All You Need to Know About Digital Farming in India
By: Jyoti Harpal
When we talk about ‘digitisation’ in the fields of India’s various agricultural communities, we generally associate the concept with extravagant innovations such as computerised tractors and AI aided tools that would ensure golden yields. However, this isn't accurate. While the end goal of digitisation is to make life easier for both cultivators and consumers, it is not about automated tools, but an AI aided blockchain that would actualise information symmetry, create access to markets and institutional credit and reduce price volatility to maximise profits.
To that end, it is safe to conclude that the Indian agribusiness sector has a solid foundation. In fact, as of 2019, India’s 500 new agtech companies have combined raised as much as $248 million in capital from international investors. Most of the technology presented by these start-ups focus on bridging the gap between the farmer and the consumer via digital marketplaces.
In the two years since then, India has seen the rise of two major agri-blockchain platforms: the National Agriculture Market and the Crop Stock Exchange. The former is an Amazon-like e-marketplace where ranchers can directly sell their produce without requiring a middle-man. The latter is a facility that allows investors to trade in crops as they would in company shares and gold.
However, a look at the Indian setting will reveal that about 85% of the country’s ranchers are still marginal and can't utilise these innovations (NITI Aayog, ‘State of Agriculture in India’ Report). So does that imply that the idea of agri-digitisation is preposterous in India? The answer should be 'No'. Digitisation in Indian farming is conceivable, and it has been successful to a vast degree. How? Read on to find out.
Small farmers, big data
From Aadhaar-based direct benefits transfer (DBT) subsidies to the Unified Payments Interface (UPI) for financial transactions, from a DIGIT platform for urban services to a National Health ID in healthcare, the Narendra Modi government’s promise of open digital ecosystems (ODEs), anchored on shared digital infrastructure, has been felt all over the country. Last year, the Union created an OED for agriculture, as well. It is known as AgriStack, and it aims to use the government’s available data on farmers to increase their quality of business.
India has created farmer relevant datasets over the last few decades. These include soil health data: that provides a read on the soil fertility of farms across India. This data is stored in a digital database separate from weather data, cropping patterns, and other data silos. AgriStack uses all these data silos to provide ranchers with accurate cultivation recommendations and integrated services throughout the agri value chain, including financing, crop insurance, input procurement, market access, etc.
The first AgriStack initiative was the Soil Health Card programme, launched in 2019. Under this, ranchers across the country are provided with soil health IDs seeded to their Aadhaar cards. In addition, the Union Agri Ministry runs periodic checks on soil health in various regions. Based on these findings, it distributes region-specific fertilisers that help soil health ID holders access (via a mobile app) the soil nutrients their land lacks.
Fintech’s venture into agriculture
Around 5,579 Indian farmers died by suicide in 2020, the National Crimes Records Bureau estimated in December last year. In about three-fourths, the reason driving the suicide was debt.
Indian farmers operate a cash-based business. Therefore, they need ready cash to pay for rent, labour and the supply chain. However, since farming is also a seasonal business, the rancher does not have ready cash on them more often than not. For this reason, farmers have to turn to credit institutions.
Unfortunately, Indian banks consider farmers a defaulter group and charge them high-interest rates. Alternatively, these financial institutions gatekeep their customers via credit scores and collateral demands. Farmers usually end up scoring poorly on these scales. Therefore, access to credit becomes a deeply entrenched problem in the Indian agri system.
This is where fintech groups come in. The Ministry of Agriculture has partnered with some of these institutions where these groups get direct access to farmers and provide them with credit. They work through the internet, leaving out the physical hassle of filling out forms. Courtesy of the Reserve Bank’s new rules, fintech companies have an interest cap and thus, cannot charge more than 11% per annum.
To access this easy credit, all a farmer needs to do to sign up for an Agri Ministry app.
The supply chain between the farmers and their buyers is where the former spend the most. This means transporting the produce to the marketplace or mandi (incurring labour and transportation charges) and selling it to ‘middlemen’ or wholesalers at a minimum support price. The wholesalers then sell the crops to buyers.
This current system gives the ‘middlemen’ considerable power over the farmers.
AgriStack seeks to change this. The government has partnered with Microsoft to create a National Agriculture Market where farmers can sell their produce directly to buyers via an online mandi. The crops' prices on this e-mandi are regulated by demand and supply forces, and there is no system of MSP. There is also a provision of a Crop Stock Exchange where private individuals can invest in crops like shares. This also controls the market prices of the produce to an extent, but currently, there are too few users of the CSE for it to be of any actual influence.
Big data such as farming soil health and the financial status of a farm needs big tech to collect. This is where the final frontier of digitised agriculture lies.
With the Union relaxing the regulations on the usage of drones, UAVs can now be used to calculate and map farmstead areas and run visual checks on soil health and drainage coverage. Meanwhile, automated tractors and homestead machines armed with IoT sensors can gauge the nutrient composition to send data to AgriStack, not to mention how automation saves up on labour costs.
State governments are trying to cover entire districts under this new technology by creating farmer-producers organisations to ensure equal access of tech to both small and large scale farmers.
The ultimate goal is for the farmer to access all requisite services ranging from precision advisory to data-based credit to market linkages that can drive sustainable incomes.
India sits at the cusp of a remarkable opportunity to make technology work for the country’s millions of small farmers. It must now grab this moment with both hands.
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