Will Budget 2024 Pave the Way for a Tech-Driven Agricultural Revolution in India?

The use of technology in agriculture is growing rapidly. As per a report by NITI Aayog, the addressable market for agri-tech in India is $24 billion

Indian agriculture, which employs almost 46 per cent of India’s population, is on the cusp of transformation. Farmers are moving away from growing just agricultural crops and slowly getting into horticulture, dairy, poultry, fisheries, as well as processing.

They are adopting newer technologies (precision agriculture, farm automation, etc.) and modern farming techniques to improve productivity, enhance quality and achieve higher price realization.

Despite these fundamental shifts, the productivity, value addition and farmer income in India remain low as compared to global averages. The central government has been implementing multiple initiatives like Rashtriya Krishi Vikas Yojana (RKVY), PM-Fasal Bima Yojana (PMFBY), PM-Matsya Sampada Yojana (PMMSY) across credit, insurance, quality seed, promotion of Farmer Producer Organizations, Cooperatives, along with income support and digital agriculture initiatives to enable holistic development.

While these measures have brought about significant developments, the sector needs continued efforts to target existing gaps across the value chain.

Robust digital ecosystem: The use of technology in agriculture is growing rapidly. As per a report by NITI Aayog, the addressable market for agri-tech in India is $24 billion. Newer technology solutions like crop mapping, precision farming, automation, drones, etc. can enhance farmer efficiency and aid in decision-making.

However, limited awareness, fragmented landholding, minimal access to credit among other factors pose significant hurdles to tech adoption in Indian agriculture. The development of Digital Public Infrastructure is a welcome step and needs to be followed up with robust policy measures to increase digital adoption.

The technology solutions need to be made affordable through incentives for Farmer Producer Organizations, Self-Help Groups, Co-operatives, etc while improving farmers’ access to technology through private partnerships. Robust data collection, exchange and consent management systems need to be established at the state level in a standardized manner to improve interoperability and analysis systems should be developed to provide farmers with accurate information and insights.  A plan should be drawn to achieve strong public-private partnerships in the development of this digital ecosystem.

Boosting food processing: Though a leader in production, India is yet to achieve its potential in terms of value addition and processing. The Indian food processing market is growing at a CAGR of 15 per cent and government has taken multiple steps to boost the sector.

The Pradhan Mantri Kisan Sampada Yojana (PMKSY) and Pradhan Mantri Formalization of Micro Food Processing Enterprises Scheme (PMFME) are examples of such initiatives that have shown results on ground. Government should now focus on bringing processing closer to production centers through development of micro-processing clusters.

This will ensure value addition at FPOs, SHGs, or co-operative level resulting in increased shelf life of the produce and prevent distress selling as well as give higher bargaining power to farmers. It will also lead to trickle down of advanced farming techniques and good agricultural practices to improve quality.

Strengthening post-harvest infrastructure: Being one of the largest food producers, India’s food wastage is monumental. Every year, India faces post-harvest losses to the tunes of 10–25 per cent in perishable foods (milk, fish, and eggs) and up to 30–40 per cent in fruits and vegetables. While enough storage facilities are available for food grains under Food Corporation of India and state warehouses, dedicated efforts are needed to build the cold storage network in the country.

The government can look at incentivizing micro-cold storage solutions to reduce on-farm/ farm-gate losses and setting up multi-commodity cooling centers to facilitate effective utilization. Also, an integrated warehousing system enabled via technology, sensors, etc. can help manage the available storage space better, track availability as well as monitor stored produce for damages more efficiently.

The Agriculture Infrastructure Fund (AIF), Mission on Integrated Development of Horticulture (MIDH) schemes are being run to solve for some of this post-harvest infrastructure requirement in the country. However, the low uptake of Agriculture Infrastructure Fund (AIF) suggests a need to revisit the provisions under AIF and similar schemes to make them more attractive for private participation.

Facilitating exports: With growing agriculture exports from India, that reached $53 billion in FY2023, there is a need to focus on strengthening the support infrastructure to make exporting easier for producers and exporters.  

Government should introduce measures to expand the network of export facilitation centers and testing labs to support adherence to global quality standards as well as improving the affordability of exports through roadways, railways and airways through dedicated incentives.

Promoting growth in allied sectors: India is the largest producer of milk in the world with a share of 25 per cent. Though there has been a 60 per cent increase in production between 2014-15 to 2022-23, small farmers still struggle with low productivity per animal. Policy measures are needed to enable supply of quality feed and fodder, sanitation and veterinary care.

It also important that government takes efforts to make inputs more affordable and increase reach of marketing channels to farms not covered by the cooperative sector. In fisheries, along with the Pradhan Mantri Matsya Sampada Yojana (PMMSY), it is required that extension is improved to promote scalable best practices. Government should take steps to reduce cost of artificial feed, support access to subsidized electricity and post-harvest infrastructure.

The proposed initiatives aim to empower farmers by reducing their costs through infrastructure support and incentives, improve farmers’ productivity as well as produce quality through technology integration and ultimately enhance farm incomes through improved market access and exports. They also aim to increase participation of private players in the agriculture ecosystem and facilitate knowledge, skill and capability transfer to develop a resilient, tech-enabled, agriculture ecosystem.

(The author is Partner and Consumer Products & Retail sector Leader at Deloitte India)

(The views belong solely to the author.)

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