The agritech space in India is seeing healthy tailwinds due to government impetus on affordable innovations improving farmers’ incomes, and on widespread digitalization drives across the agricultural value chain
Agriculture is the primary source of livelihood for about half of India’s population, but the majority of the farmers still live on the edge of extreme uncertainty. The average agricultural land holding size also continues to shrink, making it difficult to generate sufficient household income. Farmers in India are still heavily dependent on rainfed agriculture, which makes them highly exposed to climate variabilities. Besides adverse weather conditions, stiff competition from larger landowners, a limited access to markets, agritech services, and financing solutions, price fluctuations, debt pressure and crop failure, post-harvest losses due to inefficient supply chain, etc. make these smallholder farmers a vulnerable section of the population- so much so that farmer suicides account for more than 10% of all suicides in India.
Factors hurting Indian agriculture
Although India is among the top producers of several crops globally and the production of food grains has been increasing every year. Agriculture contributes around 20% of the country’s GDP.
However, the agricultural yield (quantity of a crop produced per unit of land) is still lower in the case of most crops, as compared to other top producing countries such as China, Brazil, and the US. There is a clear lack of infrastructure in place across the agricultural value chain.
Among the issues that hurt the India’s agricultural productivity are shrinking agricultural land holdings, heavy dependence on the monsoon, insufficient access to irrigation, soil sickness due to imbalanced application of soil nutrients, uneven access to modern technology across the agricultural value chain, rising post-harvest losses, lack of access to formal agricultural credit, limited procurement of food grains by government agencies, and failure to provide remunerative prices to farmers, etc.
Considering the condition of these small and marginal farmers in mind, the government has realigned its interventions from production-centric approach to farmers’ income-centric initiatives, with focus on better and new technological solutions.
Tech transforming agriculture and uplifting farmers
By plugging in the existing inefficiencies in the agricultural value chain, digitalization and smart technologies like AI/ML, IoT, Remote Sensing, Farm and Data Analytics, Aerial Image-based Analytics, Robotics, Automation, Blockchain, etc. can prove to be an enabler, and can create a win-win scenario for all the stakeholders in the agricultural value chain.
Sangeeta Bavi, Director, Startup Ecosystem, Microsoft India said, “Data-driven agriculture is the need of the hour to scale sustainable food production. Data is key in removing the information asymmetry and guesswork out of farming. Especially with climate change playing havoc with predictable weather patterns, smallholder farmers need data-backed insights that are relevant to them. Advance information on weather patterns can help farmers take necessary precautions in mitigating adverse impact on crop yield.” The need for data is not just limited to precision farming techniques. There are strong use cases of enhancing supply chain efficiency and simplifying market linkages too.
In a country where dryland agriculture occupies 68% of the cultivated area supporting 40% of the population, Genomics can play an important role in growing crops in arid lands and reduce the import burden significantly. Delhi University’s Centre for Genetic Manipulation of Crop Plants has been using ‘Omics’ approach to understand factors affecting high yield of the crops across various species. It is using Lenovo DCG’s HPC-based Genomics Optimization and Scalability Tool, GOAST which can process 1 whole genome in 5.5 hours, compared to 48 hours earlier and 1 exome in 4 minutes. Paritosh Kumar, Scientist, CGMCP said, “The latest genome sequencing techniques produce very large amounts of data, which requires enormous compute and memory capacity to handle large-scale processing and analysis. It will help us to breed more nutritious, more drought and disease-tolerant, high-yield plants to feed the world.”
Extending the cellular Narrowband Internet of Things (NB-IoT) protocol for satellite communications for maximum affordability, Skylo brings real-time, affordable, and ubiquitous IoT connectivity to millions of machines, sensors, and devices, even in the most remote places on Earth. By enabling equipment owners to connect and share their heavy-duty machinery, Skylo helps to make the access to farming equipment affordable, and helps farmers to increase their productivity in turn.
To help the marginal farmers facing water scarcity, a mobile phone-based irrigation advisory called Provision of Advisory for Necessary Irrigation or ‘PANI’ was piloted in Uttar Pradesh in collaboration with the World Bank, the University of Washington, IIT Kanpur, Kritsnam Technologies and GeoKno. The field‐specific ground information captured by the sensors helped improve farmers’ crop productivity and water usage.
Considering the rising labor costs and a shortage of labor in mind, students of Lovely Professional University (LPU) School of Agriculture have conceptualized and designed ‘Flying Farmer’, an affordable drone designed to solve two major agricultural issues faced by farmers – pesticide treatment and weed detection and can be exclusively deployed in farming and field survey. It estimates the nutrient content of the soil to aid production growth and reduce crop damage. The University will not file for a patent but instead, will open source the technology so that it can be inexpensively available to any farmer, anywhere.
Lack of transparency, credit histories, and hassles relating to contract enforcement are limiting financial inclusion among smallholder farmers. Ashish Anand, CEO, Whrrl said, “Agriculture is the one little-explored sector that blockchain has the potential to revolutionize. With transparency and shared control accessibility blockchain could bring fairness to agriculture finance. It enhances farm to fork traceability by facilitating information about the crop origin as well as the details of the producers. Blockchain also provides updated demand and supplier information to farmers allowing them to define their prices and sell accordingly in overseas markets.”
Skymet, supported by Caspian Debt is scaling its digital platform to provide solutions for filling the gap between financial institutions and farmers. The platform can compute Farm Credit Score using farmers financial health, repayment capacity and cropping history making it easy for the financial institutions to underwrite loans for the farmers and can simultaneously inform the farmer regarding the credit limit. Skymet is already working with SBI/HDFC/ICICI banks in Madhya Pradesh and with District Credit Co-operative Bank of Sangli in Maharashtra disbursement of Kisan Credit Card loans/other farmers loans within a short period of time.
“Modern farming is full of opportunities, and it addresses multiple alarming issues like saving the environment, providing employment, helping marginal farmers, cultivation of nutritional food and so on,” said Rajshri Mishra, Co-Founder, NIRJA which aims to redefine agriculture via Hydroponic Farming- a method of growing plants in a soilless farming solution without the limitations of space and with complete control over the growing climate, making it more efficient and ecological than traditional methods of growing crops and plants. NIRJA introduced Hydroponic farming among the marginalised farmers in some drought-prone areas of Bundelkhand.
“India has a very ambitious target of doubling farmer’s income by 2022. With 85% of farmers being small landowners owning less than 2 acres of land, farm diversification is a very effective way of increasing revenue for farmers. The Ready to Implement Micro farms can be started with very little space and investment and is not very labour intensive to implement. As the investment and space requirement is low, more smallholder farmers take this up in addition to the existing activities.” said Prasanna Manogaran, Co-Founder, Aqgromalin, which aims to help farmers diversify their portfolios into the animal husbandry and aquaculture segment with Ready to Implement Micro farms.
Agritech adoption and investments: India vs. Global
One of the effective indicators in understanding the adoption of any new technology in any sector, is the ‘Quantum of Investments / Deals’ that flow into these technologies and sectors, said Prabhakar Puranik, Head of Engineering- Advance Technology Solutions, Robert Bosch Engineering & Business Solutions. “While adoption rate may not be directly proportional to the investments that flow in, we can get a sense of proportionality for Smart Technologies adoption in Agriculture by comparing such investment inflows in 2020 in India vis-à-vis other geographies. Research reports reveal that India Ranks third in adopting Smart Technologies in Agriculture (investments of about $1.5Bn+) next only to USA and China (which, combined attract an investment of about $18Bn). While across the globe, there was an uptick of 30%-50% in adoption rate in 2020; India in fact saw an adoption rate upwards of 70% in 2020,” explained he.
“Another way of looking at the technology adoption is by differentiating the Agriculture Value Chain broadly into two buckets, ‘Farm Related (Farm to Market)’ and ‘Market Related (Market to Fork)’. We can see that in advanced countries the adoption of smart technologies in both these areas Agriculture is almost equal (50:50). However, in India, it is in the 30:70 ratio,” said Puranik.
Agritech startups: A great enabler across Agriculture value chain
Startups have remained at the forefront of India’s Agritech revolution, with over 650+ Agritech firms in the ecosystem including various think tanks, research labs, government, incubators and accelerators. Startups engaged in helping farmers, enabling financing for them and enhancing farm mechanization have been attracting significant interest and funding from top investors. A report by Maple Capital Advisors forecasts that the investments from venture capital firms in agritech startups are expected to exceed $500 million (around Rs 3,730 crore) in the next two years. India’s agritech sector attracted about $245 million in investments from venture capital firms in 2019. The ‘Supply chain tech and output market linkage’ segment has emerged as the top funded segment, followed by the ‘Precision agriculture and farm management’ segment, says an analysis of the top deals by EY, which is, however, in sharp contrast to the global Agritech investment scenario. Globally the latter one leads the charge in terms of funding as well as the number of startups.
The next frontier of growth for Agritech:
Agritech market opportunity is spread across multiple segments- while the supply chain tech and output market linkage remains the top funded segment, financial services, precision agriculture and farm management, and quality management and traceability could script the next leg of growth in India’s agritech story. As the agritech scene matures, we will see further consolidation of the startups across the segments and a rise of the diversified solution providers.
Favorable policies and a strong R&D support for the affordable technology innovations and adoption is also essential to drive the adoption of technologies across the agricultural value chain. Easy and simplified access to finance, farming advisory, robust internet connectivity, affordable technology solutions and mechanization options are also essential for the upliftment of the farmers. The agritech growth can be accelerated by building a robust ecosystem of multiple stakeholders of the agricultural value chain including technology providers, R&D institutions and the government.
“The lack of awareness and knowledge is also a major concern. The youth should be made aware of and armed with agricultural technology because the young generation is already using technology and is interested in it. They’re interested in the traditional business of agriculture and grow in a tech-enabled way. So, the youth should be empowered to use technology as they are our future,” suggested Sanjay Borkar and Santosh Shinde, Co-Founders, FarmERP.