By SK Nag
The absence of a suitable modernizing approach has failed to improve the agriculture ecosystem with required technological intervention, unlike developing countries to combat low productivity resulting from high dependence on manpower. This structural challenge had predominantly stonewalled the sectors progress. The awareness of modern technology that can benefit them is grossly absent and ends up losing productivity. How aggrievedly the farmer is sustaining their traditional agro-business model for long is a concern to be addressed now. More than COVID, these old and irrelevant farming structures hold them back to unleash their potential and affect the economy badly.
Indian agro-business consists of small farm landholding with a lack of access to technology. Therefore, the sector suffers from high information asymmetry, and heuristically, the farmers invest their money in crops leading to huge losses on account of many reasons, which can potentially be made risk-free with a lot of mechanisms available in our Govt. policy. However, local farmers had developed an equipment sharing module in many states to reduce their fixed cost on equipment CapEx. Start-ups are also foraying into this sector with great interest. Still, the reach is not so deep that it can see the light at the end of the tunnel immediately.
With the introduction of the new farmer bill, India will see a fast paradigm shift in agriculture sectors invoking Farm as a Service to leverage their productivity by introducing technology-driven solutions to agro-economy. The farmers are always cash strapped due to market exploitation. The missing link between producer and consumer never developed in agriculture, unlike manufacturing or FMCG produce. This missing link was brutally leveraged by middlemen who understood to have control on both the sides.
Modern-day ‘Digital India’ calls for a broad cultural change required to turn- around the most neglected ecosystem. It should learn to adopt ‘agree-culture’ as a new mandate to scale it up to support the stakeholders’ needs of the ecosystem. Farming is no longer seen as a reputed profession to build the farmer’s life and livelihood expectations. It lost its sheen due to the many structural challenges it has inherited. The traditional format of farming is no longer relevant. It cannot live up to the expectation to become a cash reach business model. With rising income and population, the demand for food also will grow disproportionately, and in order to avoid major food shortages, empowering farmers is essential through sustainable farming.
Indian economic development has been highly dependent on agro-economy since ages. The prosperity of our country is always piggybacked on agricultural produce. Even today, monsoon plays a key role in predicting the yearly growth of GDP. It contributes to the country’s GDP, with 17% participation. 70% of the Indian population is directly or indirectly associated with the agriculture ecosystem. Having employed such a large section of our population (mostly bottom of the pyramid), it suffers from low productivity and shortage of right and timely manpower. These two majorly impede the potential growth to reach its fullest.
The absence of a suitable modernizing approach has failed to improve the ecosystem with required technological intervention, unlike developing countries to combat low productivity resulting from high dependence on manpower. This structural challenge had predominantly stonewalled the sectors progress. The awareness of modern technology that can benefit them is grossly absent and ends up losing productivity. How aggrievedly the farmer is sustaining their traditional agro-business model for long is a concern to be addressed now. More than COVID, these old and irrelevant farming structures hold them back to unleash their potential and affect the economy badly.
Indian agro-business consists of small farm landholding with a lack of access to technology. Therefore, the sector suffers from high information asymmetry, and heuristically, the farmers invest their money in crops leading to huge losses on account of many reasons, which can potentially be made risk-free with a lot of mechanisms available in our Govt. policy. However, local farmers had developed an equipment sharing module in many states to reduce their fixed cost on equipment CapEx. Start-ups are also foraying into this sector with great interest. Still, the reach is not so deep that it can see the light at the end of the tunnel immediately.
The development of any country needs equal public & private participation. When Govt. incentive alone cannot yield the desired result, why not Private companies should be allowed to come forward. Therefore, FaaS is a solution to this problem of dis-information. It is a ‘subscription-based’ or ‘pay per use’ model devised to convert fixed cost to variable cost to make agriculture sustainable and profit-making business leading to larger community development.
It is classified under three categories:
- Farm management solutions: Information sharing, analytics, and precision farming tools.
- Production assistance: On-site resources to aid production, such as equipment rentals.
- Access to markets: Virtual platforms that connect farmers with suppliers of seeds, fertilizers, agrochemicals, and a broader customer base
Intuitively, we may say FaaS is a combination of traditional farming with IT-enabled technology intervention making the model more modern, relevant, and agile.
Besides the above, farm-to-mill, farm-to-fork, and farm-to-warehouse models are also some encouraging business options. All these will enhance the sector’s growth to outperform from the current level at a rapid speed. With this disruptive business model, this industry will prosper despite having 45% of the net sown area to have access to irrigation facilities and 55% of the area to depend on rainwater.
As stated above, 70% of the population is involved in the agriculture sector, directly and indirectly, for their subsistence. They have almost become forgotten stakeholders of our ecosystem. Therefore, with a bigger objective in bringing them back in the mainstream economy, bills are introduced in the parliament. ‘Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020′ and the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020, will bring a lot of transparency to this segment.
The government initiative to restructure the whole value chain from the downstream side is a well-appreciated approach and will favorably impact historical pain points. This will demolish the pseudo cartel mechanism the middlemen had created to control the market, defying the producers and consumers’ legitimate benefit. Despite having a minimum support price mechanism, farmers’ concern was not fully addressed. So contract farming will facilitate this sector with better visibility with pre-agreed price (like future contract). In addition to the above two bills, ‘ The Essential Commodities (amendment) bill,2020 seeks to remove commodities (cereals, pulses, oilseeds, edible oils, onion and potatoes) from the essential list, ending the imposition of stock-holding limits excepting extraordinary circumstances.
Therefore, it is a fundamental need of the country to co-create this agriculture to the agreed- culture of 1.3 billion citizens of India.
The pain points are addressed correctly or not yet to be seen. Political parties with contrary views are mobilizing protests on the road if some merits are unreconciled. People took to the street without being fully aware. However, the fungibility of farmland will be better leveraged in contract farming, as envisaged in this bill.
Besides the above, farm-to-mill, farm-to-fork, and farm-to-warehouse models are also some encouraging business options. All these will enhance the sector’s growth to outperform from the current level at a rapid speed. With this disruptive business model, this industry will prosper despite having 45% of the net sown area to have access to irrigation facilities and 55% of the area to depend on rainwater.
(SK Nag is Chartered Engineer, Energy Expert and industry mentor. The views expressed are personal opinion of the author. He can be reached at saibal.iim@gmail.com )
