India's businesses get Mahatma Gandhi's 1929 message - India lives in its villages
Whether it is agritech or consumer goods, digital divides are shrinking in India
Green revolutions can turn famines into feasts. Norman Borlaug revolutionized Indian agriculture in the 1960s. Today, digital technology is beckoning another green revolution.
Smart farming is about data digestion from various sources to gain insights into the management of farm activities. Smart systems are able to record data and make sense out of it. The Internet of Things (IoT) and software platforms can become transformative forces in agriculture in emerging markets like India.
The payoffs come in the form of savings in water and energy consumed and increases in crop yields. Coromandel, a large Indian fertilizer and crop protection player, in its 2020-21 annual report talks about ‘an impending disruption of the agricultural sector’. The catalysts have been, one, access to high-speed Internet; two, emerging agri-focused credit products; and, three, digital tools for soil health measurement, pest advisory, weather information, demand forecasting and livestock management.
Some examples of technology as an enabler in Indian agriculture are market linkage solutions (bringing aggregators in the supply chain) and farming-as-a-service (on-demand equipment rentals).
Thinking beyond traditional
Coromandel also highlights how digital is changing the face of Indian agriculture through cheaper smartphones and low data costs has resulted in the Indian rural internet coverage growing rapidly to the extent that it is now larger than urban India
The government has also pushed digital adoption by driving e-commerce and e-governance programmes, while there is also the direct transfer of agricultural subsidies to beneficiaries through the JAM (Jan Dhan, Aadhar, Mobile) initiative.
What is causing the change in Indian farmers’ behavior? Bayer CropScience’s 2020-21 Annual Report underscores the reason for the shift in behavior: ‘The biggest challenge in farming and agriculture in India is not the unavailability of data or the lack of IT solutions, but the acceptance of the same by farmers. Indian farmers have traditionally preferred speaking with someone in person to take advice than just follow what an app says.
‘However, in 2020, the COVID-19 pandemic accelerated the digitalization of agriculture and adoption of digital tools by farmers both big and small’.
Close digital gap
A Black Swan event like COVID-19 and the lockdowns that followed have had the unintended side effect of ushering in the advent of smart farms in India. It has also catalysed the Indian agritech start-up ecosystem. According to data from analytics firm Tracxn, agritech start-ups have raised $426 million, across 38 deals, from January to August this year, over three times more than the same period last year. Given the potential of applying technology to agriculture, this is probably only the beginning.
What are the consequences of a digitally driven green revolution in India? Greater incomes in rural India, which will accelerate the ongoing shift in the composition of non-urban incomes from a pyramid to a diamond. Low-income shrinks dramatically, middle-income grows significantly, and the ranks of the rich increase sharply.
Change is all around
The non-urban transformation in occupational profiles (local branded garments are displacing tailors; beauty parlors have burgeoned), consumption patterns and aspirational ambitions are leading to multiplier effects in the broader Indian economy.
Fast moving consumer goods (FMCG) companies have been aware of this ongoing shift AND which will probably accelerate in the coming years. Look at some of the larger players. Dabur plans to increase its distribution to 80,000 villages in two years. Nestle India is rapidly increasing its rural India footprint since increased affordability and aspirations now present the company with a greater opportunity.
Simultaneously, FMCG companies have been reporting a strong growth in e-commerce revenues. Rural thus presents a large digital opportunity for Indian FMCG players.
Mahatma Gandhi wrote in Young India in 1929: ‘The vastness of our country, the vastness of our population, the situation and climate of the country have, in my opinion, destined it for a rural civilization. India does not live in its towns but in its villages.’
Nearly a century later, his statement is even more relevant.