Can Agritech Increase the Value Capture Of India's Small Farmers?

Rather adoption of technology in various ways in the agricultural sector brings an array of benefits which together help to amplify farmers' income

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Agriculture is a significant constituent of the Indian economy. It is the primary source of livelihood for 55 per cent of Indian population and about 60 per cent of India's land continues to be used for agriculture. Despite this vast agricultural promise, much of India's farming population struggles with access to capital, technical knowledge and optimal production capacity. Nearly 80 per cent of the farmers in our country are small and marginal farmers who together hold approximately only 45 per cent of the crop area having individual holdings of less than two hectares of land.

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These large number of small and marginal farmers are still using traditional and sometimes unscientific practices of farming. They still struggle to earn the right value of their produce due to lack of visibility and reach. They depend on multiple informal economic activities to finally get to their meagre income. Multiple factors affect their income such as poor facilitation, lack of efficient and low-cost logistic and degraded quality assurance. Advancements in technology and new agritech services can play a big role in overcoming a number of abovementioned challenges and improve the value capture of individual farmers and in turn increase the total value creation in the agricultural ecosystem.

There is no one all-in-one technical panacea for farmers. Rather adoption of technology in various ways in the agricultural sector brings an array of benefits which together help to amplify farmers’ income. Agritech interventions offer solutions. The emerging technologies are empowering farmers by enabling right and transparent information and fostering networking and connections in the value chain. A small farmer with smartphone enabled technologies is no longer bound by a small geographic boundary, nor is his network restricted to traditional (usually unprofitable) channels. Technology also promotes cost efficiencies and fair value and quality assessments.

Today, India boasts of more than 450-plus startups in the agritech segment. The sector has attracted approximately $50 million investments in 2021. This high investor confidence clearly shows that the Indian agritech industry has the potential to empower rural India. The startups are working hard to bring irrefutable value to the farmers’ ecosystem with tech-led services like technology-led crop planning models, FaaS (farming as a service), farmer aggregation, networking, online retail and procurement among a host of others.

We believe significant advances in the following areas will help increase the value capture of small and marginal farmers.

Better quality checks and precision farming solutions: Poor agricultural practices and improper quality checks lead to a lot of output waste resulting in decreased income. The need of the hour is precision farming solutions which will allow the farmers to track weather, check soil quality for the crop and check for pest infestations leading to better crop yield and earnings.  

Extensive adoption of linkage, monitoring and networking solutions: Agritech solutions now facilitate farmers to directly connect with market, partners and consumers. Farmers can directly communicate about the prices of their product and gain good profits. Agritechs are playing a key role in gradually reshaping the face of the agriculture sector by making resources available, exhibiting how to use resources wisely, distributing collective knowledge widely, and bringing the world closer to farmers through technology. Rapid and extensive adoption of these tech-led solutions can help improve farmers’ condition. Some recent reports say that smartphone penetration in rural India is growing 3x of urban India. We can therefore safely assume that the overall farmer access and adoption of digital ecosystem is also on the rise.

The near future will see emergence of more tech-enabled financial services, and precision agriculture and farm management services to aid the agriculturists. Other helpful advancements in agritech sector will likely be in mandi-automation, wider buying and selling of farm outputs online, and hyperlocal connectivity.  Tech-solutions will continue to offer huge potential to improve farmer incomes. But the solutions will be beneficial only if there is a large-scale adoption of technology by agriculturalists and small and marginal farmers. Some recent reports say that smartphone penetration in rural India is growing 3x of urban India which in turn signals wider internet access. We can therefore safely assume that the overall farmer access and adoption of digital ecosystem is also on the rise, and we should be able to see the results in not-so-distant future.