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Business News/ Opinion / Agriculture a fertile ground for digitization

Agriculture a fertile ground for digitization

An all-inclusive digital platform for the agriculture sector will help improve yields and meet the growing demand

Photo: BloombergPremium
Photo: Bloomberg

The numbers around India’s agriculture sector are staggering. It accounts for nearly 15% of India’s gross domestic product. It constitutes 10% of the overall exports. Over 58% of rural households depend on the sector as their principal means of livelihood. Most importantly, it feeds more than 1.2 billion people.

Driven by a growing population, in particular an expanding middle class with higher incomes, the sector has seen a sustained increase in demand, especially over the past decade. India, however, continues to face significant bottlenecks in feeding nutritious food to a large chunk of the population, leading to issues around chronic undernourishment and malnutrition as well as lifestyle diseases.

To feed the currently undernourished population, India would require a 3-4% increase in food supply. With the population expected to grow even further, the strain on the sector is likely to grow more in the coming years.

Diet diversification

The generally observed trend is that rising incomes lead to diet diversification—away from staple grains and towards higher-cost foods like poultry, fruits and vegetables, and dairy products. This poses a whole new set of challenges for the sector.

While the dairy segment has been one of India’s success stories, it will require significant investments to improve its productivity and ensure that the sector sustains its growth to meet demand requirements in the coming years. In addition, substantial gaps in availability of livestock feed supply and competition for acreage from food crops pose fundamental threats to necessary dairy production.

Rising incomes will also drive higher consumption of edible oil. While India is one of the largest producers of oilseeds in the world, it imports around 55-60% of domestic edible oil consumption requirements. This poses a major challenge as high import dependence means an uncertainty in supply and potential for significant variability in prices.

Despite the move away from them, staples like grains and pulses will essentially need to replicate production growth achieved between 2001 and 2011 until 2025 in order to meet demand from a growing population. However, a meagre increase in the land under production, coupled with plateauing yield growth, pose major challenges to achieving this. Inability to effect major improvements in yields could see a shortfall of as much as 11 million tonnes of foodgrains by 2025.

At the same time, multiple other issues, such as double cropping, lack of crop rotation, lack of time for soil recreation, are putting further pressure on fertility and yields.

Digitizing growth

This is where the use of technology can be of immense help. Technologies such as automation, decision support system and agriculture robots are being widely adopted in the sector globally. Farmers are using the Internet of Things and smart sensors to get access to valuable information like soil moisture, nutrient levels, temperature of produce in storage and status of farming equipment. The sector is also ripe for the use of big data analytics and artificial intelligence, technologies that have been deployed successfully in various sectors across the globe.

However, the digitization and use of technology in agriculture has, thus far, been taking place in confined application fields. The logical step for the sector, especially in India, would be to build an all-inclusive digital platform.

An inclusive platform will be able to provide end-to-end services for farmers—from selecting crops, optimising plantation timings, seeding and fertilization rates based on plants’ actual needs and regulatory requirements and limits. All the data collected during a crop’s cycle can be compared with other farmers who grow the same crop in similar conditions. Lessons learnt from one field can be applied automatically to another to maximize output. Our analyses show that such an approach can help to improve the yield of major broad-acre crops by between 20-30%.

Game changer

Establishing such a digital platform will not only help improve yields and meet the growing demand, it will also be a game changer for the sector.

Firstly, it will help to track produce from farm to the table. In the process, it will reduce wastage in the value chain—a huge issue in India currently—and improve food safety. Technology can help detect pathogens and allergens before they reach consumers.

It can also help address the price discovery issue. The current wholesale market format suffers from a transparency challenge. With no data on volumes, prevailing prices or inventory levels, there is little information for buyers or sellers to make informed decisions. This information gap is a barrier to the entry of new players and, hence, increased competition and better price discovery.

Finally, it can also help trigger an “uberization" of the sector by bringing farmers in touch with profitable customers and help build sustainable partnerships to improve farming productivity.

Meeting India’s growing food demand requires improvements on multiple fronts: availability, affordability, consumer awareness, quality, safety and access to food. A holistic digital platform can help address these and catapult Indian agriculture to the next level.

Debashish Mukherjee is a partner at AT Kearney India.

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Updated: 19 Dec 2016, 09:18 AM IST
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