Agriculture is the age-old occupation of India. It is a primary source of income for about 60% of Indians. India is an agrarian economy, and hence, it is also a large contributor (16%) to the Gross Domestic Product of our country. Not just the Agrarian workforce, multiple other industries like retail, chemicals, e-commerce, widely rely on the output from the Agricultural Sector.
It is believed that India’s farm income will be almost double by 2022. The agriculture sector has witnessed exponential growth in the last five years and is expected to be a profitable investment in the future. More and more multinational companies are investing in agricultural infrastructures such as cold storage, irrigation facilities and warehousing.
Various factors throughout the value chain inhibit the growth of the Agricultural Sector, and that plays a negative impact on individual Farmer Incomes. Agriculture as an occupation has a great demand in India, being the primary source of income for a majority of the Indian workforce. Since the lion’s share of India’s farm holdings (approximately 86%) are owned by small and marginal farmers, considering solutions to challenges must involve their needs as well.
The recent policy reform announcements highlighted the removal of stock limits, relaxation of selling products across the country, and formalizing the process of contract farming. These reforms are aimed at an increase in capital shelled out by private corporates hence enabling the achievement of the Government’s aim at doubling farmers' income by 2022. In lieu of these changes, the essential adoption of technology-driven digital platforms, analytics, machine learning, computer vision, artificial intelligence, blockchain, and IoT solutions are underway.
With the introduction of global companies as investors, the agriculture sector has witnessed a technological boom, the use of artificial intelligence, blockchain, machine learning, satellite imagery, computer vision, drones, advanced sensors, automation, and so many aspects that were unseen in previous decades. These high-tech aspects interspersed with regular agricultural activities may not be the present in abundance across the world today, but one step at a time.
The introduction of technology in agriculture ushered in the era of AgriTech companies.
AgriTech companies are coming up steadily with various business models like the margin-based models, subscription-based models, and transaction-based models. The AgriTech players harp on data-fed conclusions to accurately predict and work for the supply and demand of inputs, along with various other factors, therefore strengthening the path to scalability within the segment. Globally farm applications using technology like AI has an estimated value of around $850 million in 2019 and is expected to grow 25 per cent more by 2030. The Indian AgriTech market is valued around $200 million has reached less than 1 per cent of its estimated potential. (Source: Indian Express)
The Agriculture industry is looking towards the development of a robust ecosystem, strong technology and investments on research and development, cross-country collaboration for innovation ideas, and a favourable regulatory environment. Today, the Indian AgriTech market potential penetration is steady at 1%.
Since there is so much additional potential for investment within the multi-fold segments of the value chain, there are several different ways in which AgriTech will be able to support the pain points within farming processes, enabling a structural change and sturdiness within the landscape. Today, farming is synonymous to toil and tribulation, resulting in uncertainty regarding the crops of farmers, not knowing whether they will be met with abundance or loss when it is time for harvest. However, with the use of technological advancements, such issues can be controlled.
The Agriculture industry is looking towards the development of a robust ecosystem, strong technology and investments on research and development, cross-country collaboration for innovation ideas, and a favourable regulatory environment
The confluence of high-speed internet and maturing digital content has been building up to an affluent Digital Ecosystem in India. It has been establishing the groundwork for various innovations within the agriculture sector, where data digitalization and data platforms, analytics, etc., can be leveraged to regulate operations at multiple levels within the value chain.
The segments within the value chain like Market linkages (farm inputs), precision agriculture & farm management, quality management & traceability, supply chain tech & output market linkages, and financial services have the various market potential for investments within the sector. These segments have numerous pain points that can be capitalized on using technological processes.
The global pandemic has made the adoption of food safety and quality assurance a necessity, a mechanism such as Total Quality Management (TQM) including ISO 9000, ISO 22000, Good Hygienic Practices (GHP), Good Manufacturing Practices (GMP) and Hazard Analysis and Critical Control Points (HACCP), will be an asset to the industry.(Source: IBEF)
According to the Department for Promotion of Industry and Internal Trade (DPIIT), “the Indian food processing industry has cumulatively attracted Foreign Direct Investment (FDI) equity inflow of about US$ 9.98 billion between April 2000 and March 2020”. The Indian Government has also assisted farmers during the pandemic with various Acts such as the amendment of the Essential Commodities Act Technology is currently advancing at a breakneck pace, much like the exponential growth experienced by database technology in the late twentieth century.