Sunday, 20 December 2009

Indian Agriculture 2020

A friend was doing research for his company on rural India. He asked me to gaze into the crystal ball and tell him how Indian Agriculture will look like in 2020. Here is what I had shared with him over breakfast, earlier this morning.

Mega Trend 1: A counter-intuitive aspect of Indian agriculture today is the shortage of semi-skilled and unskilled farm labour. In itself, at a macro economic level this is a good sign; but, when you sound any farmer out, the first complaint is about labour shortage and consequent high wage bill. Over time, this is likely to trigger land consolidation and further fragmentation at once, at the two ends of the spectrum. Larger farmers will accumulate more land to make mechanization feasible. Medium farmers will off-load some land and keep just about the acreage they can cultivate with the labour available within the family. Opportunities for Business: Innovations in Indian specific farm mechanization (beyond the classic approach of tractorisation); innovations in labour saving crops, farm practices and inputs.

Mega Trend 2: Swifter shifts in land usage pattern (across different crops, as well as away from agriculture) triggered by shifting cost v benefit v risk and increasing role of free markets with decreasing information asymmetry. Gone are the days a farmer would cultivate a crop because that’s what he had done last year. Opportunities for Business: Networks for gathering market intelligence from grass roots for consumption by all the stakeholders (commodity businesses, brands with agri raw material, ag input companies, ag infrastructure companies, insurance companies, Governments)

Mega Trend 3: Inroads by Bio-Technology. After the phenomenal success of Bt Cotton, Bt Brinjal is waiting by the door. Once one food crop shows the way, others will follow! Farms will then turn into factories, farming with precision and producing crops with traits desired by the consumers. This will blur the differences between independent industry verticals like farm inputs, food, pharmaceutical and packaging. In turn, this may well create a vibrant “wellness” industry. After all, human beings long for four evergreen As. Ability (Physical & Mental performance), Anti-Ageing (internal organ functions) and Appearance (external). Bio-technology promises to deliver these!

Mega Trend 4: Concerns on Food Security for the poor will be outweighed by the concerns on Food Safety of the rich and middle class… The agri-food supply chains will need to deliver identity preserved products to retail shelves, some of which need tracing all the way to farm practices! This requires a recast of the roles of players along the supply chain. Role of Information Technology will be central.

Mega Trend 5: All of these changes ride on a fundamental shift in the agri-extension service. Today, the service is barely customized to crop and region. Tomorrow this needs to be personalized to individual farmers. More complex to design and deliver! But there lies the mother of all business opportunities… raise farm incomes and take a share of that. Create Fortune for the Bottom of the Pyramid and then look for Fortune for yourself.

I was actually looking for two more trends, shook the crystal ball vigorously; but no, can’t see them!

1. More conservation agriculture to preserve environment while improving productivity.

2. More partnerships among Government, Agri Businesses and Farmers (or their Collectives) to realise everyone’s goals!

May be passive gazing isn’t enough to make these happen. Let’s do something…

9 comments:

  1. 1. another one would be use of GIS mapping to predict crop output/diseases,weather etc- basically farmer would become much more smarter to manage his farm.
    2.farm consolidation- this would eventually would have to happen,
    3.industry,research & farmer would converge- which means farmer will eventually produce what would is needed for the industry-for instance for making tomato puree we are importing paste from china- not because of cost but that quality is not available- this will be much beyond contract farming.
    4.dramatic shift in crop acreages- due to unproductive soil & eroding water resource- this is going to be a huge thing.

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  2. Yes Ravishankar, GIS etc can be subsumed under the same trend where Bio Technology is mentioned, to actually broaden the scope of that trend to Technology Aided Precision Farming!

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  3. Yes, Mega Trends 5 are most important things to regenerate Agriculture. Labourer scarcity, Techno gap in between researcher to farmers, Increasing inputs cost, Mediators and inflation are the factors to analyze and restructure the farming community and agriculture.

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  4. We totally agree. next decade is going to be BIG for rural economy in India!

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  5. One debatable point here... is the lack of labor cited here is consistent across India ?
    I feel in some regions there are workers available but simply no work! I would be more than please to see a lack of labor scenario but in current situation of unemployment, it is still far-fetched.
    I hope I am wrong.

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  6. Prashant: Obviously the labour situation varies across different regions of India. But movement everywhere will be towards shortage and high wage rates over time. Yes, this is a desirable shift...

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  7. Shiv- Good observation. I have few things add.

    1. You are accurate with the Labor. The labor has become more lazy because of the subsidized goods provided by states. However the labor shortage is certainly a very encouraging trend and use of effective machines is evident as a result.

    2. Genetically engineered seeds needs more of a thorough regulatory analysis before they intorduced.

    3. Farmers selling the excess land is not happenning. However, the excess land may be given to the labor which could be a wrong direction(Productivity decreases). Even if the land is for sale, it is at very high prices which Return on Investment is in RED for the buyer.

    4. Access to the commodity futures market to Farmers can be leveraged for better marketing. This will help bypass the brokers for better market.

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  8. @Madhu: Nuances exist in each of these areas, but I broadly agree with you...

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  9. YOu are absoletely right and agriculture is the all eyes of shiva,s. Main eye of shiva is agriculture labour in agriculture sector.
    Sarda Prasad, JNU

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