While farmers’ cooperatives were and still are popular, government and the well-meaning private sector, enthusiastic about the successes of some OPAs, are giving impetus to the formation of other such collectives.
FBOs, with their professional management structures, provide much-needed leadership for smallholders – from getting the right seeds and the right proportion of fertilizer to finding a market for their produce. They therefore have the potential to fill some of the major gaps in India’s agricultural supply chain. However, experience from around the world, as well as the case of the Indian manufacturing sector, shows that these structural changes must be accompanied by innovation and capacity building.
As the world prepares for the fourth agricultural revolution (Lejon and Frankelius, 2015), India must carefully assess its capacity, needs and social context while choosing its own path towards not only greater agricultural productivity and a improved well-being of farmers, but also ecological sustainability. Emerging technologies such as the Internet of Things, artificial intelligence and robotics have the ability to radically change the way we farm (Wolfert et al., 2017). With an internet penetration rate of 32%, India is still in its early years of adopting these advanced technologies. FPOs, however, have the potential to accelerate the adoption of these technologies by creating economies of scale and building the necessary architecture.
FPOs and agri-techs therefore have a complementary role to play in the Indian agricultural ecosystem. OPAs provide scale and organizational structure to small and medium farmers, who by themselves might not be able to effectively participate in the agricultural market individually. Agricultural technologies provide the technical solutions to agricultural problems such as pests, inefficient use of water, shortage of labor and lack of market information. For example, aerial pest/plant health surveillance systems can provide early warning signals to FPOs about affected regions. Micro-weather monitoring solutions can give personalized alerts to FPOs that they can use to optimize planting and harvesting.
There are key differences in the type, duration and mode of financing FPOs and agricultural technologies. FPOs, being commercial entities, need early funding for their formation and secondary funding for their maintenance in the early years until they break even and become profitable. Funding for technology generally does not follow the same pattern. Financing innovative technology often involves ambiguous overhead, longer lead times, and uncertain product outcomes. However, many agricultural technologies relevant to Indian agriculture have already been piloted, tested and commercialized in the advanced world.
What India needs now is a concerted effort to locally replicate these technologies in the Indian context. This requires building a problem-solving and innovation ecosystem that successfully identifies opportunities and gaps in the agricultural value chain. Of course, it also needs substantial, sustainable and flexible capital.
Policy decisions must therefore balance the need for an immediate resolution of current problems and a futuristic vision of an agile and sustainable agricultural ecosystem. For Indian agriculture, with its specific needs in each region and geography, there is no single solution. Here, agricultural technologies, which help and support OPAs, can allow farmers to get their fair share of the value chain while providing a much-needed boost to the sector, perhaps spearheading its revival and its durability.
—With contributions from Professor Dr Rakesh Arrawatia, Anand Institute of Rural Management
— The author, Priyadarshini Ganesan, is a senior research fellow at Dvara Research’s Household Finance Research Initiative. Opinions expressed are personal
(Edited by : Ajay Vaishnav)