New Delhi: The idea of doubling farmer incomes is likely to become a reality in the next few years based on the technological and regulatory changes in the agricultural sector, a new report released by Bain and Company states.
The changes are expected to usher in a USD 30-35 billion value pool in India’s agri-logistics and agri-input delivery sector by 2025 as it has seen significant interest from the investor community, making India the third-largest nation for funding received and start-ups in agritech space. The market will be driven by a maximum increase in online grocery buyers and the online offtake market that includes e-commerce platforms.
Titled ‘Indian Agriculture: Ripe for Disruption’, the report also claimed that in the next two decades, value creation in the agri-value chain will fundamentally change the production and consumption of food, both in India and globally.
The report also pointed out that the three new farm laws introduced by the Modi government last year are intended to encourage investment in direct farmer purchase by corporations given that the Agricultural Produce Market Committee (APMC) tax, also known as the Mandi tax, is being done away with. This, in turn, will result in free movement of food items from production to consumption centres, thereby providing private investment in storage. The report also claimed that when all three reforms come into operation, there will be a host of new business opportunities in Indian agriculture.
Speaking to ThePrint, Parijat Jain, one of the authors of the report, said: “We expect a massive increase in farmers’ income by a twin way of increase in yield and productivity along with reduction of wastage. Both of these will be achieved by technological and investment-related disruption in Indian agriculture sector, thereby providing better and timely crop, soil and weather-related inputs to farmers along with robust supply chain and in-time auction to reduce wastage and boost incomes.”
On the farm reforms introduced last year, he added: “The substance of new farm laws are in the right direction as they provide a choice of availability to Indian farmers and other stakeholders in that sector along with services such as better storage and value chain development.”
The farm laws, however, have been a controversial subject for farmers across the country, especially those in Punjab, Haryana and Uttar Pradesh. Protests have been on since last October demanding a rollback, while negotiations between the Centre and farmer bodies have failed to make any headway. Farmers argue the laws remove protections such as minimum support price, opening them up to market fluctuations and corporate monopoly.
Getting agritech savvy
With the introduction of the three new farm laws, the report states, firms will be able to save 5-10 per cent or more on procurement costs of food items through a concerted national strategy as APMC reforms will enable corporates to buy directly from the farmer. The Essential Commodities Amendment reform will also further incentivise investment in storage and transportation infrastructure, resulting in supply chain efficiencies, the report notes.
On Indian agriculture, the report notes how importance has been focussed on digital disruption in the country’s agriculture sector and the introduction of technology-driven interventions by agritech firms with recent major investments. “Large farms have adopted automation and mechanisation of operations, and data-backed services across the value chain are leading to positive outcomes.”
It also pointed out that in farming activities, weather prediction and smart crop management are leading to higher output while sensors and the Internet of Things are enabling better tracking and visibility of farming activities. Also, direct sourcing, demand forecasting, and inventory management are fuelling agricultural produce sales with digital engagement promoting the ‘Uberisation’ of services, creating online communities and marketplaces, and driving e-commerce.
“The technological and regulatory disruption in Indian agriculture will ensure that with heavy accessibility and availability of technology, capital expenditure is rapidly converted into technical expenditure,” Jain said.
The report further recommended that the backbone of an agritech platform should be built around multiple themes, such as a digital marketplace, supply chain management, or smart services across the agricultural value chain. This could begin by building a hook to get the farming community onto the platform through services such as input marketplace, certification and quality assessment, or smart input management.
The further phases, according to the report, will comprise contract farming, transportation services, warehousing for non-perishables, and crop insurance services.
‘Future of agriculture is digital’
Agritech firms should also be expanding into real asset sharing for small farmers, e-trading/online marketplace, export trading of produce, data-backed advice on risks and mitigation steps, and data-backed long-term loans with customised credit terms, the report says.
Taranjeet Singh Bhamra, CEO and founder of AgNext Technologies, a startup, said: “Rise in agritech over the past few years has led to increasing penetration of various technologies by the deployment of emerging technologies, thereby transforming productivity and profitability across agri-value chains. If we look at our developed counterparts, it is evident that the future of Indian agriculture is digital and we will see increasing adoption of frontier technologies such as AI, machine learning, Internet of Things, spectral sciences.”
He added: “However, the mere adoption of technologies is not enough as there is a need for Indian agritechs to innovate India-specific, technology-driven and highly scalable solutions to solve persisting legacy issues which hinder farmers and agribusinesses growth potential.”
Amit Sinha, co-founder of Unnati, an agritech startup, said: “Agritech companies have been able to create solutions that are impacting the way farmers are doing their farming business … Farmers see anywhere from 10-30 per cent increase in their overall earning and more significantly better manage the risks associated with farming … In times to come, the services will become more personalised … and help improve the productivity, significantly contributing to doubling of farmers income.”
On the impact of the farm laws passed by the government last September, Rohtash Mal, chairman of EM3 Agri Services, an agritech company, told ThePrint: “These three laws are not complete, they are not adequate in the sense that everything cannot be changed at the same time … but I do see these laws as the beginning of a quiet enabling revolution for the farmer to get his due … [it] will enable a higher share of revenue [going to] the hands of the farmer.”
(Edited by Manasa Mohan)