11 – 12 October, 2023 | Goa, India

Nuances of driving AgTech adoption by smallholder farmers

Indian agriculture has a number of features that present both, significant opportunities as well as substantial challenges for AgTech solutions. Chief among them – the predominance of smallholder farmers, which poses various structural challenges for AgTech innovations to contend with.

Many a structural barrier for AgTech

Small landholdings: Over 85% of Indian farmers can be classified as small, marginal or landless, while a majority of the 200 million field parcels they work on are 1 acre or less in size. Given these fragile circumstances, Indian smallholder farmers would benefit significantly from there being a digital record of their farms and crops that farmers can use to access formal credit as well as precision insights on crop choices, input usage, time to harvest, among others. While this is being accomplished in other geographies through the use of satellite imagery, replicating this at a 1 acre of less scale is extremely challenging.

Digitizing these fields, not just once but dynamically, time and again, is currently very hard and manually intensive. Google is investing a lot in this problem where the objective is to combine the magic of AI with remote sensing and geospatial imagery to create a per field view.

Siddharth Prakash, Group PM & Technical Advisor, Google Cloud India

The distributed and fragmented setup of these holdings, though an opportunity for supply chain AgTech solutions, also impose high costs of customer acquisition, challenging the financial viability of such solutions.

Trust deficit: Smallholder farmers’ vulnerable reliance on each crop cycle leads them to have a low threshold for risk and therefore a trust deficit between them as users and AgTech enterprises as technology providers. Gaining their trust often takes time and involves tapping intermediaries in their orbit who have their trust, which imposes temporal and financial costs in driving adoption.

Diversity: Though India’s large agricultural ecosystem and high proportion of labor participation in it are often touted to be an opportunity for AgTech solutions, the sector’s size encompasses diversity across numerous parameters that complicate the cross-applicability of AgTech solutions across regions and value chains and therein dampen the pace of their adoption.

We are a very diverse country – whether you take agro-climatic zones, culture, language and even the way we do business. The commercial terms in Punjab maybe completely different from a farmer or retailer’s way of doing business in Gujarat or the North-east. And so, any [AgTech] solution which tries to cater across everything, may not work.

Deepak Verma, Lead – Agriculture, ONDC

Long cycle times: A key distinction in driving AgTech adoption compared to other innovation ecosystems is that, there is often a long cycle time between an action and validation of its efficacy (particularly in crop agriculture), which inherently slows the pace of adoption.

Naturally it [AgTech] involves season-on-season experimentation so the pace will not match what we are used to in other sectors. For there to be a technology breakthrough and then adoption, you’re looking at a decade to two-decade cycle. That is what clearly differentiates the sector, and the important question is how long startups are able to sustain in such a challenging environment.

Vivek Garg, Rural and Agri Lead, AWS

Nuances of AgTech adoption

These factors make for a complicated landscape for AgTech innovations to go-to- market and scale. In the face of smallholder farmers’ vulnerability to market forces and climate changes, their appetite for making investments or taking risks is limited and so, a concrete perception of incremental benefit in the form of convenience, better yield, better cost of input or better price of output – is critical to driving AgTech adoption.

For an AgTech enterprise, this entails two critical mandates – providing holistic solutions and demonstrating a closed loop of outcomes.

Developing holistic solutions: As is the case in many innovation ecosystems, AgTech solutions can range from point solutions, that offer a particular product, service or insight to platform solutions that cater to multiple needs for one or many stakeholders. However, in the case of smallholder farmers, for them to switch away from traditional or established methods and/or channels in favor of an AgTech innovation, it is important that they be developed into a holistic solution that farmers see as addressing the entirety of a problem for them.

Our offerings have been built on a strong farmer-first thesis. We realized that standalone information won’t help the farmer, so every single piece of information has a follow-on action – be it related to input, advisory, financial access etc. If they are selling produce, they don’t just want to sell A or B grade, they want a solution for all quality grades. Otherwise, we will not be able to replace the conventional channels.

Shashank Kumar, Founder & CEO, Dehaat

Demonstrating a closed loop of outcomes: The second aspect critical for AgTech startups to drive sustained adoption of innovations is to generate and implement ways to link them to positive outcomes for farmers. This can take various forms, depending on the solution provided – ranging from guaranteed demand and/or higher prices to measurable improvement in some facet of the cultivation process.

The impact has to be quick. Farmers and other members of the ecosystem don’t have the mindset to wait for impact, they want to see a clear closure of the loop. If they are guided for any package of practices, it is important that they have a perception that it is linked with demand.

Shashank Kumar, Founder & CEO, Dehaat

Role of aggregation

Given the fragmented as well as diverse nature of India’s farmers and farmlands – effective models of aggregation will play a key role in the roll-out and scale-up of AgTech innovations. In the context of AgTech solutions for Indian farmers, there are both demand and supply-side aggregation approaches.

Demand-side aggregation includes the collectivization of farmers and farm produce, such as through farmer producer organizations (FPOs). This allows farmers to establish greater bargaining power in the agricultural value chain and also jointly lower the unit (per farmer) cost of accessing AgTech innovations that unlock greater productivity and/or prices.

For me, precision farming is to maximize income, maximize the value per acre or value per unit of resources. As a farmer, because of small scale, we don’t have negotiation power at the market level. This problem can be solved with a collective approach, [where] there will be control on the complete ecosystem – production, post-harvest and market-linkage. At every point the farmer is adopting new technologies for better yield and better productivity because of the complete ecosystem creation where the value is assured.

Vilas Shinde, Chairman and MD, Sahyadri Farms

At the other end, supply-side aggregation can include a stacking or grouping of AgTech solutions themselves in order to create offerings that holistically addresses a farmer’s needs without requiring each AgTech solution-provider to unilaterally solve every aspect of a farmer’s challenge in order to gain their adoption.

Today in ONDC’s ecosystem – if you are an AgTech startup solving a particular challenge, in a particular geography – you can continue to do that and at a larger scale we need integrated solutions. So the ONDC protocol can weave these individual solutions and provide one larger solution to the farmer. Allows for players to continue specializing in their area of focus but the market can be presented with a unified interface. Without that solutions with be limited to silos.

Deepak Verma, Lead – Agriculture, ONDC

As an increasing number of AgTech innovation are developed and introduced, the need for a layer of institutional solutions that bridges across India’s diverse and fragmented agriculture landscape – such as those aggregating farmers, data and service providers – will be critical to viably deploy AgTech solutions at scale.

This article summarizes insights emerging from two panel discussion hosted at ThinkAg’s Harvesting Tomorrow Summit 2023.

The panel, titled – “Inclusive Innovation: Empowering smallholder farmers in digitized agri value chains” was contributed to by:
The panel, titled – “Promoting Precision: Enabling precision agriculture for improved farm incomes” was contributed to by:

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