Need for Agri to Institutionalise & Leverage Technology through FPOs, AgriTech Startups

Need for Agri to Institutionalise & Leverage Technology through FPOs, AgriTech Startups

October 31, 2022

Blogs and Articles

Agriculture & Food Processing

The future of agriculture is Agritech and for small and marginal farmers, it is FPOs. Vested interests have, in the past, resisted innovation and, therefore, agriculture has always been slow to embrace technology and transformation. Where the green revolution technology narrowed down the gap between developed and developing countries reducing dependencies on developed countries for food and agriculture, the second wave of technology has caused developed countries to move ahead, while developing countries have been slow on the uptake.

To bring India to the level of developed nations, it is imperative to institutionalise and adopt technology in agriculture. As a sector, Agriculture needs to tackle challenges in climate change and take on sustainability opportunities. Further, our producers are losing competitiveness in the international market as our MSP is higher than in the international market. In the next 10 years, our production will grow by 3.5 per cent, but due to population growth deceleration, the domestic demand for food is only growing at 2-2.25 per cent. This means that the country has around 1% surplus food that can be exported to the international market. This is where Agri Startups and FPOs can help bring down the cost of processing, marketing and logistics and bring in the efficiency required to compete in the international market.

The last few years have seen the sector opening to change. To help reduce climate change and work towards sustainable farming models, we need to adopt innovative and precision-based farming methods. If we are to take the example of fertilisers, while a majority of it is lost in the air or water while spraying, by adopting technologies such as using precision-based fertilisers, or sensor farming, wastage can be reduced, and efficiency brought in.

Five years ago, 86% of farmers were marginal farmers – today around 90% are. A majority of these farmers farm on less than 1 hectare land. If they only stick to produce such as wheat, rice or other cereals, they may not be successful. But if they are given the opportunity to diversify into vegetables instead, it can help them increase their income. Therefore, a 2 acre farmer can bring in as much income by changing their production plan, as a 10 acre farmer can.

However, this cannot be done by a single farmer, due to difficulties in connecting to the right startups. If the farmer is able to work through an FPO, the cost is reduced, there is an advantage of scale, and higher bargaining power and volume. An agric startup can connect such an FPO with retailers or manufacturers or directly with consumers. There is a lot of work already happening at the private and government levels.

Further, digitalisation has made it possible to remotely transfer knowledge, and this can be taken to the farmer through startups. Today, with the availability of information and knowledge, consumers are willing to pay more for certain attributes. Whether this is looking for wheat which has more protein and less gluten, or better quality and safe produce, the consumer, today, is demanding for specifics. Hence, the producer should be able to leverage this willingness of the consumer to pay more, which can then help double farmer income. There is also a need to remove excessive intermediaries and enable the logistical chain between the producer and the consumer through just one agent – the FPO.

Today, if we divide national agriculture into five segments – rice, wheat, cotton; horticulture; livestock & dairy and fisheries, the segment that has the most government intervention – which is wheat, rice and crops – the MSP crops, has the least growth. The segment with the least intervention from the Government has the most growth. This is because the power of the market to stimulate growth is much higher than the power of the government to stimulate growth. Hence, we should not stifle the demand side factor and just look at government support. We need to harness the demand side power to increase farmer income and to harness this, the two best instruments are agri startups and FPOs, as they have the more scale, low cost and more bargaining power.

Maharashtra has always been an agricultural friendly state. It is time to make the state of Maharastra a pioneer in market reforms.

Author Info


Prof. Ramesh Chand


NITI Aayog

Author Info

Saakshi Kamble

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