Last month we explored the inefficiencies caused by information asymmetry and surveyed some solutions that aim to reduce the market and financial risks faced by farmers. Advancements in technology, offering on time and real-time information, can mitigate the risks of information asymmetry. In this second post we will review the Government’s efforts to bridge the information gap between large and small farmers and examine the various technologies being applied around the world to improve farm yields and productivity.
The State of E-Governance in India
The National Agriculture Market (NAM) is an online trading portal that aims to create a unified farmer’s market by connecting farmers directly with traders. Farmers bring their produce to the nearest market where it is showcased on NAM. With no middlemen necessary to transport the farmer’s produce and increased competition from a higher number of traders, farmers are able to command their price.
Since its launch in early 2016, thirteen states have implemented NAM. There are 455 APMC mandis and 35 commodities being sold across the online marketplace. The Government plans to increase NAM’s presence to 585 APMC Mandis by March 2018. NAM is evidence of the Government’s recognition of growing Internet penetration in rural areas and using it to address the primary challenge of poor returns to farmers due to information asymmetry.
What’s in it for Agribusiness?
As the figure above shows, agribusiness firms must change their business model to account for the rapid growth of and shift towards doing business online. The Internet provides a new platform for disseminating product information to existing customers and building a link to a new customer base. Competition in this new sphere has led to an increased expectation of cost savings.
Mobile platforms offer several high potential areas for innovation such as supply chain management connecting farmers with distributors and retailers, monitoring productivity and efficacy of sales people, using RFID tags on livestock to collect and store data, track animal health, improvise feed intake and improve productivity, using satellite imagery to capture data points on plant health for an accurate estimate on farm yield, and using known and captured data to issue advisories to farmers that positively impact productivity.
The benefits are seen in the form of higher crop yields, cost savings from better supply management, efficient product management throughout the crop lifecycle, and pre-booking of crop output supplies before the harvest season. Inflationary pressures and price volatility are reduced with timely availability of data on sowing, harvesting, and production.
Using integrated digital platforms, farmers can access and analyse agronomic data. Farm operations including soil moisture, weather, and crop data are tracked for better predictions that help increase yield.
Start-ups Satisfying the Goals of E-Agriculture
Several Indian start-ups are building mobile applications that are meeting the four main goals of e-agriculture.
The GOI’s Kisan Suvidha application provides information on weather, market prices, seeds, fertilisers, pesticides, and machinery in multiple regional languages. Other private sector applications offer services such as a social network that encourages peer-to-peer learning, a platform on which farmers can upload pictures and ask questions, and locally relevant video content.
Access to Extension Services
Several companies are bringing extension services such as renting otherwise unaffordable machinery to farmers on an hourly or acreage basis, matching farmers looking to hire tractors with those wanting to rent self-owned machines, connecting farmers with reputed seed providers, retailers, and distributors, and an online marketplace on which farmers can buy and sell old tractors.
Market Links and Distribution Network
Mobile commerce platforms are offering delivery services of agri-input products to farmers and connecting farmers to seed and other input suppliers.
There are also many other start-ups focused on smaller farming operations in the fields of dairy technology, irrigation, and soil amendment.
Smart Farming Around the World
The FAO has warned that we need to produce 70% more food by 2050 in order to feed the world. Farm Management software is helping transform the sector by addressing the need for real-time data on soil, weather, air quality, and hydration levels for better planning decisions on planting and harvesting.
These systems gather data from individual farms and combine this history with known behaviour of individual crops strains and local weather forecast to make recommendations. The impact is seen in resource efficiency, traceability of inputs and opportunities to access credits and markets, and profitability that results from improved productivity and efficiency.
Case Study: An Almond Farm in California
Almonds are one of the most remunerative crops in the world, but they require large amounts of water – nearly 3.8 litres per almond. In one example, an American farmer implemented farm management software that delivered a precise sprinkling of water mixed with an appropriate dose of fertiliser to each plant on the half hour (see figure below). This technique used 20% less water than the traditional manual irrigation system – especially useful given the four-year long drought in California.
This success is being replicated beyond fruit and nut farms to include “row crops” like maize and soybean where sowing, watering, fertilising, and harvesting are all computer-controlled.
The Future of Global Agriculture
Agri-businesses are moving beyond sales of machinery, seeds, and chemicals. They are developing matrix-crunching software platforms that act as farm management systems. In the United States self-driving bots apply fertiliser to maize plants without crushing them and planes fitted with a multispectral camera capture individual plants across the country. In Europe, camera equipped robotic harvesters identify ripe strawberries, and modified hydroponics systems use LED light for photosynthesis. As seen in the figure below and with the examples given here, data will drive informed decision making on agronomic practices that will positively impact outcomes.
Advancements in information technology are key to the sustainability of agriculture. These new tools and applications offer inclusive growth by reducing the knowledge deficit between large and small farmers. For now, the cost of technology is not proportionate to yields and profits at the farm level. In the long run, however, as technology becomes more economical the benefits will far outweigh the costs.