India's agri-food value chains have been evolving over the last few decades to cater to the growing consumer demand for healthy, safe, and nutritious food. These value chains are increasingly getting integrated from production to marketing to cater to such demand. While large and/or commercial farmers have easy access to such modern food value chains, small and marginal farmers in India and other developing countries alike are unable to take advantage of the same. Focusing on improving the agri-food value chains, particularly for perishables, makes a strong case in India given most Indian farmers are small and marginal farmers and are unable to take advantage of economies of scale. It is encouraging that both public and private sector entities are getting engaged in connecting Indian farmers directly to the supply chains of various crops. However, more needs to be done to make the processes, particularly in the public sector, the least bureaucratic and more farmer-focused so that small and marginal farmers in particular, benefit widely.
TopIntroduction
The Indian economy has been moving from an agrarian economy to a service economy over the last few decades. Agriculture’s contribution to India’s GDP fell from about 27% in 1990 to almost 15% in 2018, while the share of the service sector grew from 42% to over 58% during the same time (GOI, 2020). However, according to the latest population and agricultural census, almost 67% of India’s 1.2 plus billion people still live in rural areas and most of them rely on agriculture as their principal source of income and livelihood (GOI, 2019). Such dependence on agriculture by the majority of India’s population had not changed much since its independence in 1947 when more than half of the national income was contributed by agriculture and more than 70% of the total population was dependent on agriculture (Pandey, 2013). Thus, despite the reduced importance of the agricultural sector in India’s economy, it remains the most important source of livelihood for hundreds of millions of people in India.
Agriculture has significant linkages to India’s food and nutritional security (IFPRI, 2015). This sector also plays an important role in adaptation and mitigation strategies relating to climate change (IPCC, 2001 and 2007). Similarly, agricultural development is crucial for the reduction in poverty (World Bank, 2008). Not surprisingly, India has increased its annual budget outlay from Rs. 37,865 crores in 2001-02 (= USD 5.83B; 1 USD = Rs. 65) under the Tenth Plan1 to Rs. 43,799 crores in 2013-14 (= USD 6.74B) under the Twelfth Plan, an increase of about 16% (GOI, 2020). Return to such investments in the agricultural sector resulted in higher output in food grain and other principal crops. In 2018-19, India registered record food grain production of 284.83 million tons (GOI, 2019b). India remains the largest producer (25% of world production) and consumer of pulses (27% of world consumption) as well as the highest net importer of pulses (Dev, 2018). India also became the largest milk producer in the world, hitting an annual high of 176.4 million tons in 2017-18 but it remained a milk deficit country (NDDB, 2019). India is the second-largest producer of rice, wheat, sugarcane, cotton and groundnuts, as well as the second-largest fruit and vegetable producer, accounting for 10.9 percent and 8.6 percent of the world fruit and vegetable production, respectively (FAO, 2017).
One of the major problems in the Indian agricultural sector is the fractured nature of agricultural holdings. The latest Indian Agricultural Census data shows that in 2015-16, out of a total of about 146 million agricultural holdings, almost 81% were small and marginal farmers.2 The Agricultural Census data also shows that about 69% of the total land holdings belonged to marginal farmers (those with less than 1 ha). Such smallholdings and prevalence of it across the country also limit the adoption of certain agricultural production or harvesting technology which are not scale-neutral. Thus, the fractured nature of agricultural landholdings in India makes the economic viability a challenge for small and marginal landholders in the country.
As the Indian economy grew over the last few decades, consumers’ spending power also grew along with their demand for safe and healthy food. To fulfill such rising consumer demand, the food production-marketing systems in India has evolved from mostly unorganized or itinerant sector to a more organized sector in which food supply chains are more aligned with what consumers want. Nowadays, one can find Western-style supermarkets not only in big cities but also in smaller population centers across India. Agri-food value chains that integrate various foods from their points of production (farms/ranches) to the points of consumption (retailers) and meet the changing consumer demand for healthy and safe food products may provide a solution to the growing challenge of addressing the economic viability of small and marginal farmers in India.
The generation and application of agriculture knowledge are important, particularly for small and marginal farmers, who require relevant information to improve, sustain and diversify their farm enterprises (Mathur and Goyal, 2014). The advent of information technology (IT)3 in the agricultural sector has introduced new methods and ideas in food production and marketing, such as precision farming, optimal use of agricultural chemicals, and targeted selection of crops to suit the cultivable land. IT is also used to make production and marketing decisions of a vast array of agricultural products, from field crops to milking of dairy cows. It is needless to say that information technology has transformed the agricultural sector around the world and India is no exception.