Agriculture has been one of the major contributors to the Indian economy. Nearly 54.6% of the Indian population is directly dependent on the agriculture sector, making it their primary source of livelihood. However, the population is increasing at a considerable rate. As per projections, by 2050, India’s population will increase by 300 million and 1.3 billion by 2100. As the population continues to grow, we cannot rely on traditional agricultural practices to meet the growing demand. Though the traditional practices were the backbone of our agrarian economy, we need to change them quickly, or else we will end up putting great pressure on our environment and natural resources.
Now is the time to incorporate agri-tech solutions into the system.
What is Agri-tech?
Agri-tech, as the word suggests, is a combination of agriculture and technology. The average Indian farmer faces multiple challenges at every stage of growing and selling crops. Similarly, other stakeholders like suppliers, commission agents, buyers, etc., face obstacles in the supply chain or during storage and transportation. When it comes to procuring and selling commodities, managing inventory is another challenge for commission agents.
With agri-tech, technological innovations such as robotics, data analysis, artificial intelligence, and sensor-based technologies are offered to find effective solutions to the challenging situations faced by farmers. If incorporated properly into agribusiness, these solutions can increase crop yields, enhance crop quality, lead to better crop management, and generate high profits.
Apart from farmers, the agricultural supply chain also involves stakeholders such as buyers, suppliers, packers, transporters and distributors. Agri-tech startups have introduced stakeholder management tools. These include farm management solutions, storage and transportation management, online trading platforms, customer-relationship management tools, etc. Agri-tech startups are also enabling end-users to make informed decisions as to what to buy, where to buy it from, how and when to buy, etc.
Agri-tech at different stages
Most of them are using Artificial Intelligence (AI), Machine Learning (ML) and the Internet of Things (IoT) to unlock the potential of Big Data. This is done to increase efficiency, transparency and inclusiveness. While the agri-tech startups are helping the sector and stakeholders, the biggest challenge is sustenance and scaling.
How agri-tech gained popularity
Agro-business stakeholders understood that agri-tech startups can address issues such as poor soil quality, water shortages, low-quality seeds, climate changes with digital solutions. This has led to a quick acceptance and in a short span of 5 years, agri-tech solutions have gained popularity in India. The few notable highlights behind this acceptance are:
- The transformation in the communication sector and increase in digital connectivity has played an important role. Increased use of smartphones and internet connectivity along with the availability of low-cost internet packs have contributed to the quick and favourable adoption of agri-tech in India.
- The Government of India has taken initiative and invested in this sector with the Agriculture Infrastructure Fund (AIF). Through AIF, the government has invested ₹8000 crores in 8,665 applications. They have recently signed agreements with three tech giants – Amazon, Microsoft, and Cisco Systems to modernise the agricultural sector. These tech companies will harness data and statistics available on India’s agricultural ecosystem since 2014.
- In August 2020, the Ministry of Agriculture announced that it will invest nearly ₹36.71 Cr in 346 agri-tech startups working in allied sectors like agro-processing, artificial intelligence, digital agriculture, farm mechanization, waste to wealth, dairy, and fisheries among others.
- Covid-19 helped the agri-tech startups in unleashing their potential as the agribusiness stakeholders understood the need for technology. They welcomed innovation and digitisation. As per reports by Tracxn, Indian agri-tech startups raised $426 million between January-August 2021. This includes seed, early and late-stage deals.
- People have slowly come to realize that agri-tech presents new opportunities for everyone in the agriculture sector. It helps in achieving sustainable development goals.
History of agri-techs in India
The evolution in the agriculture sector, from agriculture 1.0 to agriculture 3.0, has paved the way for agri-tech.
From 43 agri-tech startups in 2013 to around 450 in 2019, the number of startups has increased to 700 in 2021. This has happened as investors identified the potential of this sector, hence the number of startups, as well as investments, have gone up.
The Compound Annual Growth Rate(CAGR) for 2017 was $91 Million, $219 Million in 2018, $296 Million in 2019 and $329 Million in 2020. The investment in the sector has come a long way from $40 million in 2016 to more than $400 million in 2020. An Ernst & Young 2020 study shows that the Indian agri-tech market would be worth $24 billion by 2025. Right now only 1% of the same has been captured and there’s a long way to go.
Challenges faced by agri-tech
We have talked about the usefulness and growth of agri-tech but we need to understand a few of the challenges it faces:
- Lack of awareness: While agri-tech startups are growing at a constant pace, there is still a need to spread more awareness. The stakeholders need to be informed on how free and inexpensive agri-tech solutions (e.g. mobile free apps) can help them with trade.
- Need to increase data connectivity: There is a need to increase last-mile connectivity. This would not only help in spreading the message but also pull out data from tier 3 and tier 4 cities. The information collected can be used to create more effective solutions.
- Develop scalable business models: Agri-tech startups need to develop scalable business models so that the government and potential investors can share their vision and invest in their startups.
- Lack of financial services: Awareness among farmers and other agribusiness stakeholders need to be increased about the lending options they have. There are fintechs or agro financing partners who provide soft loans to these stakeholders so that they can invest in these solutions and expand their business. Apart from this, there are agri-tech that provide free solutions which can be useful for small farmers.
- Limited digital infrastructure: Since the adoption rates for agri-tech solutions is still low, there is limited data and digital records of transactions across the agri value chain. Hence agri-tech needs more advanced digital infrastructure and this would only happen with an increase in data connectivity and acceptance of digital solutions.
- Issues in the market linkage: Farmers are unable to get fair prices due to limited sales channels. This is an opportunity for online trading platforms like Bijak where farmers, commission agents and buyers from across India can sell or purchase commodities without hesitation. Similarly, e-mandis can also be created to provide new selling or purchase platforms.
Foreign investments are expected to continue and by 2030, there is a high possibility that the funding could grow to $10 billion. Venture Capitals have also understood the growth of agri-tech in India and are investing in different agri-tech startups. Adequate investment in technology as well as in building infrastructure, and continuous innovation can help in job creation. This would also help in increasing the acceptance of agri-tech.
It is estimated that in the next 5 years, the face of Indian agriculture will be changed by agri-tech. Farmers productivity and efficiency will improve and a robust supply chain network will be created to reduce wastage.
While every startup is trying to understand and address the problems faced by farmers and other stakeholders, Bijak which is India’s Number 1 Agritrading Startup has come up with an accounting solution called ChargeERP for commission agents. It helps them deal with challenges faced during mandi accounting, inventory management and payment tracking.
ChargeERP the solution
ChargeERP accounting software has been designed keeping in mind the daily interactions of commission agents in agricultural mandis. It is a cloud-based accounting software introduced with the core aim of reducing the agent’s workload. ChargeERP is the easiest, fastest and most secure mandi accounting software available in India. One of the many benefits of this platform is that it can be accessed from anywhere and from multiple devices. It provides data security with end-to-end encryption. Plus, it doesn’t require any kind of technical or accounting expertise.
If you are looking to explore more about this next-level accounting software, feel free to dial +91 9311341199 or visit www.chargeerp.com, and request your free demo today. We also suggest that you follow us on Facebook for regular updates. You can also view the latest instructional videos on the ChargeERP YouTube channel.