Unleashing the potential of India’s agricultural sector

Agriculture has been essential in India since the dawn of its civilization. With one of the largest arable lands complemented by favorable climatic conditions, it enables the subcontinent to produce a variety of crops. Even today, despite rapid urbanization, the growth of the agricultural sector is intrinsically linked to the growth of the economy as a whole.

In terms of economic productivity, it contributes to at least 1/6th of the national income and contributes to the maintenance of food security in the country. India’s total exports of agricultural and related products amounted to US$41.25 billion in FY21. The sector employs over 50% of India’s population and 70% of India’s rural population depends on agriculture for its livelihood. As a result, productivity growth in the agricultural sector is shown to have the greatest impact on poverty reduction (about twice that of the manufacturing sector). Recognizing this, the government has stated its goal of doubling farmers’ income by 2022.

However, the sector has been fraught with challenges in terms of availability of formal capital, mechanization, logistics and market accessibility. The gravity of which was heightened by the chain of events wrought by the pandemic, but conversely revealed the uncharted reach of agriculture.

The impact of Covid-19 on the agricultural sector

Even though India has been a net food exporter in recent years, the pandemic has disrupted production and marketing, due to labor and logistical constraints. It also wreaked havoc on the rural economy, as the negative income shock restricted farmers’ access to markets and increased food prices. However, even though farming is considered a low-margin, high-cost profession, farming has proven to be one of the very few sectors to absorb a large workforce that has undergone reverse migration. .

It should be noted that recent quarterly post-COVID GDP estimates show that agriculture is the only sector to register positive growth of 3.4% in the financial year (fiscal year below) 2020-21 ( quarter 1: April 2020 to June 2020). This is a testament to the robustness and resilience of India’s agricultural sector which has cushioned the Indian economy during the crisis. The increased responsibility and potential of the sector during the pandemic has led to it being prioritized in post-pandemic recovery. Today, the ecosystem has more than a compelling need to take advantage of technological innovations to create a self-sustaining agricultural sector that is the gold standard for the rest of the world.

Unleashing the potential of India’s agricultural sector

The Indian government recognizes the potential of agriculture and the overall thrust of the Union Budget 2022 appears to be aimed at building a more robust and resilient agricultural infrastructure for farmers through modern technological intervention and significant financial investments within of the agritech start-up and large agricultural companies. value chain ecosystem.

The introduction of “Kisan drones” for land records, digitization and crop valuation will lead to improved efficiency in key agricultural interventions, especially for smallholder farmers; it could also help boost employment opportunities in the rural landscape if the opportunity is catalysed by the government. The groundbreaking decision to focus on crop diversification and the promotion of domestic oilseed production is significant, as it will promote both expansion and improved productivity in the often neglected horticultural sector.

The Indian government has introduced various programs and policy changes to support the growth of agriculture in India, many of which have initiated the adoption of technology and provided better access to inputs to improve the current processes and structures of agriculture. agriculture and the existing food system within the country. But these policy initiatives have historically focused only on increasing agricultural productivity and failed to effectively transform the value chain.

Although there are indications of further improvement in yields due to improved inputs. Intervention in agriculture must go beyond capital investment. For this reason, it was encouraging to see the State Agricultural Universities (SAUs) doing their due diligence in budgeting through increased financial support to promote higher education, research and training in the sector.

It requires a clear knowledge of the problems of grassroots farmers that go beyond capital needs. The key to increasing farmers’ income lies in increasing farmers’ share of the price paid by the final consumer by decreasing the cost of marketing, transaction cost and other intermediaries. As a sector that relies heavily on the efforts of farmers (most of whom are small, marginal farmers), it is in its interest to empower them. One of the measures taken by smallholder farmers to increase their margins and pool their resources is through Farmer Producer Organizations and Farmer Collectives (FPC). A major impediment to this is the lack of a solid value chain approach that solves end-to-end issues. However, there is a deliberate attempt to reverse the situation through government-led policy initiatives and on-the-ground intervention by private actors with the aim of strengthening this scalability in trust and collaboration with the farmer. .

The rapid development of technologies and infrastructure has added a new dimension in which problems such as hyperlocalization and fragmented supply chains can be solved. The recently increased access to mobile connectivity in India has also increased the potential to address issues of information dissemination and provision of verified market linkages on both the demand and supply side.

This potential is being quickly tapped by private actors providing transparency and working directly with farmers, enabling them to take the first step towards digital transactions. Several players in the agritech ecosystem are now trying to increase the balance within the agricultural value chain by providing customized solutions to the pain points of smallholder farmers.

On the horizon

Agriculture depends on connecting all stakeholders within the agricultural value chain and empowering the farmer. In fact, recent reports indicate that India’s agtech sector has the potential to grow to $24.1 billion over the next five years, indicating the potential the ecosystem is about to unleash. As a very enterprising country, Indian farmers and entrepreneurs have the ability to co-create sustainable, efficient and self-sustaining systems. For this understanding, field data from the supply and demand side is imperative to make informed and targeted decisions. If we create an ecosystem where all stakeholders in the agricultural value chain have access to a higher balance through financial intermediation, market linkages, information, etc., there is no reason why agriculture cannot be the biggest contributor to our economy.



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The opinions expressed above are those of the author.



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Lana T. Arthur