+ Drivers for Growth of Indian Agriculture - CII Blog

The landscape of agriculture is fast evolving with an increased focus on enhancing farmers’ incomes. The flagship schemes of the government are targeted towards improving purchasing power at the bottom of the pyramid to accelerate overall economic growth. At the same time, advanced technology is providing solutions to tackle the traditional challenges faced by agriculture towards improving the overall efficiency from farm to fork.

In the transforming scenario, CII has identified five key drivers for fast pacing growth in the agriculture sector. 

Aggregation

To begin with, while “aggregation of farmers” into “Farmer Producer Organization (FPO)” provides an efficient solution towards building scale and strengthening the livelihoods of small and marginal farmers, a host of issues related to regulations; operational & governance issues; access to market, finance & infrastructure are impeding the long-term sustainability of FPOs.

Ground realities show that high cost of financing and the requirement of collateral security to avail bank loans limit FPOs in expanding their business operations. Also, while the FPO promoting agencies provide handholding during the incubation stage, the continuity beyond the initial stage for economies of scale is missing. While private sector entrepreneurial skills and investment can ease the pressure, the current FPO framework restricts private players from investing in FPOs.

To overcome these challenges, CII recommends uniformity in sections and rules governing registration and governance of FPOs to help simplify the process of incorporation and governance. Additionally, simplifying and effectively communicating the formats for loan appraisal is critical towards overcoming the constraints posed by limited access to funding through financial institutions. More importantly improving access to credit by allowing private sector equity investment in FPOs will strengthen the financial viability of FPOs and would also help in creating commercially sustainable business models by bringing in experienced, trained and professionally qualified CEOs and other personnel for FPO management. Lastly, improving market access by facilitating FPO’s participation in the exchange platforms is extremely warranted.

Apart from farmer aggregation, land aggregation is equally important, and it is critical to push State Government to adopt Model Agricultural Land Leasing Act 2018 (MALL ACT) at the earliest to enable aggregation of fragmented land ownership. This will also facilitate investments by the aggregator while ensuring that the small land owners do not lose their ownership rights.

Fostering innovation

Next comes the need for a robust intellectual property rights (IPR) regime for agriculture technology to foster confidence and stimulate investment in research and development. The Intellectual Rights Policy 2016 is a step in the right direction. However, its effective implementation is important to attract investment as well as fostering innovation by Indian companies. In addition, Regulatory Data Protection (RDP) and at least 5 years’ exclusivity for any new registered product (globally 6 years’ data protection is in practice) is important. 

These steps will help recover the investments towards development and data generation and will enable access to newer technologies to the Indian farming community.

Leveraging advanced technology

As mentioned earlier, infusion of technology is revolutionizing the agri landscape globally. According to studies, global AgTech investments have seen monumental growth over the last decade, recording investments worth US$6.7 billion between 2012-17. India too witnessed its fair share of growth in startups and technology ventures. According to estimates, the ag-tech sector in India is growing at a rate of 25 per cent, year on year.

The farmers as well as the agri-industry are embracing this transformation and using technology as a resource to make agriculture a sustainable and scalable sector. More importantly, the policy ecosystem is evolving with increasing interest from the government to leverage technology led solutions. It is therefore an opportune time to harness technology solutions for making informed decisions at pre-production, production as well as postproduction stages.

As a first step in towards this transformation, CII recommends digitization of land records on priority. This data can then be overlaid with advanced technology solutions offered by remote sensing for efficient production planning; pre-emptive risk assessment and its mitigation; timely crop loss estimation and faster delivery of insurance.

A host of remote sensing and data-based analytics solutions are already making farming an insight driven occupation. Satellite imaging, remote sensing, artificial intelligence and IoT are being used to monitor weather patterns and prepare weather forecasts, in turn providing agricultural risk mitigation solutions. These solutions are also being leveraged to provide real-time insights to farmers, encompassing the entire crop cycle, to help them take informed decisions regarding crop protection, nutrition etc. Drones are being leveraged to collect data for monitoring and analysing farms and generating insights to improve farm efficiencies.

The Government has already prioritized digitization of land records and is working with the Ministry of Electronics and Information Technology to develop a digital data bank of farmers in the country. These exercises become very important for scaling digital solutions. 

Investment in agri infrastructure

According to CII, agri specific infrastructure has the potential to drive the agriculture sector towards a modern, commercial and dynamic farming system. This should be focused upon under the ‘National Infrastructure Pipeline’, given the social and economic significance of the sector. Investment in agro specific infrastructure will be a driver towards raising farm productivity, reducing farmer risks, reducing farm wastages, ensuring improved market connectivity and enhancing farmers’ incomes.

In line with this, CII proposes investment towards establishment of an Independent Quality Control Management Authority for all testing requirements related to seeds, agro chemicals and fertilizers. The proposal is to establish independent identical laboratories equipped with world class infrastructure, techniques & manpower.

Investment is also recommended in suitably augmenting risk mitigation infrastructure viz Automatic Weather Stations (AWSs) and Automatic Rain Gauges (ARGs) for reducing uncertainty and risk in agriculture. The investment can be optimized by leveraging remote sensing technologies, where possible.

On the post-harvest side, it is important to undertake a detailed assessment of the existing infrastructure and its utilization, identifying gaps that are impacting capacity utilization and investing to bridge the gaps to bring in efficiency in the supply chain. For example, for long-term safe storage of grains, it is recommended that investment be made in upgrading the existing storage capacity into scientific storage structures like silos. Additionally, the ecosystem for logistics needs to be automated and connected with the existing infrastructure to create seamless integration from end to end.

Towards attaining the vision of doubling agricultural exports by 2022, CII recommends a cluster-based approach with focused investments in developing necessary post-harvest handling infrastructure development at sea ports (dedicated perishable berths), railways (reefer wagons), as well as at airports (CPCs and quarantine area). Towards improving domestic and export markets for perishables, investment is recommended in efficient cargo perishable centers at airports.

The need for strengthening marketing infrastructure is being further being advocated by CII.

Enhancing export competitiveness

Apart from infrastructure support, enhancing export competitiveness requires focus on resolving pending issues related to non-tariff and tariff barriers affecting agri exports within a time bound period. Secondly, Indian agri exports also suffer due to lack of adherence to international food standards and quality norms. Therefore, CII advocates comprehensive efforts on backward and forward integration and infrastructure for quick testing labs which are reliable and reasonable to meet increasingly stringent global requirements.

It is this multipronged effort that can create the systemic change needed for viable and resilient agricultural growth.


Contributed by:

B Thiagarajan

Co-Chairman, CII National Council on Agriculture and 

Managing Director, Bluestar Ltd