India’s digital penetration and ecosystem is witnessing healthy tailwinds such as highly affordable and high speed internet and maturing digital content ecosystem. The confluence of these factors presents an exciting opportunity for innovation in agricultural ecosystem, wherein market players can leverage next generation technology such as data digitization and data platforms, data analytics, AI, ML, the IoT and Software.

In conversation with Mr. Anil Kumar SG, Founder and Group CEO, Samunnati, we attempted to seek his expert views on the potential of AgFinTech sector and its impacts on the agri and allied industry and the economy.

What are your views about current trends in India’s agriculture sector, persisting challenges and predictions for future?

When we look at agriculture, India is one of the top producers of rice, wheat, pulses, and fruits & vegetables in the world. India’s agriculture & allied sector contributes nearly one-fifth to the country’s GDP and supports the livelihoods of nearly two-thirds of the population. However, the industry continues to face chronic problems such as low productivity, inefficient logistics, poor infrastructure resulting in huge wastage as high as 40% in horticultural crops etc. About 86% of the farmers in India are smallholders with a median land holding of 2 ha. They are facing huge challenges including lack of access to quality inputs, finance particularly, from formal institutional sources, lack of know-how etc.,

But there had been gradual and steady progress made in the last few decades particularly, in the recent times, agritech innovations such as digitization, IoT, AI, data analytics, drones and so on are transforming India’s agrarian sector by addressing these chronic issues. The policy environment too is conducive and is evolving in parallel to suit the emerging needs. All these are placing India at a unique place where its economy will not only be self-reliant, more resilient but also self-sufficient in ensuring food and nutritional security for its 1.3 billion population without compromising environmental sustainably obligations.

What are your thoughts on farmer collectives and their potential impacts?

Of late, farmer collectivization has become a key focus area for the Government particularly for the smallholders. I mean the initiative of promoting 10000 FPOs or Farmer Producer Organization. Farmer collectives are helpful in addressing many challenges faced by an individual farmer through the power of aggregation. When coupled with e-commerce B2B and B2C platforms at the front end, commodity supply chains can transform into demand-driven and market-oriented value chains by eliminating inefficient processes and intermediaries. Initiatives from the Government like e-NAM are gaining momentum steadily. The ‘Agristack’ initiative, which aims to serve as the ‘comprehensive data backbone’ is set to foster a complete digital transformation of India’s agricultural sector. New age agtech companies support the FPOs to manage their business through digitization of farmer member records. FPOs, as an asset class, are perfect vehicles for investing for greater socio-economic impacts as they help farmers achieve greater synergy and enhanced access to finance from formal sources at affordable rates mainly for the smallholders.

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How are AgriTech innovations transforming India’s agri and allied sector and what are the key driving factors behind? 

Many Indian agtech companies are working on providing innovative solutions to address a variety of issues e.g., enhancing traceability, cutting wastage in the supply chain, real time weather monitoring to provide actionable advice on pest and disease management etc., India’s unique strength lies in having an educated and skilled workforce and a supportive tech-ecosystem. It is apt to say India has become a hotbed for innovations.

Of late, there is a huge buzz around financial inclusion particularly, for India’s smallholder farmers. What are your views on it?

While financial inclusion in India is a widely discussed issue since many decades, as a country, we have made impressive progress. The Global Financial Inclusion Database (Global Findex Report 2017) says 80% of Indian adults over the age of 15 have a bank account today. India’s progress in ICT (Information Communication Technology) is mind blowing as there are over 600 million smart phones. Better internet connectivity even in remote rural areas is available at an affordable rate today. Ever expanding tele-connectivity and futuristic innovations like 5G are going to play a pivotal role in driving digital economy. On the policy front, for example, the government is strongly encouraging use of the UPI (United Payment Interface) to move towards a digital economy. We must acknowledge that there are enormous issues such as low literacy levels, poor digital literacy, poor communication infrastructure, lack of access to formal financial systems and so on. But India made huge progress on all these fronts in the last few decades. Farmers adopt those technologies or innovations that are simple to understand, easy to use, and give demonstrable results on the field. I would say, the Covid19 pandemic was helpful in a way to enable farmers move towards ‘digital advisory and e-commerce’ models.

What do you think are the key drivers behind the ‘AgFinTech’ revolution in India?

Yes, the phrase ‘AgriFinTech’ has become a popular one. To put simple in words, AgriFinTech works at the confluence of three sectors – Agriculture, Finance and Technology. Enhanced access to finance will help risk-averse farmers invest in better quality inputs, and technologies, which will ultimately enhance their incomes. Most importantly, vulnerable sections like smallholder farmers can be saved from falling deep into debt traps at the hands of unscrupulous money lenders. Working to enhance financial inclusion in the country, the tech-driven, new age NBFCs like Samunnati are designing innovative products and services to suit those segments who traditionally remained ‘unbankable’ for long. Aided by end-to-end, digitally enabled, robust systems, these NBFCs are nimble yet efficient.  But synergistic partnerships with traditional financial players and evolution of newer concepts like Co-lending arrangements are critical for overall success. Recently, Samunnati entered into one such partnership with India’s largest and reputed commercial bank State Bank of India. These kinds of initiatives can lead to enhanced financial inclusion and address many of the challenges with credit being the most important of all, faced by farmers. It's just a matter of time before the underserved and the unserved sections of the society like smallholder farmers, low and middle income groups, MSMEs, people in the rural areas and tier 3, 4 cities, get their fair share of benefits from the larger economic progress and digital transformation.

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