Agriculture touches almost every element of our daily lives. It is the sector that sustains human
survival and faces critical challenges from climate change, supply chains, and ever evolving
technologies that are disrupting this long-standing industry.
With ~USD 0.5 Tn Agriculture market opportunity by FY30, India is positioned really well to
strengthen its pivotal position in the global agrarian economy. It holds the second largest agricultural
land in the world, employs 43% of its workforce and is 3rd in global ranking on Agritech investment.
Industries such as Consumer packaged goods, Retail, Chemicals, e-Commerce and many more are
heavily dependent on outputs produced through Agriculture.
India is also well placed for international food supply. The ongoing conflict in Ukraine has positioned
India to take over as the wheat bowl for the world. This subsequently affected supply, scarcity, and
inflation locally. If we’re to continue supporting our population and the food needs of our export
partners, we must invest more meaningfully in agriculture, supporting the industry with the capital
and technology needs to become a global force. Reports show that Indian agricultural exports have
grown by 19.9% during 2021-22 to reach $50.2 billion. The export of wheat hit an all-time high at
$2.1 Bn in 2021-22, growing 273% from 2020-21 while other cereals registered a growth of 53% by
fetching ~$1.1 Bn in 2021-22.
4 levers are critically important to unleash the shear potential that Indian Agriculture has to offer in
the local and global economic context :
- Subsidies, Support and Solutions
- Cultivating Agritech Innovation
- Cracking ‘Phygital’
- Resolving for affordable and timely credit for farmers
Let us spend some time understanding each of the areas in detail below. - Subsidies, Support and Solutions:
One critical lever to support farmers is through a direct benefit transfer of assistance, including
fertiliser subsidies. Since FY’21, the fertiliser subsidy bill has almost tripled to INR 2.3 trillion in FY’23,
and it looks set to continue rising if global hydrocarbon prices do not moderate.
The government has been considering giving farmers subsidised fertilisers or equivalent cash on a
per-acreage basis to curb the ongoing rise in subsidy. Direct cash transfers to the farmers’ bank
accounts and a capping of the subsidy based on land holdings are expected to improve the scheme’s
efficacy while generating major savings.
Farmer groups are calling for various measures including direct benefit transfer for fertiliser subsidy
and an increase in financial assistance under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN).
Under the current scheme, 100 million farmers receive three equal instalments totalling INR 6,000
annually. However, farmers believe this number should be hiked to align with the rising cost of
living, particularly agricultural inputs. Farmers are also calling for a policy to disallow the import of
agricultural commodities whose landed costs are below the minimum support price and thereby
dampen domestic prices, such as edible oil and pulses.
Other demands include increasing credit limit under the Kisan Credit Card (KCC) scheme, sufficient
financial human resources allocation for Krishi Vigyan Kendras, and provisions to get credits for
agricultural inputs used.
From the production standpoint, one potential solution is increasing domestic production of
soyabean, mustard, groundnut, and sunflower. As we have already seen restricted exportation of
wheat and broken rice improve domestic supply and contain inflation, further use of domestically
grown crops could reduce India’s reliance on imported goods, thereby improving price and
availability while bolstering our national resilience.
Also, it is equally important to improve the learning and development opportunities available for
farmers – both current and future talent. While we need vital infrastructure to improve how we
grow and cultivate crops, it is equally important that we upskill future generations of agricultural
workers to thrive in an increasingly fast moving and digitalised world.
- Cultivating Agritech Innovation
India is fast becoming a global hub for technology, which is subsequently accelerating the pace of
digital transformation in various industry sectors, and especially agriculture. This has also certainly
helped our national economy avoid recession at a time of significant uncertainty and disruption.
While India is set to become a global powerhouse in fintech and SaaS, investors and start-ups cannot
neglect the country’s less glamorous but more critical needs, such as climate change solutions, water
and food security, and intelligent farming solutions. As climate has direct impact on farming and
supply chains, we must ensure that our farmers can mitigate the risks of unpredictable weather
conditions, water scarcity, and increasing urbanisation.
Investment in technology startups across the Indian agriculture and food sector jumped over by ~2x
to $4.6 billion during the last fiscal on the back of higher inflow in restaurant marketplace and e-
Grocery, according to ‘India AgriFoodTech Investment Report 2022’. Total investment in
Agrifoodtech startups for India’s FY’22 stood at $4.6 billion, up 119 per cent from FY’21. While there
are various Agritech solutions available for free, most are provided to users through a freemium
model. One example is Swiss-Italian Agritech startup, xFarm Technologies, which enables agricultural
enterprises to make data-driven decisions. The company’s platform gathers data through sensors
installed in farmers’ fields, allowing for greater efficiency, visibility, and sustainability across supply
chains.
Farmers get accurate real-time insights to better understand their inputs and outputs, such as how
much water or fertilisers they need per square metre. The platform has over 110k users in over 100
countries and offers a freemium version to let new user test out the platform’s capabilities.
Another freemium offering is Aquaconnect. Based in Chennai, the farm advisory solution leverages
machine learning and satellite remote sensing technologies to improve farm productivity and market
linkages for Indian fish and shrimp farms. From stocking to harvest, Aquaconnect offers end-to-end
services for aquaculture farmers, providing formal credits, insurance, and offer market linkages for
26,000 shrimp and fish farmers in Andhra Pradesh, Gujarat, and Tamil Nadu.
Despite growing investment in Agritech solutions, not all farmers are digitally literate. While most
have a smartphone and internet access these days, they are not aware of these technologies, or how
to use these technology solutions to maximize value for them in terms of improving performance,
efficiency, or price margins. The key challenge for India’s agricultural sector is creating awareness,
helping farmers understand what is available and how they can leverage intelligent technologies
with ongoing support and education.
Furthermore, we cannot expect struggling farmers to spend upfront for using these technology
solutions. If we are to build on agriculture’s resilience and future proof the industry from impending
risks, there must be collective effort towards educating, supporting, and empowering farmers
through the collective effort of government, industry / business models, and academia.
- Cracking ‘Phygital’
‘ Phygital ’ represents an important opportunity to further improve investment viability while
ensuring a more seamless transition for farmers looking to digitize elements of their operations. A
combination of physical and digital, ‘Phygital’ is about bridging the relationship between a user
(human) and activity (company), creating a seamless and intuitive experience through a solution
which is a hybrid of technology as well as required physical infrastructure.
Technologies such as Artificial Intelligence (AI), precision agriculture, remote sensing, and the
Internet of Things (IoT) provide innovative solutions to solve challenges across the agri-food value
chain. However, their adoption is limited by long-standing dependencies on physical activities across
the value chain.
Phygital strategies have helped transform retail, banking, and healthcare, but more needs to be
done for agribusiness. Creating a Phygital strategy for agribusiness or any other sector must begin
with evaluating the customer experience gained in the last two years.
By understanding the challenges customers face and which areas to invest in, can help inform a
future strategy, guiding the industry towards a phygital experience that exceeds customer
expectations. Blurring lines between physical and digital experiences in the post-COVID world is
enhancing user experience and help companies attain sustainable business models while mitigating
risks and costs.
One interesting case study is Gramco Infratech. Based in Indore, the company spent good number of
years to understand the pain points faced by the farmers at the grass-root level, created physical
infrastructure including multiple warehouses, worked on market linkages, and is now pushing a
technology innovation layer on top to resolve for the complexities that farmers as well as other Agri
stakeholders face in day to day livers. - Resolving for affordable and timely credit for farmers:
Despite recording significant growth in output, investment, and employee numbers, many Indian
farmers still need access to loans and credit for procuring agri inputs and equipment, investing in
farming technologies, and selling produce to food companies. Furthermore, wholesalers require
working capital to manage large quantities of produce, improve storage, and transport goods to
retailers. For many farmers, digital transformation may require a steppingstone.
As many other nations face declining agricultural sectors, it is important to nurture this shrinking
industry through responsible lending and improved financial inclusion, especially in the face of
potential food scarcity. Technology is reducing the time and resources needed to support this
dwindling sector as digital platforms make financial support and information more accessible and
efficient for lenders and borrowers.
We are seeing how sustainable investment is supporting responsible innovation, particularly within
underserviced regions and industries. Here in India, we are seeing financing for agribusiness gaining
traction, supporting farmers who’d previously lacked the credibility and working relationships to
secure financing from banks and lenders. As many financial-service providers did not have the
capability to assess risks involved with financing farmers, technology is helping them determine
important metrics such as yield per acre, effective underwriting at household income levers rather
than individual incomes and potential profitability based on pricing history.
Indian-made platforms such as Agribazaar and Unntai give farmers bargaining power and resources
than ever before by providing access to financial and non-financial inputs, services, and
technologies, which help reduce costs and improve efficiency across supply chains. Agribazaar is
developing solutions for crop identification and estimation using remote sensing technology,
advisory and financial services, and post-harvest intelligence for farmers.
One more interesting model is Navadhan, who has taken the ‘Phygital’ route to address the credit
gap issue for the small businesses including small rural households. The company has already
onboarded 50k+ rural MSME households in short span of operations.
Conclusion:
Agriculture is a critical industry that requires our ongoing support and development. If we are to
combat climate change while ensuring food and water security for future generations, agricultural
innovation has a pivotal role to play. Digitization and intelligent tech solutions are important
resources to unlocking efficiencies, eliminating waste, and gathering insights on how to do things
more sustainably. However, more than technology, we need ‘Phygital’ collaboration to help best
practices and ensure all regions and industries benefit from ongoing innovations.