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How Long Before India’s Agri-Tech Boom Turns into a Reality?

  •  6 min read
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  • 05 Sep 2024
How Long Before India’s Agri-Tech Boom Turns into a Reality?

India's agriculture sector has long been the bedrock of the country’s economy, providing sustenance and employment to a vast majority of its population.

Agriculture contributes nearly 15% to the GDP and employs over 50% of the workforce, making it a sector of immense importance.

Share of agriculture in India's GDP declined to 15% in FY23: Govt "In growth terms, agriculture and allied sector has registered an average annual growth of 4 per cent during last five years. As far as global experience is concerned, share of agriculture in the w...

However, the sector faced numerous challenges for many years that stunted its growth and development.

Today, with the advent of Agritech and Food Processing innovations, the sector is witnessing a remarkable transformation.

Let’s explore India’s agricultural journey, from its past struggles to its promising future.

For decades, many challenges have kept India’s agriculture sector from reaching its full potential.

One of the most significant issues has been the fragmentation of landholdings. With an average landholding size of just over 1 hectare, Indian farmers have struggled to achieve economies of scale, resulting in low productivity.

Additionally, the sector has been heavily dependent on monsoon rains, making it vulnerable to the vagaries of climate change. Poor irrigation infrastructure and inadequate access to modern farming techniques have further exacerbated the situation.

In addition, traditional farming methods passed down through generations, have become increasingly outdated in the face of modern agricultural demands. The lack of access to quality seeds, fertilisers, and pesticides has limited crop yields, while insufficient mechanisation has kept labour productivity low.

Moreover, the absence of efficient supply chains and cold storage facilities has led to significant post-harvest losses. This inefficiency has affected farmers' incomes and contributed to the country's food security challenges.

Finally, how can we not discuss market-related challenges?Fluctuating market prices, driven by the mismatch between demand and supply, have made it difficult for farmers to secure fair prices for their produce. As a result, many farmers have found themselves trapped in a cycle of poverty and indebtedness, with little hope of improvement.

In recent years, however, the agricultural sector in India has begun to experience a renaissance, thanks to the rise of Agritech and food processing industries.

Recognising the need to modernise agriculture, the government and private sector have invested heavily in technological solutions that address farmers' challenges.

One of the most significant developments has been the introduction of precision farming techniques. By leveraging technologies such as GPS, remote sensing, and data analytics, farmers can optimise using resources like water, fertilisers, and pesticides. This not only improves crop yields but also reduces the environmental impact of farming. For instance, drip irrigation systems have helped conserve water while ensuring that crops receive the right amount of moisture.

Drones have also emerged as a game-changer in Indian agriculture. These unmanned aerial vehicles are used for crop monitoring, soil analysis, and pesticide application. By providing real-time data on crop health and soil conditions, drones enable farmers to make informed decisions and take timely action to protect their crops. This has led to significant improvements in productivity and has helped farmers reduce their reliance on manual labour.

In addition to precision farming, digital platforms have revolutionised how farmers access information and markets. Mobile apps and online platforms provide farmers with real-time weather forecasts, market prices, and expert advice on crop management.

The food-processing sector has also seen remarkable growth in recent years. Traditionally, Indian agriculture has focused on producing raw agricultural commodities. However, with the rise of food processing, there has been a shift towards value addition.

The food processing industry has created new markets for farmers and reduced post-harvest losses by processing raw produce into packaged and ready-to-eat products.

This would not have been possible without the government’s support, though. Government initiatives such as the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) have aimed to improve irrigation infrastructure. At the same time, the Soil Health Card Scheme has provided farmers with essential information on soil conditions.

Additionally, the government has launched various schemes to promote organic farming and sustainable agricultural practices. The push for organic farming has not only catered to the growing demand for healthier food but has also helped reduce agriculture's environmental impact.

Since 2014, the government has initiated agri projects. With better warehouse infrastructure, we can help boost rural incomes, cut imports, and reduce massive crop wastage. The goal is to eventually compete with big agri exporters such as Brazil, the US, and the European Union.

The transformation of India's agricultural sector is now well underway, with the rise of Agritech startups leading the charge. These startups are leveraging cutting-edge technologies such as artificial intelligence (AI), the Internet of Things (IoT), and blockchain to develop innovative solutions tailored to the specific needs of Indian farmers.

For example, AI-powered platforms predict crop yields, detect pests and diseases, and optimize supply chains. Similarly, IoT devices are enabling farmers to monitor soil moisture levels, track weather conditions, and automate irrigation systems.

Research and development (R&D) in agriculture has also gained momentum, with public and private institutions investing in developing new crop varieties, sustainable farming practices, and advanced processing techniques.

The push for sustainability and organic farming is expected to shape Indian agriculture in the future. Consumers are becoming more conscious of their food choices' environmental and health impacts, leading to a growing demand for organic and sustainably produced food. This presents a unique opportunity for Indian farmers to tap into new markets…

In Conclusion

India's agriculture has one of the lowest levels of mechanisation compared to developed nations and developing ones. According to Ernst & Young's estimates, India's agri-tech penetration is currently just 1.5%.

More mechanisation and better use of technology can offer a huge upside to India's agri sector. The idea is quite simple, to be honest, and companies have already started doing it. Store all the information, such as crop patterns, soil health, insurance, credit, and weather patterns, into a single database. These insights can help develop personalised services. These will deal with challenges such as inadequate yields, water stress, degrading soil, and a lack of temperature-controlled warehouses and refrigerated trucks.

The advent of various technologies has created amazing lives for so many people. Adopting food technology and agritech is a net positive for the world. There will be many more advancements over time.

The number of problems in India’s agriculture sector is ever multiplying, so we need as many problem solvers as possible.

Keep learning!

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Sources and References:

  1. ECONOMICTIMES
  2. PIB
  3. SCIENCEDIRECT
  4. IBEF

Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.

Investments in securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed SEBI prescribed limit. The securities are quoted as an example and not as a recommendation. SEBI Registration No-INZ000200137 Member Id NSE-08081; BSE-673; MSE-1024, MCX-56285, NCDEX-1262.

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