In FY24, the Government allocated about 1.9% of the total Union Budget to the Agriculture and Allied sector, and about 1.3% was designated to support small and marginal farmers through the PM KISAN Yojana. A significant portion, about 8.3%, was directed towards major subsidies, covering food, fertilizer, and petroleum subsidies.
Overview of current challenges in Food & Agri sector
Within the Indian agribusiness sector, a substantial challenge revolves around the comparatively low productivity of farmers, particularly the prevalence of marginal and small-scale farmers with limited access to finance and technology. Over half of India’s arable land relies on rainfall for irrigation, directly influencing farmers’ productivity and incomes.
The limited access to finance and technology leaves farmers without the necessary resources to bolster productivity or combat adverse weather conditions, pests, and diseases effectively.
Complicating matters further, insufficient storage, improper handling, damage by insects/pests and transportation infrastructure, resulting in post-harvest losses. This challenge is exacerbated by a fragmented and intricate supply chain involving numerous intermediaries. This issue of food loss holds critical economic, and environmental implications, with India’s food loss percentage hovering at about 4.5%, as reported by the Food and Agriculture Organisation.Sector’s expectations & recommendations
1: Enhancing India’s Food Processing Sector for Sustainable Growth
With the Indian food processing market projected to reach US$ 535 billion by 2025-26 at a CAGR of over 15%, expectations center on strengthening the food processing value chain. The government has taken initiatives to boost the sector under schemes, such as Pradhan Mantri Kisan Sampada Yojana (PMKSY) and Pradhan Mantri Formalisation of Micro Food Processing Enterprises Scheme (PMFME).
Emphasis should now shift to promoting cluster development and micro-processing units, encouraging public-private collaborations, and enabling wider market access. Focus should be laid on encouraging FPOs in setting-up clusters and micro-processing units that will help farmers in deriving better price realization.
2: Mitigating post-Harvest losses by Improving Infrastructure
Indian Agri Value Chain faces substantial post-harvest losses, especially for perishable foods. Expectations revolve around enhancing storage and grading facilities, upgrading transportation networks, by leveraging existing schemes like Agriculture Infrastructure Fund (AIF) and Mission on Integrated Development of Horticulture (MIDH).
Focus should be laid on establishment of multi-commodity cooling and grading centers, solar-powered micro-cooling units, and cooling units near airports and ports to reduce food losses. These interventions not only cut transportation costs but also empower farmers through better pricing realization and avoidance of distress selling.
3: Paving the way for Agri-Tech adoption
The agribusiness sector anticipates a surge in digital adoption as the Agri-tech market is expected to reach a valuation of US$ 13.5 billion by 2023. The government’s initiatives, including the Digital Public Agriculture Infrastructure, Digital Agriculture Mission, and National Agriculture Market (e-NAM) Scheme, aim to foster farmer-centric solutions, promoting Agri-tech growth by supporting Agri-entrepreneurs.
The government should aim to enhance the adoption of Agri-tech solutions such as AI-based precision agriculture, IoT-based real-time data collection systems, and drone-based agriculture to improve farmer yield and profitability.
To maximise impact, the government should prioritize the reach of Agristack, that aims to provide comprehensive farmer information, including soil conditions, crop specifics, and land records across states thus, ensuring real-time access to crucial data on markets, schemes, logistics, and warehousing. Effective agristack, through state level data aggregation, can drive agricultural innovation and success.
4: Boosting the Agricultural Exports:
India’s agricultural exports have grown at a CAGR of 6.6% from FY18 to FY23, reaching US$ 52.5 billion in FY23, highlights the need to focus on improving the export ecosystem.
Focus should be laid on interventions like demand-driven production through regular market identification, strengthened post-harvest infrastructure with digitally enabled supply chains, adherence to global quality standards, and incentivising the promotion of agricultural exports.
Conclusion
The envisioned initiatives hold the potential to empower farmers by minimising losses, enhancing income, and fostering technological advancements. Simultaneously, they aim to bolster the growth of agribusinesses by optimizing operations, increasing market access, and positioning domestic produce as a globally recognized brand. Embracing these expectations paints a future where Indian agriculture thrives through innovation, efficiency, and expanded horizons, benefitting both farmers and the entire agribusiness sector alike.
The writer is Partner, Consumer Industry Leader, Consulting, Deloitte India.
