UPSC Essentials: Reports and data on you tips— ‘What’s next for Indian Agri-Tech?’ (2023)

Syllabus-

Prelims: Economic and Social Development

Mains: GS III Syllabus — Agriculture: transport and marketing of agricultural produce and issues and related constraints; e-technology in the aid of farmers.

Relevance: Agriculture is one of the most important topics for Geography and Economy. There are many static and dynamic dimensions of agriculture. Often, a government report or an international report give you some insights on various of agriculture. Noticing that UPSC picks a very specific micro topic as question, this report becomes highly relevant. Though, less in data, it brings to limelight agri-techs, startups and traditional agricultural companies together. Go beyond the report and know useful information and examples of agri-tech startups in India. Enrich your agriculture related questions of GS and Essay.

Why in news?

FSG, a global consulting firm, has launched the Agritech Report 2022, “What’s next for Indian agri-tech? Emerging opportunities and the way forward for India’s agricultural technology sector”.

This report presents the current state of Indian agri-tech in India. It highlights emerging opportunities in this field. It also recommends way forward

—Traditional agriculture companies to succeed across the agriculture value chain

— Agri-tech start-ups to address the stiff competition ahead

What are the key takeaways from the report?

Agri-tech startups

—Start-ups are driving India’s agri-tech innovations and investment story with significant private equity inflows.

—Start-ups will need an acute focus on profitability to survive an emerging ‘battle of platforms,’ as several of these players now compete for farmer attention. This situation will be exacerbated by a funding slump in the medium term amidst an overall slowdown in global investment activity.

—Innovative global start-ups need to be responsible for addressing systemic barriers and building the critical ecosystem required to scale the agri-carbon market.

Technology

—While the first wave of Indian agri-tech focused on market linkages, several mature, late-stage start-ups are now becoming ‘full-stack’ platforms, including value-added services such as agri-fintech in their core offerings.

—The next wave of agri-tech growth in India will come from technological advancements in, and increased adoption of, sustainable inputs, digital in-farm solutions (such as farm management software, remote sensing and advisory, and farm automation), novel farming systems, traceability, and agri-carbon.

—Climate change has intensified the focus on agri-carbon innovations.

—Technology has irreversibly disrupted the traditional agricultural value chain – from how farmers access information and inputs to how they grow and sell their produce. Stronger need to adapt to this digital transformation of agriculture. Investments in in-farm innovations, including artificial intelligence (AI) and Internet of Things (IoT) solutions, robotics/drones, and farm management software, have been growing exponentially.

—The government is playing a key role in the continued mainstreaming of agri-tech in Indian agriculture, through supportive policies in each of these emerging categories.

Traditional Agriculture companies

—The report highlights that while traditional agriculture companies lag behind in most categories, large agrochemical players benefit from in-house R&D and a greater investment capacity. They are therefore ahead in developing, producing, and marketing sustainable and specialized inputs such as bio-fertilizers and organic fertilizers.

—However, traditional agriculture companies focused on the upstream and midstream value chain, including in-farm mechanization solution providers, lag behind start-ups in most other agri-tech innovation categories.
Traditional agriculture companies must embrace technology to succeed.

—Whether they double down on their strengths, or expand into adjacencies, they will need to develop a few core digital capabilities such as data analytics and digital farmer networks.

Why agri-tech innovations are required?

—Agriculture accounts for an estimated 43% of India’s employment. Despite its importance to India’s economic and social development, the sector is fraught with challenges.

—Indian farmers face increasing cost and margin pressures due to several operational issues and structural barriers, such as rising input and production costs, threats to sustainability due to climate change and intensive cultivation, labor shortage and limited mechanization, and a low share of the final price of produce.

—Agri-tech innovations can address many of these challenges by making better information and technology available to farmers. This will inturn provide opportunities to farmers improve their incomes and engage in more sustainable food production.

—India’s agri-tech advancements, if utilized correctly, present an excellent opportunity for sustainable and equitable growth, ensuring not only profitability for agribusinesses but also improved livelihoods for farmers.

Beyond this report

Ashok Gulati and Kavery Ganguly writing for The Indian Express – ‘Agritech startups have great potential in India’ highlight that agritech startups can steer the shift from government-controlled agricultural markets towards more demand-driven digital markets. Some of the key highlights of the article are:

—Globally, India is competing with the US and China in the agri-startup space. According to Agfunder, India witnessed an increase in funding from $619 million in H1 2020 to $2 billion in H1 2021, behind the US ($9.5 billion) and China ($4.5 billion).

—An Ernst & Young 2020 study pegs the Indian agritech market potential at $24 billion by 2025, of which only 1 per cent has been captured so far.

—Currently, it is estimated that there are about 600 to 700 agritech startups in India operating at different levels of agri-value chains. Many of them use artificial intelligence (AI), machine learning (ML), internet of things (IoT), etc, to unlock the potential of big data for greater resource use efficiency, transparency and inclusiveness.

—The pandemic helped them catapult and the 2020 farm laws can give them a further boost by providing a legal framework to work with the farmers through FPOs, co-operatives and other collectives.

How some startups in the marketing space are empowering farmers, small agrifood operators, and giving consumers a better deal?

—Ninjacart, Dehaat, and Crofarm (Otipy) are a few of the many startups that are redefining the agrifood marketplace. The novelty of startup-led value chain transformation is not limited to empowering farmers but also co-opting local grocery, mom-and-pop, and kirana stores as well as small agrifood businesses that are an integral part of the agrifood ecosystem.

—At the same time, the startup network is able to leverage the bigger front-end players who demand bulk quality produce and have challenges in directly linking with farmers. This is in contrast to the earlier organised retail (big box) wave that emerged in the mid-2000s, wherein the livelihood of the unorganised retailers and small businesses was perceived to be threatened.

How agritech startups have a growing footprint ?

Dehaat is present in Bihar, West Bengal, Odisha, and Uttar Pradesh, working with 6,50,000 farmers through 1,890 Dehaat Centres.

DehaatNinjacart sources fresh produce from farms and supplies to retailers, restaurants, grocery and kirana stores, and small businesses and is operational in nearly 11 cities.

With a farmer network of 10,000 plus, Crofarm has served more than 1 lakh consumers and 5,000 businesses.

Otipy has emerged as one of the popular app-based platforms with nearly 2 lakh customers and more than 8.25 lakh mobile downloads. It currently works with 10,000-plus resellers in Delhi NCR and also present in UP, Gujarat, and Himachal Pradesh. About 70 per cent of the resellers are women.

How the agri-tech startups have had a demonstrated impacts?

Ninjacart reduced wastage to 4 per cent compared to up to 25 per cent in traditional chains through demand-driven harvest schedule. Logistics optimisation enabled delivery in less than 12 hours at one-third the cost in traditional chains. Farmers’ net incomes are reported to have increased by 20 per cent.

Dehaat has enabled up to 50 per cent increase in farmers’ income as a result of savings in input costs, increased farm productivity, and better price discovery.

Terms you should know

Agri-tech: Agricultural technology, or agri-tech, is the use of technology in agriculture based on agricultural science, agronomy, and agricultural engineering. Agri-tech innovations could be in the form of products, services, or applications, which aim to improve yield, efficiency, profitability, and sustainability of agricultural operations.

In-farm & novel farming solutions: Innovations such as artificial intelligence (AI), Internet ofThings (IoT), robotics, and data analytics that manage risks and improve farm productivity and quality, and novel farming solutions such as vertical farming and aquaculture.

Agri-fintech: Agri-fintech, or fin-tech for farmers, includes digital financial products and services across the agriculture value chain, such as input credit, supply chain financing, and insurance.

Agri-carbon: Agri-carbon includes regenerative farming and soil health practices (such as no-till farming and crop rotation) which can restore carbon in the soil, biomass for energy and feedstock,and the trade of carbon credits.

(sources: fsg.org, ‘Agritech startups have great potential in India’)

Point to ponder: Startups are creating a buzz in India by raising large sums, despite many of them currently making losses. This is because they disrupt the traditional system of doing business and leapfrog to efficiency, winning the trust of potential investors. Agri-startups are no different. Discuss.

MCQ:

With respect to Agriculture in India, which of the following statements is incorrect

a) Agriculture Infrastructure Fund offers long term financial assistance for building infrastructure for post-harvest stage.

b) India is the top producer of milk, spices, tea, jute, and rice.

c) The objective of Pradhan Mantri Kisan Sampada Yojana (PMKSY) is to supplement agriculture, modernize processing and decrease Agri-Waste.

d)Agriculture’s contribution in the gross domestic product (GDP) has reduced to less than 20 per cent.

Answer to previous MCQ: UPSC Essentials: One word a day – AIBD, the organization (c)

Post Read Q&A

Can you recall what you read?

1. What are the highlights of Agritech Report 2022, “What’s next for Indian agri-tech?

2. How some startups in the marketing space are empowering farmers, small agrifood operators, and giving consumers a better deal?

3.Why agri-tech innovations are required?