Despite being one of the fastest growing emerging market economies of the world, India still derives 15% of its GDP from agricultural activities, engaging 41% of its population.[1] Recurring attempts have been made every year by the government at both central and state level by means of release of new schemes, programmes and subsidies to promote the Indian agriculture industry. However, the Indian agriculture industry is still trailing in innovation and technology in comparison to other jurisdictions. Indian agriculture sector is largely reliant on the traditional means and methods due to which it has still not been able to realise its full potential. One of the factors acting as a roadblock in the growth of the Indian agriculture sector is the presence of middleman at different levels of supply and production chain. The presence of middlemen results in considerable time lag between the harvest of the produce and the time it reaches end user or storage facility in addition to decreasing the margins for actual farmers. Consequently, 16% of the total crops harvested in India is wasted.[2]
There is also lack of cold chain and proper storage facility, exports, transportation, adequate processing facilities and marketing. Although there has been an increased use of fertilisers, pesticides and herbicides, many farmers still fail to secure the right prices for their crop for various reasons including the increase in input costs. As a result, the farmers often do not consider investing in technology and innovation or are unable to invest in innovation due to financial constraint. In this light, there is great scope of innovation in the Indian agriculture sector, especially in the field of product optimisation and process optimisation.
There is thus huge scope for Agri-innovation in the sector. Agri-innovation incubators can play an important role in this regard and bridge the gap for the agriculture sector, facing challenges such as climate change, lack of market access, lack of storage facilities, ill-equipped warehouses, access to farm equipment, seed quality, soil quality, access to credit etc. Remote sensing, data analytics, geographic information system (GIS), blockchain, artificial intelligence etc. are some of the key areas of incubation and innovation that may be manoeuvred by the Agri-innovation industry in collaboration with the agriculture sector.
Contract farming for reaching adequate scale for innovation
High fragmentation of land holding is one of the major reasons that India’s agriculture sector is not optimized. The average size of land holding in India is as small as 1.15 hectares.[3] Over the years, Parliament has made multiple efforts for introducing norms on contract farming, however they have attracted agitation from the farmers. It is feared that large corporations shall take over the agriculture sector and the small farmers will lose control over their lands.
Recently, the President gave his assent to the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 (FEPA Act) and the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 (FPTC Act).
The legislation attempts at commercialization of agriculture by allowing the farmer to directly enter into farming agreements with sponsors, aggregators and if necessary agriculture service providers. The legislation stresses for objective criterion for determining crop prices including linking of prices to APMC yard rates. At the same time it places onus on the farmer to meet standard crop specifications similar to any sale of goods or services bringing agriculture to the level of all other goods and services in India for the first time.
The legislations empower the farmers to constitute joint cooperative societies and undertake contract farming. It provides farmers with the freedom to choose the trade area for carrying out business.[4] Further, it allows the farmer, farmer producer organisation or primary agricultural cooperative society to establish and operate electronic trading and transaction platform for facilitating inter-state and intra-state trade and commerce.[5] Additionally, an exemption from payment of any market fee or cess is also provided to the farmers for accessing the trading and transaction platform.[6] All these measures are aimed at making contract farming sustainable in India.
However, a lot depends on the implementation of this legislation. There is also a sudden spurt of interest in agri-tech which like any other aggregator model enjoys privilege of freedom from regulatory strangleholds. Perhaps this is one of the reasons there is a need for a sudden upgradation of agriculture as a commercial activity. However, the change is not going to be easy in a country where agricultural income is still exempt from taxation with no accountability of book keeping.
It is at times like this that Agri-incubation centres and innovators attached to such centres should step up and take onus for one of the most important yet most underserved sub categories of bio-innovation i.e. agriculture. Establishment of agricultural cooperative societies shall make it easier for bio-innovators to map and contact these clusters of farmers who will now form a part of the farmers’ cooperative society. This will help innovators to assist the farmers with required technological support and provide innovative solutions towards agriculture and production. Contract farming alongwith market linkages, crop and farm management, agri-support facilities like soil sample testing and improvisation, access to quality seeds etc. shall help in production of high value and high yield crops. Air seeding and drone facilitated monitoring for larger agricultural fields to check for pest infestation and weather examination shall play an important role in the agriculture sector as well if input costs outweigh the net profits.
Agri-innovation centres can take a pledge to adopt farming communities geographically close to their centres and handhold them to help them with incorporation of cooperative societies, framing byelaws, vetting farming agreements and facilitating meetings with bio-innovators, sponsors, aggregators and agri-techs from their existing ecosystems.
Benchmarking quality standards in agriculture
Despite initiatives like agri-mark, standardization of quality standards of produce and seeds is a persisting problem area. This has become even more important now that the legislation requires contractual agreement on standards.
Bio-innovation can aid with gene editing and gene designing to obtain quality produce with high yield. This area has been constantly evolving with innovators having multiple opportunities to work towards clean and quality produce. This shall also help the famers in fetching the best price for their produce by meeting the standards of quality, grade and standards under the farming agreement.[7] At the same time, the ghosts of previous disasters in badly managed genetically modified seeds hangs over the history of Indian agriculture. It is very important for Agri-incubation centres to promote sustainable development and implementation this time.
Scope for agri-tech
With the increased access to mobile phones in the rural areas alongwith cheap data and internet packages, the access to technology even in the agriculture sector has increased. The number of internet users in rural India increased by 35% in 2018.[8] Affordable access to technology also presents in itself an increased opportunity for expansion of agri-tech. India is also home to the world’s largest digital literacy programme for rural adults, ‘Pradhan Mantri Grameen Digital Saksharta Abhiyan’ (PGMDISHA). India’s agri-tech sector with a turnover of USD 204 million is at under 1% of its market potential today.
However, a pertinent question to ask is whether the farming community in India is organized enough to reap the benefits of agri-tech. On the flipside, will the professionally funded agri-tech companies survive proof of concept in the Indian hinterland? Agri-innovation centres can act as buffers and facilitators to ease this transition.
The new legislation and the increasing interest in agri-tech is definitely an interesting opportunity to propel the Indian growth story constantly mired by the lack of certainty attached to one of the major sectors contributing to its GDP. Only time will tell whether this social experiment shall succeed.
