to farmers. India’s largest Agri-tech enterprise, Samunnati, facilitates FPO development by providing financial literacy training, giving access to customized financial solutions and facilitates new techniques, such as precision farming.
Both government and private interventions can empower Farmer Producer Organisations and boost access to farmers. This is where technology is enabling real-time information sharing and greater transparency.
Digitisation to boost income of Farmers
Increasing the digitisation of agriculture can improve the overall efficiency of the food system. One of most critical aspects is the post-harvest infrastructure like warehousing and primary processing centres as such losses can account for 20-40 per cent due to limited storage capacity and outdated warehouse units. Therefore, the country needs to have a comprehensive and connected storage infrastructure. The launch of Agriculture Infrastructure Fund for Rs 100,000 crore in August 2020 for aiding farmer groups as well as private players to invest in post-harvest management infrastructure and community farming assets can go a long way in taking forward Agriculture. These can boost income of farmers as well as reduce the time spent in transit besides lowering amount of waste.
Niti Aayog-WEF fostering Emerging Technology
In May 2022, the World Economic Forum collaborated with the government’s think tank Niti Aayog, to focus on improving use of emerging technologies such as AI, Internet of Things, blockchains and drones for benefitting farmers, especially the marginal and small farmers. As per the WEF, lack of credit history for small-holding farmers makes it difficult to obtain credit at 10-15 per cent and instead end up borrowing at an unsustainable and unfavourable 35 per cent. Therefore, the WEF will be focusing on inclusion and insurance. Furthermore, the WEF aims to address the challenge of sustainability through improved technological services for lowering costs and ensuring sustainable farming. Sustainability will be even more important for India as the country is home to just 2.4 per cent of arable land but is responsible for the food needs of the one-fifth of the global population.
High speed internet and mobile penetration can also enable a greater number of farmers, especially the youth to discover better prices. This can be enabled by National Agriculture Market, an integration of Agriculture Produce Marketing Companies, which is an online market platform to promote pan-India trade in agricultural commodities, improved price discovery through transparent bidding procedures based on produce quality, and timely online payments.
With the country aiming to be a USD 5-trillion economy, it is imperative more than ever to ensure that a significant part of the population, which works in agriculture, take advantage of the growth opportunities, and move up from lower end of the pyramid. This especially includes the farmers owning small tracts of land, who till now had little know-how and access to favourable credit, market linkages, crop management and profitability.