- Smallholder farmers make up 86% of the farmers in India but are economically impoverished as they are unable to obtain adequate value for their products.
- Technology offers tremendous potential for improving farmers’ incomes by enhancing total value added and increasing the value that farmers generate.
- Integrated ecosystem solutions can improve value creation and collection at farmgate and expand the ecosystem by $ 76 billion annually, the majority of which goes to farmers.
- B2B buyer-supplier matching platforms and Mandi Automation show the greatest potential as the coordination between several supply and demand centers can be improved.
Agriculture is a critical pillar of the Indian economy and employs 43% of the domestic workforce. Small farmers – who own less than 2 hectares of land, compared to 2-10 hectares for medium-sized farmers and more than 10 hectares for large farmers – who make up 86% of all farmers in India, are still among the poorest people in the country, however, only earning 39% of what medium business owners make and only 13% of what large business owners make.
As a rule, due to the low visibility of demand, exploitative brokering, limited quality assurance, limited access to efficient and cost-effective logistics and limited bargaining power, smallholders are unable to obtain adequate value for their products. In order to improve farmers’ incomes, it is necessary to improve their value creation and drive total value creation in the agricultural ecosystem. Technology offers the potential to develop and iterate solutions quickly, to create cost efficiency, to bring transparency to the flow of information and to strengthen the connectivity between actors in the value chain.
Given the critical role agriculture plays in the Indian economy and the persistently disadvantaged position of farmers in the country, challenges in the Farmgate-to-Fork (F2F) ecosystem need to be addressed and agriculture made more profitable for farmers.
What possible solutions are there?
Four key levers can drive value creation and value creation:
- Direct matching between farmers and buyers
- Transparent quality assessment
- Inexpensive and punctual transportation
- Aggregation of small-volume products
Numerous high potential technologies have emerged in India to address these solutions, some of which are showing proof of concept. India is well positioned to scale these technologies. An internet user base of 560 million users (50% in rural areas), high smartphone penetration and an AI market valued at 6.4 billion US dollars (16% of the global AI market) reflect India’s rapidly evolving agricultural engineering landscape Innovators, investors and users who can develop, test and adopt solutions on a large scale.
5 technical solutions identified for the F2F ecosystem
We have identified five types of technology solutions that can add value in F2F as highlighted below. Among these, B2B buyer-supplier matching platforms and Mandi Automation are likely to be the game changers that could drive the bulk of the value chain.
1. B2B buyer-supplier matching platforms Would facilitate links between aggregators and institutional buyers and processors. These platforms would serve a wide range of crops and provide comprehensive information on the quality, quantity and price of the products to facilitate the comparison between buyer and supplier. Various B2B platforms already exist on the market, but they have significant functional gaps. In a mature state, a fully functional B2B platform could add an additional $ 19 billion to $ 24 billion in annual value, allowing farmers to get most of that value.
2. Mandi automation The solution would digitize the traditional retail channel, ie the Agricultural Product Market Committees (APMCs), and connect smallholders to middlemen and institutional buyers. The National Agriculture Market (eNAM), a government-led technology initiative by Mandi Automation, currently handles less than 1% of the commodity trade and accounts for less than 0.1% of the total trade value in the APMC Channel. In order to scale, eNAM needs to get more farmers and buyers on board by creating more incentives and optimizing functionality. In a mature state, eNAM could potentially add $ 18-22 billion in additional annual value.
3. Pawn aggregation Solution would facilitate the aggregation of smallholder products and connect farmers with aggregators and institutional buyers.
4. Hyperlocal connection Solution would help farmers sell their fresh produce directly to local consumers.
5. Online retail Solution would facilitate sales between retailers and consumers, and focus on providing easy-to-use e-food options.
Ultimately, we expect the five technology solutions to add significant value to the ecosystem (approximately $ 62 to 76 billion per year), with farmers generating $ 34 to 42 billion (50 to 60%) of that value. It is expected that 75â91 million farmers would benefit from the added value of these solutions over a 20 year period, representing 35â43% of farmers in India. With the additional added value, the income from plant cultivation for the farmers concerned would increase by 70-80% over the 20-year period.
How to advance the identified technical solutions
To accelerate the development of these solutions, immediate action and the cooperation of various actors are required:
– Big tech and agro technology actors need to work closely together to develop technology solutions. Big tech companies must commit to building world-class B2B platforms for matching buyers and suppliers, taking into account insights from the e-commerce industry. Big Tech would also help emerging agro technology players who provide solutions for quality assurance, traceability, etc., by enhancing their solutions through AI, machine learning, etc.
– Agribusinesses need to support new technology platforms by adopting them on a large scale.
– Government support is essential to develop solutions. The Ministry of Agriculture, in consultation with NGOs, agribusiness and technology companies, would need to invest in upgrading skills and introducing eNAM. Additionally, state governments could take the lead to make it easier to run pilot projects on the ground to accelerate learning and improvement.
– Donors and investors would have to provide sustainable funds for the pilot project and the expansion of integrated platforms in various raw materials and markets.
– Agricultural and social organizations could help implement the solution in both the pilot and scale-up phases, using the participation of farmers and farmer-producer organizations (FPOs) to facilitate the testing and rollout of Accelerate projects.
Two billion people around the world are currently undernourished and it is estimated that by 2050 we will need 60% more food to feed the world’s population. But agriculture is ill-equipped to meet these needs: 700 million of its workers currently live in poverty and are already responsible for 70% of global water consumption and 30% of global greenhouse gas emissions.
New technologies could help make our food systems more sustainable and efficient, but unfortunately the agricultural sector has lagged behind other sectors in terms of technology adoption.
Launched in 2018, the Forum’s Innovation with a Purpose Platform is a large-scale partnership that facilitates the adoption of new technologies and other innovations to transform the way we produce, distribute and consume our food.
With research, increasing investment in new agricultural technologies and the integration of local and regional initiatives to improve food security, the platform works with over 50 partner institutions and 1,000 executives around the world to use new technologies to make our food systems more sustainable. inclusive and efficient.
Find out more about the impact of Innovation with a Purpose and contact us to find out how you can get involved.
As a next step, stakeholders from different areas must develop a common vision and commit to long-term support in the transformation of the F2F ecosystem with technological interventions. Key actors need to invest in integrating best practices and best-in-class technologies into these solutions, in the rapid piloting and scaling of ideas, in coordination between actors in the value chain, and in sustained financial support in order to achieve long-term success guarantee.
We encourage and invite more stakeholders to join us in developing impactful and viable solutions for the F2F ecosystem, and we look forward to working together to make meaningful change by harnessing the power of technology.
You can find a detailed report on all topics here. Read the Artificial Intelligence for Agricultural Innovation report Here.