Without a doubt, India is an agrarian economy, i.e., a vast majority of the economic contribution is through the production, consumption, trade, and sale of agricultural commodities such as plants and livestock. The agriculture sector contributes to more than 15% of the country’s GDP. Agriculture is also one of the biggest employers in India, with over 265 million citizens engaged in farming activities. This number is higher in the country’s hinterlands with approximately 70% of the rural population employed in the agricultural space, making the industry the backbone of the Indian economy.
However, despite the sheer scale of it, the agriculture industry in India faces significant challenges that hinder its progress. For instance, one of the key drawbacks is that the sector has been considerably slow in the adoption of technology, largely due to insufficient penetration, and those engaged in agriculture being unaware of existing technological advancements. More often than not, farmers lack sufficient information regarding farming inputs for increasing their yield. Apart from this, the vast unorganized credit structure and absence of proper market linkages add to their woes by contributing to their meager income. This is where agri-tech start-ups come into the picture.
Recent times have witnessed a boom in the agri-tech industry with several start-ups emerging to help India’s agricultural sector make rapid progress by bridging the existing gap through tech-led solutions. Let us look at how agri-tech start-ups are disrupting the industry and empowering farmers digitally.
Digitization of farming
The agriculture industry can be classified into 4 broad divisions – Agri inputs, agri-financial services, food processing companies, and farm mechanization. With the advent of agri-tech start-ups, the agriculture industry has seen several fundamental changes in the way it functions. Up until recently, farmers primarily preferred traditional farming/selling methods that meant that they had to go through several intermediary parties to access the market resulting in lowered incomes. The increased penetration of the internet in rural areas of the country has made it possible for agri-tech start-ups to take cutting-edge technology to India’s hinterlands.
Agri-tech start-ups are taking a highly data-driven approach to address pain points in the sector. Novel technologies such as AI, ML, and Data Analytics are making it easier for farmers to improve their methods of farming such as identifying the right crop to be sown for better yield. Additionally, start-ups are also offering mechanized equipment that can be potentially unaffordable for farmers to purchase, on a rental basis, making it more feasible. Besides, agri-tech start-ups are taking it up a notch with mobile applications, making it even more convenient for farmers to access information. Digital farming methods also provide a wider reach, which, for a country like India with a large population of farmers, can be immensely beneficial.
Direct access to the market
One of the key challenges faced by farmers, as mentioned earlier, is the lack of access to direct market linkages, forcing them to sell their products through intermediaries. This fails to offer the farmers the best prices for their produce due to an increase in the cost per transaction. Through online agri-tech platforms, farmers can access the purchases directly without the need for intermediaries, increasing their income since money is directly been transferred to the farmers’ bank accounts. Aside from direct access to the market, farmers can also benefit from a greater reach with more scope to scale their operations due to the wide variety of options that agri-tech start-ups offer on their platforms. Agri-tech companies offer faster and easier payments to the farmers since the complete sales lifecycle is on the platform itself and managed digitally
Organized credit structure
One of the important elements for any business is access to cost effective funds. Farmers, however, struggle to obtain credit due to the unorganized structure of credit. Agri-tech start-ups ensure that there is financial inclusion by enabling farmers to upload their records digitally and apply for credit, freeing them from the clutches of local moneylenders who may charge unreasonable rates of interest. Based on their credit history, quality, and quantity of produce, farmers can avail loans to achieve their growth objectives without any roadblocks.
To sum it up, India’s agricultural landscape is changing thanks to the valuable contributions of both agri-tech start-ups and the government, which has introduced numerous schemes to help farmers reap the rewards. Especially at a time when the world is grappling with the COVID-19 pandemic, digitized ways of farming can be both convenient and safe. Considering these advancements, agri-tech start-ups are all set to restore the glory of farmers across the country through innovative solutions.
