Modernizing India’s Agri-Food Sector

Report by Dr. Pratapaditya Mishra, Visiting Professor, Utkal University, Orissa, India.

 

Agricultural development is one of the most powerful tools to end extreme poverty and facilitate the prosperity of a nation.
Improving access to safe and nutritious food and ensuring food security in times of crisis — like the one mankind is facing to-day with the COVID-19 pandemic killing more than half a million people across the globe — is a key challenge before the powers-that-be.

In India at least 600 million people are engaged directly or indirectly with farming. However, agriculture continues to remain impoverished with agrarian distress hitting the headlines in the media time and again. In the past two decades, farm incomes had either remained stagnant or were in the negative, which means rural spending was already low. The declining rural demand has pulled down India’s growth, which in turn has pulled down global Gross Domestic Product (GDP), according to the International Monetary Fund (IMF).

The average farm income in 17 states of India stands at a paltry Rs 20,000 a year. In other words, farming families in roughly half the country survive on less than Rs 1,700 a month. At such low incomes, the share of agriculture in the country’s GDP is bound to remain low, according to the Economic Survey 2016.

India’s USD 2.80 trillion economy consists of around 57% contribution from the service sector, 26% from the manufacturing sector and 17% from agriculture and allied activities. Despite its lowest share in GDP, the majority of the working population earn their livelihood in the agricultural and related sectors. It is crystal clear that other sectors have not been able to create employment opportunities compared to the agricultural sector. The agri-food sector remains critical for livelihoods and employment.

The first and foremost step is to start viewing agriculture as part of the formal economy. Agriculture should not only be seen as a sector whose only contribution is to ensure that food inflation does not cross the four per cent (plus or minus two per cent) limit as laid down under the Reserve Bank of India (RBI) macro-economic policy, but should be seen as a sector that can create economic buoyancy. More so, at a time when the bottom 60 per cent of the population holds only 4.8 per cent of the national wealth.

Modernization of Indian agriculture is imperative to meet the food needs of a growing population. Although sustained effort has been made by the planners for development of agriculture since 1951, priority was given to industrialization in India. Only when the country faced severe food shortage and famine and industrial recession in the mid-sixties did the strategy veer toward development in agriculture.

The planners decided to focus on modernization of agriculture and improvement of farm productivity. It was called the Green Revolution and has been pursued vigorously since 1967. Major changes were brought in by introducing high yielding varieties of seeds for several major crops, creating and utilizing energized well irrigation and lift irrigation facilities, giving high doses of fertilizers and pesticides, and extensively using farm machinery for improving farm productivity. This revolution necessitated a significant increase in capital investment in agriculture. Since then there has been some acceleration in the overall rate of economic growth in Indian economy.

But in the last 40 years it has not progressed as it aimed to do. Although a majority of the Indian population participate in farming, still the country is not self-sufficient in producing enough food to feed all. Each year, food grains are imported from other developed countries to feed the Indian population. So, let’s find what are the main challenges we are facing today?

  • Declining and/or stagnation in productivity
  • Diminishing and degrading natural resources
  • A rapidly growing demand for food (not just for quantity but for quality as well)
  • Diminishing and/ or stagnating farm income
  • Fragmented land holdings
  • Unprecedented climate change
  • Locust attacks on crops
  • Migration of workforce to urban areas for better employment and earning opportunities

blank

The widening urban-rural divide is also evident in the inequalities in consumption, quality of life, and availability of physical and social infrastructure. To ensure inclusive economic growth, the government needs to urgently focus on transforming the agrarian economy to pull the maximum number of people out of subsistence farming and give them a much more remunerative role. This is the time when we see millions of migrant workers are making reverse migration from urban to rural areas and are looking for gainful and sustainable engagements.

With two-thirds of India’s billion-plus people living in villages, jump-starting the economic engine of rural India will have a multiplier effect on investment, consumption, government expenditure and exports. The potential of rural India can be gauged by the fact that agricultural startups have raised nearly $130 million in about 70 deals in the past five years to 2018, according to a news report.

The present government has its task cut out. It will need to focus on agri-technologies that can boost agricultural productivity, create value-added farm products and tap “farm-to-fork opportunities” to ensure better realization for farmers. It will also need to create millions of micro-entrepreneurs and thousands of economic clusters in rural India, besides investing in rural roads, rural electricity, irrigation networks and national cold chain grids.

Besides these, infrastructure for digital technology must be set at the earliest possible time if India wants the advantage of being able to ‘leapfrog’ older agri-food technologies and models in favour of a digital agriculture revolution. This new scenario will require radical rethinking by policy makers, international organizations, business leaders and individuals.

While several sectors of Indian industry are experiencing the Industrial Revolution, i.e. Industry 4.0 through adoption of disruptive technology like Artificial Intelligence (AI), Immersive Reality, Block Chain and the Internet of Things (IoT) the agri-food sector is barely touched by these developments. Proper use of digital technology in this sector can bring the following changes:

  • Reduce market distortions and help farmers to plan production processes and cropping patterns through mobile applications providing price information to farmers.
  • Help farmers to measure, map and optimize water and irrigation use, when the Agriculture Robots (Agrobots) are employed. These can act as replacement to the traditional high mass tractors, allowing a gradual reduction of compaction, re-aeration of the soil and benefits to soil function. The weeding robot allows vegetable farmers to manage crop weeding with a high level of precision, already proven in the case of lettuce, carrots and onions.
  • Can lead to cost savings in terms of seed, fertilizer and tractor fuel, and can reduce working hours in the field when Guidance Systems are utiilized during planting and fertilizer application. It means IoT (Internet of Things) can be applied for PA (Precision Agriculture).
  • Can reduce water and pesticide use and reduce labour and resource costs when VRT (Variable Rate Technologies) and UAV (Unmanned or Uncrewed Aerial Vehicle) or Drones are used.
  • Through Enterprise Resource Planning (ERP) each process of the enterprise from procurement to production to packaging to warehousing to distribution can be streamlined.
  • By using technology to improve processing and packaging, it can improve the shelf life and safety of food.
  • Block Chain databases can rapidly pinpoint contamination in the bags of leafy green vegetables. The agri-prenuers can emphasize the quality of their fresh food to customers. This has been developed by IBM and being used by Walmart and many retail companies.
  • By using robotics and digitizing, companies in the food industry can find alternatives to plastics and other harmful packaging that is harmful to the environment and can go for edible packaging, micro packaging and even bacteria-resistant packaging.
  • Through analytic software food waste can be traced, monitored and managed effectively.

In the offing are innovative business models that will help to facilitate farmers in taking and executing optimum decisions by providing geo-mapping, crop planning, individual farm plans and farm automation customized for each farmer based on weather, soil, pest and crop data provided on an almost real-time basis. These models are sustainable, data-driven, scalable, intelligent, self-learning, real-time collaborative Agri-food systems, which can serve as a farm as well as farmer management solution, predictive analytics and monitoring tool, decision support system and agriculture e‑commerce platform.

Although in the agriculture and food sectors, the spread of mobile technologies, remote-sensing services and distributed computing are already improving Small and Medium sector entrepreneurs’ access to information, inputs, market, finance and training to some extent, there is a huge opportunity created by digital technology to integrate them in a digitally driven agri-food system.

Software with advanced analytics has the ability to better understand customer needs and more accurately predict the seasonal levels of demand. Food industry technology innovations allow business owners to understand customers better and provide them with a little bit more than they expect. For example, the latest quality management and traceability software prevents any low-quality products from ending up in the consumer’s hands. It both increases the entrepreneur’s income and improves his market reputation.

The food industry’s digital transformation concerns not only customers but also workers who produce products for them. Workers complete their tasks more effectively in a safe environment, and digital tools provide all of that.

Digitalization can change every part of the agri-food chain. It will function in real time in a hyper-connected way, driven by data. Value chains will become traceable and coordinated at the most detailed level whilst different fields, crops and animals can be accurately managed to their own optimal prescriptions. Digital agriculture will create systems that will create optimization of production, highly focused on individual elements, anticipatory and adaptable to changes such as those caused by climate change. This, in turn, could bring better management of resources leading to greater food security, cost efficiency, market opportunities, profitability and sustainability. It has also the potential to deliver social and cultural benefits through increased communication, inclusivity and environmental benefits.

Although the potential benefits of digitalizing the agri-food sector are quite convincing, it will require major transformations of farming systems, rural economies, communities and natural resource management. This will be a challenge to the present government as it requires a systematic and holistic approach to achieve the full potential benefits.

The first challenge is going to be the Urban-Rural Divide which will lead to a Digital Divide. Our urban areas have better digital ecosystems, comprising resources, skills and networks than the rural areas. So, when you try for digital transformation the rural areas will fall behind their urban counterparts to a great extent.

Let us look at the preconditions to making a digital society covering rural areas:

  • Can we ensure availability, connectivity, affordability, educational attainment including ICT and supportive policies and programmes (e‑government) for executing digital strategies?
  • Can we create enabling conditions for facilitating the adoption of digital technology to use the internet, mobile phones and social media, digital skills and institutional support for agri-preneurial and innovation culture like talent development and programmes including hackathons, incubators and accelerators?

The developed countries are integrating the Agri-food sector as a key focus within existing national digital strategies to transform wider industry and society. But, in India most of the services are embedded within e‑government or ICT strategies where the main objective is to provide basic e‑Agriculture services such as early alert notifications and general information.

Alongside investment in digital technology, there is a growing need for investment in the development of multidisciplinary digital skills and knowledge. In the Agri-food sector, the digital transformation will change the structure of the labour market and the nature of work. It is likely to redefine the role of farmers and agri-preneurs and also alter the skill set required in the agri-food sector. It may also transform how and where people work and is likely to affect female and male workers differently due to differences in digital skills and technology use. Young agri-preneurs have a key role to play in the digitalization of the agricultural sector.

Creating a sustainable digital agri-preneurial culture is a long-term political and practical process, starting with appropriate education in schools. It requires an enabling environment which allows risk-taking, trust-based relationships between stakeholders, financial opportunities, professional services, a sustainable digital ecosystem, the availability of appropriate skills and an attitude of sharing.

Thus, digital technology can not only be helpful in eliminating hunger from the world, but also it will be useful in minimizing food waste.

 

© 2020 Art Valley

 

 

publications

MF International

Managers, entrepreneurs, diplomats and consultants are interviewed regarding their experiences.

The Visitor

The cultural case of Alessandro Valignano, the Visitor who began one of the greatest enterprises of the Renaissance, is now open.