Digital innovations can help farmers raise their income

Innovations in digital technologies can offer optimal solutions for enabling sustainable growth and enhancing farmers’ income by bringing efficiency in input use for crop production and post-harvest management. Considering the slow progress and the untapped potential, there is a need for requisite policy measures to promote digital innovations in agriculture with an adequate flow of public and private sector investments.

A Amarender Reddy and Tulsi Lingareddy

INDIAN agriculture is facing risks due to weather aberrations, pest attacks and diseases, uneven quality of seeds and inputs, fluctuating market prices, etc. Despite the significant increase in agricultural production and productivity over the past five decades or so, these risks and uncertainties still persist.

Sustainable farming

Besides, disasters caused by climate change and the consequent need to adopt mitigation and adaptation measures for agricultural transition to net-zero emissions can adversely impact farmers’ income. Innovations in digital technology and infrastructure applications can provide a potential solution to address the uncertainties arising from inefficiencies in crop production, inclement weather, input use, post-harvest management, etc., and thereby helping farmers earn remunerative prices for their produce.

Digital technologies have been contributing to the transformation of Indian agriculture through various applications, including the Internet, mobiles services, mobile applications (apps), digitally delivered services and artificial intelligence (AI). However, the extent and growth of digital technologies in the sector is relatively slow compared to other sectors of the economy. The use of digital technologies in agriculture started over 25 years ago with the widespread outreach and use of Internet services for providing a wide range of information on cultivation practices, inputs, output prices and arrivals of major agricultural commodities. The Agmarknet portal, under the Ministry of Agriculture and Farmers’ Welfare, is an Internet-based service provider of information on agricultural commodity prices and arrivals in mandis across the country. Several private players, too, are providing information on agricultural commodities and markets with customised paid services. These information services aim to help farmers and other stakeholders in the agricultural commodity supply chain in decision-making for the sale and purchase of their produce.

Category-wise investments in Indian agritech companies in 2022

Downstream agtech: Platforms for output linkages (farmers, businesses, consumers)

End-to-end ecosystem: Platforms that have a significant presence in multiple segments such as inputs and output

Midstream agtech: Supply chain solutions (e.g., logistics, warehousing, infrastructure) offered for agricultural produce

Mobile-based information services on agricultural markets gained traction from the mid-2000s. With the extensive outreach of the mobile network across the country, many service providers entered the agricultural marketing space, providing information on not only market prices and arrivals of agricultural commodities but also on weather and other aspects related to agriculture. Futures prices are also disseminated, thereby helping farmers and other stakeholders in gauging the trajectory of prices.

The proliferation of apps has facilitated the flow of comprehensive information on the agricultural commodity ecosystem. In addition to the information services, advisory services on farming and post-harvest management — both from public and private agencies or sources — are also being offered. The Agriculture Ministry’s Kisan Suvidha provides information on the weather, market prices, seeds, fertilisers, pesticides and agricultural machinery on a common platform.

**Investment in Indian agritech companies**
**(in $billion)**

Digital innovations have received a big push with the influx of startups in the past 15 years or so, predominantly in fintech and e-commerce sectors. This has spurred a remarkable growth in digital payments and financial inclusion, thereby promoting easy outreach of agricultural credit. Also, digital payments have enabled successful implementation of direct benefit transfer of subsidies to the targeted beneficiaries of various schemes, such as PM-Kisan and MSP payments.

The progress in e-commerce opened up opportunities for service providers to offer direct linkages for farmers with input dealers and e-markets for the sale of crop produce. For instance, the ITC MAARS app provides comprehensive services ranging from crop advisories, e-platform to purchase inputs and e-market place to sell produce to credit facility through input loans and kisan credit card, capacity-building etc.

Recent years have seen the rise of agritech startups. The use of digital technology has expanded to cover crop production practices for enhancing resource use efficiency, apart from establishing output and input linkages. Such practices include precision agriculture and climate-smart agriculture. Private sector investment flows into agritech startups in India have gone up from about $0.2 billion in 2018 to around $1.2 billion in 2022, as per estimates of McKinsey & Company.

Seeking to harness digital innovations for agriculture, the government has taken a number of initiatives, including the digital agricultural mission, three centres of excellence for AI for embedding it in agriculture and health sectors, an accelerator fund for agritech startups and digital soil health cards and maps that can help in facilitating the adoption of precision agriculture by farmers. The electronic national agricultural market (eNAM) has been operational since 2016, connecting major mandis in the country and offering trade in agricultural commodities for farmers and other stakeholders in the value chain. Agristak, a digital foundation and federated structure owned by states, is being created in partnership with private companies such as Microsoft, Amazon, ITC and Jio Platforms. Agristak is expected to help farmers with easier access to direct benefit transfer, credit, inputs, markets, advisory services, etc.

Innovations in digital technologies have the potential to offer optimal solutions for enabling sustainable growth and enhancing farmers’ income by bringing efficiency in input use for crop production and post-harvest management. Considering the slow progress and the untapped potential, there is a need for requisite policy measures to promote digital innovations in agriculture with an adequate flow of public and private sector investments.

Reddy is Joint Director, School of Crop Health Policy Support Research, ICAR-National Institute of Biotic Stress Management, Raipur; Lingareddy is a senior economist (financial markets, sustainable finance and agriculture).

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