India still is majorly an agrarian economy with an increasing service-sector touch. The agricultural sector is the largest employer, with 49% work-force owing direct dependence on it. With Food security becoming a crucial aspect of policy making, its no doubt that investments in Farming sector look bright.
According to the report over $3.23 Bn was invested in agriculture sector worldwide in 2016. Of this, 53 Indian agritech startups raised $313 Mn. The investments have been across various spectrums. Majority of public sector investment is still captured by Irrigation but we have also seen good development in fertilizer sector.
Then there are developments and innovations such as HVY (High Yield Variety) seeds, the implementation of which largely also depends on effective irrigation practices. There is much needed requirement of wide scale adoption of technology to transform the agricultural sector in India, to blossom it to its full potential.
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Understanding the Agriculture Scenario:
Even though we speak a lot about importance of agriculture and food security, the fact is that the main stakeholders i.e. farmers are not in a very good state. Poverty and growth aside, a total of 296,438 Indian farmers committed suicide from 1995 to 2013. According to 2014 National Crime Records Bureau report farmer suicides account for 11.2% of all suicides in India.
If the agriculture is such a lucrative and promising sector, we need to understand what leads majority of those involved to such doldrums. Activists and scholars have offered a number of conflicting reasons for farmer suicides, such as monsoon failure, high debt burdens, government policies, public mental health, personal issues and family problems.
Such has been the sustained continuity of these events, that these problems are now almost internalized and anyone venturing into this sector has the onus to primarily solve these first. While the government has allocated grants of 70,000 crores on fertilizer subsidy, 9000 crores allocated for crop insurance and a mammoth 6,000 crores for electrification for this fiscal year alone, without innovation in crucial sectors not much will change.
As the State of the Indian Agricultural Report point’s out- There needs to be work to enhance productivity, easy and reliable access to inputs such as quality seeds, fertilizers, pesticides, access to suitable technology tailored for specific needs and the presence of support infrastructure and innovative marketing systems.
Investments in Irrigation Sector:
Irrigation has been a major concern due to unpredictable rains for decades. Although major developments have taken place in tackling it, with initial 5 year plans focusing a lot on this aspect there is still a long way to go. Only 5 states have 50% or more irrigated area and most specifically, Maharashtra (16% irrigated area) has acute lack even after possessing maximum number of dams. Lack of canal connectivity directly affects the small farmers. 85% of the farmers own less than 2 hectares of land. This further trickles down to low productivity.
This study reports that share of the Indian Government in total investment cost has declined relative to that of the external funding agencies. The role for external agencies is growing. Even Finance Minister Arun Jaitley was quoted “Investments in irrigation leads to social satisfaction and economic prosperity”, while releasing funds for the 16000 cr Polavaram irrigation project. This scoping study by Asian Development Bank highlights the opportunities in detail.
Investments in Seeds, Fertilizers and Technology:
Ram Kaundinya, a founding facilitator of FSII (Federation of Seeds Industries in India) shared in an interview that aggregate research investments by all FSII members is put at ₹550 crore per annum. This is 75% of the total research spend of the seed industry in the country. There is also significant opportunities in HYV seeds.
We already talked about fertilizer subsidies. In the current scenario there are 57 large-sized and 64 medium- and small-sized chemical fertilizer production units in India. Reports say PSU will invest Rs. 30000 cr to revive 4 mothballed fertilizer plants.
Technology remains of the most crucial aspects in farming sector. Globally the investment of $405 million in startups of precision agriculture technologies, which include data-capturing devices and farm management software, while investment in Novel Farming Systems was $247 million. India stands second in terms of area of land under agriculture but the productivity levels are comparatively quite low. This is where technology will play a driving role.