By Saborni Poddar, Head of Communications, Omnivore
On a sunny November morning in a village in Telangana, Ranji, Chinnamani, and Parvathy sat around a phone in speaker mode, deep in conversation with the caller. It was an agronomist on the other end discussing the best way forward to start growing bell peppers and Indian gherkins in a polyhouse. Much has changed for the three women in the last few years. With the digitization of land records, they became named owners of their farmlands and joined forces. From neighbours, they became business partners. Their focus was clear, grow high-quality vegetables on their land, sell everything, stay profitable, and be self-reliant. Despite being over 60 km away from the city they knew the market like they knew how to use a smartphone – very well. A bank loan helped them outfit their farmland with drip irrigation and precision technology to manage the erratic weather patterns. They even secured a sturdy second-hand tractor. Now they were starting to explore growing alternative high-value crops designed to thrive in the punishingly hot summers. The three women often joked about how they had become unofficial experts in agronomy, as more women in the village took control of their farms and sought their guidance.
The business school case study summarized above is fictional but prescient. Since 2011, whenever Omnivore evaluates startups, we want to understand the technology endgame. Is the startup channelling more profits to farmers? Is it helping communities develop more resilience to economic shocks? Is it promoting more sustainable products and practices? Is it helping to battle climate change in rural India? At the core of all the innovations, steadily rising deal flow, and large funding rounds is a paradigm shift in measuring agricultural development, focusing on farmer incomes and rural sustainability.
Farmers in India live a life of extremes: the charming bucolic life, combined with the crushing stress of running a business while at the mercy of increasingly erratic forces of nature. Expensive inputs, fluctuating market prices, roadblocks to accessing competitive prices for their produce, and poor financing options contribute to income variability. It is not difficult to see why they want their children free of the stress of farming, even encouraging them to take up jobs in the urban gig economy. It is imperative to reduce the standard deviation of farmer incomes from season to season to attract and retain growers.
One of the key challenges farmers face across almost all crops is the lack of post-harvest support. A massive amount of harvested crops are wasted every day due to rejection by potential buyers because of the opaque and inefficient distribution system. The situation is made worse by a poor focus on value addition, lack of efficiency in processing, post-harvest losses, and multiple redundant stakeholders in the value chain.
Processed agri commodities represent a USD 150 billion market. The Indian food processing industry fosters critical links and synergies between the two pillars of our economy, industry and agriculture. However, while this industry is often called a sunrise sector, its market share in the global arena is still minuscule. The food processing sector as it stands today is highly unorganized and inefficient. Since the major processing hubs are far removed from the farm gate, food travels long distances at significant cost to farmers, further eroding profits.
Indian farmers also find themselves struggling on the front lines of climate change. Plummeting water tables, depleting soil fertility, and erratic monsoons are the beginning of a complex web of challenges they will face in the next decade. Fortunately, the rapid development of precision agritech solutions over the past few years is helping farmers reduce expenditures, solve the labour shortage, and navigate erratic climatic conditions. Innovations in two areas will be critical to the future of Indian agriculture – parametric insurance to protect farmers’ livelihood and life and material sciences to build farmer resilience. Innovations in this space can be the most effective weapons in our arsenal to protect crops from climatic stress, pests and diseases, all without any harmful environmental side effects. However, life sciences need more participation from entrepreneurs, scientists, venture capitalists, and policymakers as the future of agrifood systems might very well depend on it.
To diversify crops and invest in technology, farmers need adequate and affordable capital, which is presently in short supply. Indian farmers are often locked out of formal financial services owing to a system that has struggled to evolve and accommodate them. Common problems in agricultural credit are manifold including insufficiency of well-designed products, inadequate loan amounts, and lack of smart metrics to establish creditworthiness. Naturally, farmers still depend on informal sources of credit with interest rates as high as 50% APR that inhibit their risk-taking ability.
One of the key features of the case study we started this article with is three women managing their farm full-time. This aspect is far from fiction. Agriculture now employs 80% of all economically active women. This includes 33% of all agricultural labour force and 48% of self-employed farmers. However, they only own 13% of the land and continue to face landlessness and fragmentation even greater than their male counterparts. By 2030, the total agricultural workforce will drop by ~8% compared to 2010, to approximately 220 million workers, mostly due to men exiting the farm labour pool. As a result, there has been a nearly 30% increase in the number of women agri labourers since 2000. As skill requirements in agriculture are moving from manual labour to more value-added, technology-aided work, the same needs to be reflected in education systems.
The good news is much of the work is already underway. Overtaking China, India has become the second best-funded market for agritech startups behind the US. In the last decade, the nature of agritech innovations has evolved, with entrepreneurs and investors now looking for solutions further up agricultural value chains and closer to farms. Despite the current global economic turmoil, all eyes are on the agritech ecosystem to make agriculture a source of sustainable growth, livelihoods, and remunerative jobs for tens of millions of Indians.
