Robust Agricultural Value Chains Can Transform India's Farming Sector

Debarshi Dutta
Debarshi Dutta
Women Farmers in India

India’s agriculture sector has been contributing about 15-20% to the national GDP of the country over the past few decades. Not just nationally, but the agrarian country’s contribution to global agriculture cannot be emphasized enough. It continues to be a major supplier in the global food basket as the world's leading producer and consumer of milk, wheat, pulses, basmati rice, spices, oil, meat, sugar, cotton and castor oil.

Despite registering the fall in GDP in the April to June quarter due to the unprecedented outbreak of Covid-19, the agricul­ture sector showed tremendous resilience and managed to clock up a growth of 3.9 in 2021-2022. Recent reports from Ernest & Young, indicate that India's agriculture technology sector has the potential to grow to $24.1 billion in the next five years.

Since agriculture is the mainstay of rural India majorly, there is a significant percent­age of small and marginal farmers and MS­MEs who are involved in the agribusiness value chain. Agri value chain in simple words refers to the whole range of goods and services essential for an agricultural product to travel from farm to its final customer.

Despite making impressive progress and receiving government attention, the agriculture supply chain currently reels under the age-old structural issues fraught with inef­ficiencies that have had an adverse impact on output, productivity and quality of produce. In comparison to other sectors, agricultural stakeholders and farmers suffer the most as for fruits and vegetables the shelf life is very short. Also, since the market prices are dynamic across different markets, farmers often suffer losses or gain lesser profits as compared to what they could. The advent of technology in this sector can help build better supply chain solutions, traceability, catalyze growth, and create agri-entrepreneurs thereby benefiting all stakeholders.

Another set of challenges that this sector faces is acute information asymmetry, and lack of awareness about efficient farming and dairy techniques, poor access to markets in crops and dairy, and limited options to buy farm input and equipment. With the current technological advancements, users of the agritech value chain can overcome these obstacles and leverage their smartphones to receive better inputs, create new markets and discover disruptive opportunities.

Not limited to just crops and farming, but augment of technology in agriculture opens opportunities for cheaper and faster supply chain financing which is also the backbone for any SME or MSME to succeed. 

But for any sector to progress, one of the dominant factors is the ease of access to credit and the related operational policies that would drive the entire value chain. Agriculture, which still witnesses cash transactions, is increasingly going digital, with major producers, dealers and distributors embracing digital payments through e-wallets and mobile applications. This will also enable the sector to build a robust back-end infra­structure, augur well for agriculture exports from India further strengthening the Indian farmers’ foothold in the international markets.

Bottom line:

Given agriculture is a sector on which the entire human life cycle depends and with the aid of efficient digital tools and platforms, we will see a significant improvement in the coming years. While large corporates have been leveraging tech­nology to drive efficiency through backward integration in the supply chain, there has also been a spurt in the growth of the startup ecosystem in the agro tech space.

Considering India’s tech capabilities in software, AI and robotics and a thriving start-up ecosystem, even advanced agri-tech deployment at scale will be the reality in the foreseeable future. Though data compatibility has significantly improved across markets and services, the reliability of data collection and mapping will also accompany AI to play a definitive role in the design of future innovation in this sector.

With digitalized agri value chains, the sector will also serve as the bedrock of the formation for new ones since agriculture forms the resource base for a number of agro-based industries and agro-services.

(The author is Co-founder & CEO of Ayekart)

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