By Ramendra Verma
Agriculture sector plays a crucial role in India’s economic development. Considering that India has 60.45% of its land area as agricultural land and leads in the world in terms of area under cultivation (1.8 million km2 area) is a testimony to this fact. However, steadily increasing population is posing a threat to food security, and requires streamlining of the entire agri-value chain to match the food availability needs of this rapidly growing population. Various challenges both at the macro as well as micro level in the agriculture ecosystem are a limiting factor to increase farm productivity and farm incomes, especially when the total area under agriculture has been stagnant for major food grains over the last few years. There is no doubt that the government is proactively pursuing policies to improve the agri-value chain, however, more needs to be done to remove inefficiencies in the agricultural supply chain to make Indian agri-tech a lucrative investment opportunity. The adoption of right digital technologies by making them affordable will have the potential to address the challenges.
New technologies offer immense opportunities for increasing crop production, improving the nutritional value of crops, reducing input prices for farmers, improving the overall agri-supply chain, reducing wastage in the distribution system, enabling farm mechanisation, and ensuring an ease in connectivity between farmers and the consumers by providing linkages between the consumer and producer.
What is holding back the agriculture sector?
Small and fragmented land holdings, depletion of natural resources, changing agro-climatic conditions, decreasing agricultural land versus a growing population, scarcity of capital, inadequate storage capacity and transport facility, decreasing groundwater levels, poor quality of seeds, low rate of adoption of farm mechanisation, and wastages across the entire agri-value chain are some of the challenges limiting the growth of agriculture in India.
I believe, the proliferation of technologies and digital applications will address many of the agriculture related issues stated above and give a multi-dimensional push to agriculture. There are primarily two disruptions which technology can impact in the immediate future—supply side disruption and demand side disruption.
Supply side disruption
From the supply side, the range of technologies from automated farm equipment to a wide array of Internet of Things (IoT) sensors that measure soil moisture and drones that keep track of crops have changed the agriculture landscape in the last few years. Adopting new age technologies like Artificial Intelligence (AI), Cloud, Machine Learning and advanced analytics is creating an ecosystem conducive for farmers to achieve higher average yield and better price control.
There are comprehensive technology based solution platforms to meet all the farming requirements from crop advisory to availability of products, mechanisation services, financial services, harvesting and post harvesting services. These technologies allow better and practical decision making to pre-determine the optimal usage of water and other agricultural inputs including seeds, fertilisers, etc. The panchayats or farm produce organisations (FPOs) can be developed to act as hubs to implement the technological interventions.
Demand side disruption
From the demand side, the potential exists for the farmers to develop micro processing centres (MPCs) closer to their farms. This means that wheat processing mills, fruit processing, oilseed processing, etc can be done at the farm itself, and sent directly to the consumer (similar to the ‘app-based food delivery model’). The consumer interests in organic and ‘direct from farm’ can lead to disruption in the space. The MPCs will serve as a holistic model and enable a reduction in transaction cost and time for farmers to avail the services, and also bridge the gap between farmers and the consumers.
With the above two disruptions, the government’s initiative to double the farmer’s income will facilitate farmers to get right price remuneration by forward linking to the institutional buyers and reducing the cost of cultivation by judicious use of key resources. FPOs and MPCs can give a push by supporting the rent-based sharing model for the services and make technology affordable to everyone.
It holds much promise for the government, as this will give them an access to the critical information collected in the background through FPOs and MPCs. The information backed up with the relevant data can further be inferred by the government, and used for the right policy drafting and extending benefits to the farmers. These platforms will also allow the government to communicate with the farming community through technology and help in channelising critical information directly for the benefit of farmers.
A significant share of our agricultural growth is possible through application of new technologies. Adoption of new technologies is certainly changing the entire agricultural model, and going forward will ensure growth without compromising the man-machine linkages. However, such innovation-led growth will need to ensure that all stakeholders in the agricultural chain contribute and benefit, starting with the farmer. Therefore, using this agri-model optimally will be a key driver for improving competitiveness in the sector.
Partner and Head—Government Advisory,
KPMG in India. Views are personal