Disruptive business models to stimulate inclusive growth in agriculture, rural finance: Study

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The report also noted that in the past decade, the rural infrastructure has improved because of interventions by the government and private sector sectors. (Representational image)

The food and agriculture sector is expected to witness massive (constructive) disruption through introduction of new-farming models, advanced agri-tech services and new food products, which would replace the traditional farming system, a joint report by CII and Bain on Wednesday stated.

“In the last six years, several start-ups have emerged to reduce systemic inefficiencies among inputs and marketplaces, precision farming, processing and storage,” the report titled ‘Innovation in India rural economy: Disruptive business models are stimulating inclusive growth in agriculture and rural finance,’ has stated.

According to the report, new players in the agri-start-up sphere like Ninjacart and WayCool are improving distribution efficiencies, which cause 17% to 22% leakage, when perishable commodities are moved from farm to mandi. The CII-Bain study noted that as newer generations of farmers and Farmers Producers Organizations (FPOs) become digitally savvy, new business models are emerging across the agriculture value chain, from inputs and harvesting to processing and distribution.

“Information and transparency initiatives are addressing existing inefficiencies and formalising a traditionally informal sector,’.

Meanwhile, for ensuring that host of agri-services are accessible to the farmers through electronic National Agriculture Market (e-NAM) digital platform, the Small Farmers Agribusiness Consortium (SFAC) will launch a ‘platform of platforms’ where private entities providing services such as transportation, logistics, assaying, weather and fintech will be integrated.

Once the digital integration of all the portal runs by agri-services provided by private entities is completed, around 1.75 crore registered farmers, FPOs, traders, commission agents and other stakeholders with the eNAM platform can avail these services.

The report also noted that in the past decade, the rural infrastructure has improved because of interventions by the government and private sector sectors.

“There have been continued improvements in physical infrastructure and connectivity, plus significant advancements in digital infrastructure. Rural smartphone and internet penetration increased 30% p.a. over the last five years,” the report noted.

Stating that there has been a significant increase in access to credit in the rural ecosystem, the report has state that in the last five years, agri-credit has grown from 8 lakh crore in FY15 to14 lakh crore in FY20.

About 35% of agri-credit business comes from three states: Tamil Nadu, Andhra Pradesh, and Uttar Pradesh, according to the report. CII and Bain report stated that demand for credit has risen in rural areas, especially among consumption-driven loan products like those for two-wheelers and consumer durables. Technology disruption played a key role in this growth by lowering loan servicing costs, which enabled lenders to service lower-value loans.