Relevance: GS-3: e-technology in the aid of farmers

Key Phrases: Changing Methodologies in Agriculture, Innovative Business Models, Structural Weaknesses, Input Market Linkage, Farming as a Service (FaaS), Precision Agriculture, Farm Management, Farm Mechanization and Automation.

Context:

• India stands well equipped to adapt to changing methodologies in agriculture and transition from conventional business models to various innovative business models propelled by agritech with an ever increasing internet penetration in the country, and rural regions being the primary driver of this growth,
• The adoption of technology in agriculture is expected to solve several challenges across the dimensions of the agriculture sector.

Key Highlights:

• India is an agrarian economy where agriculture contributes 18.8% to the country's gross value added (at current prices), with almost 54.6% of the total workforce dependent on agriculture.
• The segments such as retail, chemicals, packaging, and e-commerce directly rely on agricultural output, which magnifies the sector's impact on overall economic growth.
• India's agriculture exports account for 12% of total merchandise exports and have crossed US$ 50 billion as of 2021–2022.
• However, despite the sector’s contribution, it remains stuck in structural weaknesses that inhibit growth and productivity.
• In order to address these challenges and improve farmers’ incomes, Indian agriculture needs technology-aided modernization, backed by resilient reforms.

Need for Agritech in India:

• Agritech adoption in India is primarily driven by consumer preference, urbanisation, climate conditions, and water shortage.
• There have been several areas of bottlenecks inhibiting the agriculture segment such as
  • volatility in input prices
  • limited access to technology for efficient cropping
  • non-availability of large-scale testing
  • supply chain technology
  • output market linkage
  • inability to attain financing at the right time.
• The agritech is expected to play a significant role in providing a solution for these problems.

Fragmented and unorganized agribusiness ecosystem in India:

• The agribusiness ecosystem comprises the business activities covering the entire value addition chain, from the supply of agricultural inputs, the production and transformation of agricultural products, and their distribution to final consumers.
• However, this ecosystem is unorganized and fragmented, with the existence of multiple intermediaries and middlemen across the value chain.
• The small and marginal farmers being the primary providers of food and nutrition to India, remain constrained by issues like extremely small landholdings of less than two hectares and limited access to factors like technology, inputs, credit, capital, and market, etc.
• Agritech innovation can plug these challenges, such as lack of infrastructure, supply chain inefficiencies, and low digital adoption which have historically held back the sector from performing to its full potential.

How agritech aids productivity and efficiency in India’s agriculture sector:

• The various segments within the agritech sector, which support the overall value chain:
  1. Market linkage – farm inputs: Digital marketplace and physical infrastructure to link farmers to inputs.
  2. Biotech: Research on plant and animal life sciences and genomics.
  3. Farming as a service: Farm equipment for rent on a pay-per-use basis.
  4. Precision agriculture and farm management: Use of geospatial or weather data, IOT, sensors, robotics, etc. to improve productivity; farm management solutions for resource and field management, etc.
  5. Farm mechanization and automation: Automation using machinery, tools, and robots in seeding, material handling, harvesting, etc.
  6. Farm infrastructure: Farming technologies, such as greenhouse systems, indoor-outdoor farming, drip irrigation, and environmental control, such as heating and ventilation, etc.
  7. Quality management and traceability: Post-harvest produce handling, quality check and analysis, production monitoring, and traceability in storage and transportation.
  8. Supply chain tech and output market linkage: Digital platform and physical infrastructure to handle post-harvest supply chain and connect farm output with the customers.
  9. Financial services: Credit facilities for input procurement, equipment, etc. as well as insurance or reinsurance of crops.

Benefits:

• Using Precision agriculture can enhance yield by up to 30 percent.
• Digitalizing records through farm management can improve operational efficiencies and save costs.
• Introducing quality management and traceability will help farmers attain better outcomes in terms of high quality produce, further incentivizing them to continue with modern methods.
• Facilitating output market linkages through an efficient post-harvest supply chain by eliminating inefficiencies, such as high wastage of farm produce, which is a win-win for both farmers as well as consumers.
• Offering better financial services, which could serve 30 percent of farmer households through access to credit, and 65 percent of farmer households through access to crop.

Growing segments within agritech in India:

1. Input market linkage and farming as a service (FaaS) segment:
   • This segment offers missed call-based service for farmers ordering inputs and types of equipment along with cash-on-delivery service.
   • These players have been able to eliminate multiple levels of intermediaries by partnering directly with the producers.
2. Supply chain, post-harvest management, and output market linkage segment:
   • This segment is the largest contributor to the revenue of the agritech industry in FY 2020 and also witnessed maximum growth among all the segments during the same period.
   • Players in the segment are involved in the collection, processing, storage, and logistics, and distribution of agricultural produce from farmers to end customers or retailers.
3. Precision farming, analytics, and advisory segment:
   • The startups in this segment address structural issues arising out of a lack of knowledge about scientific farming methods and techniques among farmers.
   • These players collect farm specific data about soil, weather conditions, humidity, pests, etc. using IoT sensors or geospatial technology and use their analytical capabilities to provide timely insights to the farmers.
   • Agritech startups are also coming up with a quality assessment and grading solutions for large agribusinesses and traders.
4. Agri fintech:
   • This segment comprises agritech startups offering solutions, such as credit, insurance, warehouse receipt financing, trade financing, etc.
   • Inadequate access to organized credit, collateral, and formal documentation is the biggest challenge faced by farmers.
   • Agritech players are leveraging technologies, such as geo tagging of farmlands and remote crop monitoring, to build risk profiles of farmers and ascertain their credit worthiness.
   • By partnering with banks, NBFCs, and input suppliers, agritech players offer loans at lesser interest rates than unorganized lenders.

Government Initiatives:

1. National Agriculture Market (eNAM):
   • This is a pan-India electronic trading platform that networks with existing mandis to create a unified national market for agricultural commodities.
   • The platform provides services such as commodity arrivals and prices, buy and sell trade-offs, and provision to respond to trade offers.
   • 1,000 mandis of 18 states and three union territories have been integrated with the e-NAM platform.
2. India Digital Ecosystem of Agriculture (IDEA):
   • An agristack system developed by the Department of Agriculture & Farmers Welfare will help the government introduce programmes that will help the sector and grow farmer income.
3. National Mission for Sustainable Agriculture (NMSA):
   • This government initiative covers a broad spectrum of programmes to enhance agriculture productivity by integrating sustainable technologies in the value chain. The initiative will provide information to farmers on crop management and weather forecasting.
4. National e-Governance Plan in Agriculture (NeGPA):
   • Under this scheme, funds are released to states(s)/union territories for those projects that involve modern technologies including AI, ML, drones and blockchain.

Promising Prospects Ahead for Agritech Investments:

• There has been an incremental growth in agritech start-ups in India, as total start-ups increased from 43 in 2013 to more than 1,300 as of April 2022.
• Funding in agritech has accelerated too from US$ 1.1 million as of 2014 to US$ 889 million in 2021.
• Global venture capital firms and private equity players are interested in investing in Indian agritech companies, and funding has witnessed decent growth despite the pandemic.
• Government intervention has helped the agriculture output to show positive growth during the crisis, and now, the aim is to double farm income.
• The Indian start-up ecosystem and the government are already contributing and supporting farmers, but there are still promising prospects ahead for agritech in India.

Source: IBEF

Mains Question:

Q. Discuss the role the agritech can play in transforming and plugging the challenges faced by the agriculture sector. (250 words).