Agritech startups seek digital reform measures to ease farmer woes in Budget 2021

While most sectors suffered due to the COVID-19 lockdown, agriculture and allied services registered a 3.4% growth during the April-June quarter even as the country’s economy contracted by 23.9%. 

As debates over policy changes in the sector gets more intense, TechCircle delved into what companies in the agritech segment, which saw favourable tailwinds due to the pandemic, expect from Union Budget 2021. 

The wish list includes reduction in GST (goods and services tax), access to credit, solutions to fix fragmented supply chains and boost to technology-aided farming. 

“At a time, when the farmers are not entirely convinced about the new farm laws, it is the perfect opportunity to provide them with avenues that would improve productivity significantly. For this, the Modi government can either announce subsidy or cutback on taxes to farmers who opt for agritech products. Thereby encouraging farmers to adopt agritech in a big way than in the past when there wasn’t enough awareness of technological interventions in agriculture,” Nikhil Das, founder, Bengaluru agritech startup Agdhi, said. 

Lower GST

A simpler GST tax regime and filing process besides a considerable drop in rates or exceptions for tech-enabled farm machinery (including IoT devices), agri services, dairy products, and crop insurance can increase agri production, entrepreneurs say.

Agritech entrepreneurs hope for reform changes that would drive innovation and data collaboration besides enabling easy working capital and providing digital infrastructure.

Supply chains

Agritech startups expect an effective reform-oriented budget to fix the fragmented farm-to-fork supply chain that can boost farmer incomes and reduce food wastage. 

According to a 2015 study (most recent one available) by the Central Institute of Post Harvest Engineering and Technology, Ludhiana (CIPHET), the total volume of losses for all commodities was estimated to be about Rs 92,651 crore. The study measures losses in the harvest and post-harvest operations.

“Early-stage enterprises aimed at post-harvest value addition must be incentivized and encouraged, as the development of innovative fresh produce supply chains, and a vibrant food processing sector, are key to better price realization for farmers. I believe that the budget will further add to the momentum we have seen over the last two quarters, with an increased focus on agri investments and agri digitization," Jinesh Shah, managing partner, agritech venture capital Omnivore, said.

Several startups have come up in the past few years addressing the inefficient demand-supply matching which adversely affect farmers’ earnings. They are establishing tech-enabled cold chains, warehouse monitoring solutions, crop diagnosis tools, and market linkages through digital platforms.

Direct market access, image sensing for quality grading, and IoT-based storage monitoring besides artificial intelligence and machine learning-based solutions to increase crop productivity and cycle monitoring, land management, and harvest traceability can help the government to achieve its commitment of doubling average farmer’s income by 2022.

Precision agriculture based startups, using drones, IoT sensors, blockchain, image sensing, analytics, and machine learning, have been the catalyst in driving transparency, traceability and real time access to information for farmers. These startups provide better access to agricultural inputs for better productivity and offer farming as a service to small and marginal farmers for efficient farming by converting fixed cost to variable cost.

“The pandemic has changed the world and being digital is the new normal now. There is a need for more integrated technological solutions to digitize the agriculture supply chain to make it more resilient & sustainable. India's R&D budget in agriculture is abysmally low & the government should scale-up investments to build more solutions for agriculture in partnership with agritech players in the market,” said Taranjeet Singh Bhamra, CEO and founder of agri-analytics startup AgNext.

“Growth and recovery could be the second theme of the budget as the government is expected to pump in more money in building infrastructure like warehousing and cold storage, and skill development, both of which will lead to more job creation,” he added.

Credit

Access to credit is a major concern for farmers in India. Startups are exploring opportunities to establish fintech solutions across areas including agri input and output marketplaces, livestock management, farm management, mechanisation, and analytics. Creation of a unified digital agri-database or a solution that can create a credible database on farmer behaviour can eradicate this rural, agri lending bias.

Sateesh Nakula, CEO and co-founder, full-stack agricultural services platform BigHaat hopes for a special fund for startups in the farmer financing segment, which can promote formal lending to farmers and support them with access to low cost finance. He also sought tax sops and incentives to agritech startups and access to government data on agriculture be made available to agritech startups to better deploy agritech solutions. “Liberalize the policy on inputs regulatory norms for startups in this space to expand footprint quickly across the states that eventually reduces the cost of expansion and operations for startups,” he said.

Krishna Kumar, founder of precision farming startup CropIn, said the Union Budget 2021 should have proactive measures to enhance the viability of smallholder farmers, access to credit, risk coverage, availability of input and infrastructure for driving the growth.

Tech in farms 

Similar to the ‘Digital India’ campaign, a special programme to improve technology adoption in farming can play a significant role in providing the average farmer with the best productivity and gives agritech the necessary opportunities and incentives to grow as a robust sector.

“Technology-enabled farming would not only help farmers improve their productivity, but the data intelligence can also help policymakers, regulatory, bankers, and insurers with data-driven decision-making capabilities,” said Rajamanohar Somasundaram, CEO and founder of aquatech and farming services company Aquaconnect.

In addition, startups expect favourable announcements regarding long-pending demands such as single-window land leasing programme for agri entrepreneurs , tech-enabled irrigation infrastructure and flood management systems, digital financial instruments for minimum price guarantee, improved export competitiveness, broadened market for agri products, access to international markets, public-private partnerships, and infrastructure schemes such as rural roads, rail and warehousing facilities to help the larger agricultural industry to grow and improve farmer income.