Agriculture and allied sectors contributed 20.2% GVA in 2020-21 compared to 18.4% in 2019-20 and 17.7% in 2018-19. That being said, this sector faces challenges that come with a lack of transparency and awareness and these issues have plagued the agriculture sector for decades.
However, with the advent of agri-tech, we’re finally seeing a way of overcoming these issues once and for all. It is fair to say that technology is going to play an important role in shaping the future of Indian agriculture.
In the last few years, India has witnessed a rapid increase in the adoption of digital technologies, not just by urban users, but by rural internet users as well. In fact, India has the largest internet user base with almost 50% penetration. The agriculture industry is also evolving quickly and discovering ways of leveraging technology. With the emergence of powerful agri-tech players, we can expect major disruptions in the way agri trade has been conducted so far.
The agricultural supply chain integrates into it a complex network of stakeholders catering to diverse segments within the agri-ecosystem. Agri-commodity trading platforms are therefore being designed to optimize all the transactions, processes, and touch-points involved in agri-trading while also keeping the overall customer journey in mind. However, unless agri-tech solutions provide customer satisfaction, they won’t be adopted easily or used extensively.
Another key area that is witnessing change is the mandi ecosystem. Digital mandis are challenging the way mandi trade happens in India. Earlier, agricultural commodities were brought and sold through mandis in the same geography. However, with the birth of digital mandis and agri-commodity trading platforms, traders can now connect with counterparties in distant geographies more easily. Startups have launched mandi rates and marketplace features so that users can compare prices and trade effectively with verified counterparties on the same platform.
We have noticed that bringing agricultural markets online helps in creating transparency in the system and enable the participation of all stakeholders in the value chain. We now know that technology can help build a supply chain solution, which is traceable and brings transparency to prices across different mandis. The rise of digital mandis can result in improved efficiencies, connectivity, knowledge sharing, and other supporting activities.
Over the years, we have seen how farmer participation has gone up thanks to the accessibility of agritech apps. It is now easier than ever for farmers to take on the role of suppliers and supply directly to interested buyers. This allows suppliers to connect with a new segment of buyers that were out of their reach earlier.
The next phase in agritech evolution is AI, ML and data analytics. Over the years, a massive amount of data has been generated with all the human-computer interactions. This can be used to scale up activities in order to reach the next one billion users. Digitization of the agri value chain is generating an enormous amount of data that is being used to generate insights that help all stakeholders in the value chain with use cases around crop planning, financial services, logistics and price discovery.
The pandemic has unveiled the potential of agri-tech start-ups by pushing even the most tech-shy users into adopting digital solutions. This is why in the last couple of years, we have seen an increase in the number of agri-tech startups. While agricultural communities in rural areas are adopting agri-tech solutions for improving their lives, investors are showing continued interest in funding this sector.
According to data analytics firm Tracxn, agri-tech startups in India have raised $426 million, across 38 deals this year alone, which is triple that of last year. Also, according to a report, the industry has the potential to reach about $24 bn in revenue by the year 2025.
Overall, the outlook for the agri sector is rosy. However, even though it accounts for about 15.9 % of the country’s US$ 2.7 trillion economy, there is potential for it to contribute more. The solution lies in technology. With improved government support, increased investment and an informed approach, agri tech companies can transform challenges faced by this sector into opportunities. In the coming years, you can expect to see more technological innovations that change the way the agri sector currently operates.
Disclaimer: Views expressed by the author are personal.
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