Regional Report
New Ag International SEPT/OCT2020
Considering the important role agriculture plays in India’s economy – contributing 15.8 percent to the country’s gross domestic product (GDP) and involving 42.3 percent of the population – the Indian government has a heavy hand in providing subsidies and legislation that aims to keep the sector afloat.
These subsidies are steering Indian agriculture in a modern direction with the Department of Agriculture, Cooperation and Farmers Welfare (DACFW) setting a target to double farmers’ income by 2024. This is to be achieved through improvements in productivity, more efficient use of resources, increasing intensity of crops and diversification towards high value crops.
Through this initiative the government has also placed a renewed focus on preserving soil and water resources and has embarked on several projects to increase the sustainability of both. This has brought robust subsidies for greenhouses, irrigation schemes that utilize micro irrigation and legislation that seeks to ban harmful pesticides. This in turn has boosted the market for bio-inputs, water-soluble fertilizers and precision agriculture technologies.
As the sector modernizes, machinery sales are set to benefit. Currently the overall level of mechanization in India is less than 50 percent, as compared to 90 percent in most of the developed countries, indicating a significant growth potential. According to a 2017 report by Grant Thornton, the farm equipment market in India is expected to reach US$12.5 billion by 2022.
With so much room for growth, the country is primed for investments that can speak to challenges faced by turning the tide from small-scale to commercial farming.
Growing interest in bio inputs The bio-inputs market in India looks promising as the country moves towards reduced chemical use and more naturally produced food for both the local and export market.
Years of heavy-handed chemical usage, including chemical fertilizers, in India has compromised the sustainability of agricultural systems. This has pushed the government to emphasize the production and utilization of bio-inputs, while seeking to ban a host of conventional pesticides widely used in the country. The list includes acephate, atrazine, benfuracarb, butachlor, captan, carbofuran, chlorpyrifos, 2,4-D, deltamethrin and others. It also proposes to ban the chemical malathion that was used extensively by the government during the recent locust attack.
The proposed law is a contentious issue as opposition parties have stated the proposed alternatives are not only far more expensive, but would need to be imported, which will harm local manufacturers. Furthermore, the ban will significantly harm the export industry, as some $2.9 billion of chemicals are exported to global markets by India.
But this does present an opportunity for the bio-inputs sector to increase their footprint further.
A report by Ken Research states the biopesticide market in India has registered a compound annual growth rate (CAGR) of 16.4 percent in terms of consumption volume between 2013 and 2019. Organic farming is gaining traction and farmers are increasingly following integrated pest management strategies.
The application of biopesticides is spread across several crops. The share of cereals, pulses and oilseeds has been recorded the highest, and has commanded a major portion of the overall biopesticide consumption in India. Flowers, spices and tea constituted the smallest market share in terms of revenue generated.
Microbial biopesticides are expected to dominate the market with a share of 65 percent by 2024.
During 2019, Bacillus thuringiensis contributed to a majority of the bioinsecticides sold in India. Due to its high effectiveness and quicker results, it is preferred over any other bioinsecticide present in the Indian market. The market also shows a leaning towards indigenous biopesticides, which includes products derived from the neem tree.
Biofertilizers have emerged as a highly potent alternative to chemical fertilizers due to their eco-friendly, easy to apply, non-toxic and cost-effective nature. The use of biofertilizers has been encouraged by government through the provision of subsidies. The most widely used biofertilizers include Rhizobium cultures, phosphate solubilizing bacteria, zinc solubilizing bacteria, Azotobacter, mycorrhiza, blue-green algae and vermicompost. Nitrogen fixing biofertilizers are highest in demand.
Biofertilizer development centres are being established in both the private and public sector, and the industry holds much promise in the long run, once information of its benefits becomes adequately available. However, greater production and improved awareness campaigns have been cited as the biggest catalysts needed for this industry to really take off.
Coupled with the increased focus on eco-friendly farming practices is the rising popularity of plant-incorporated protectants (PIPs), which include genetically modified (GM) plants. These are expected to gain wide acceptance owing to their better adaptability in varying environmental conditions and tolerance to a wide range of pests. With better regulatory practices in light of toxicity and safety of GM crops, PIPs are expected to have better acceptability in the coming years. Moreover, GM crops – in addition to being tolerant to different pests – can be engineered to have specific nutritional content whose deficiency leads to disorders, owing to which GM crops are expected to gain momentum in forthcoming years.
Sustainable irrigation Agriculture is a sector wherein water scarcity has critical relevance, and this is especially so in the context of ongoing climate change vulnerabilities. India has suffered numerous droughts, and rapidly depleting groundwater levels have made both farmers and government hyper aware of the need to reduce water consumption in the agricultural sector through more efficient irrigation systems.
A 2019 report mapping policy surrounding the water-energy-food (WEF) nexus in India found that much of India’s irrigation systems are highly inefficient. Among minor irrigation schemes surveyed in 2014-15, the majority, 63 percent, used open water channels that are subject to evaporation and more likely to have issues with leakage. Surface pipes and underground pipes were used by 25.8 percent and 15 percent of schemes, respectively, while only 3.3 percent used sprinkler systems and 1.9 percent drip irrigation.
Dr. Abhilaksh Likhi, DACFW joint secretary, noted that cropping patterns have created more reliance on irrigation as water-intensive crops are grown in water-scarce areas, and large-scale hybrid crops are more water intensive than indigenous species.
“While food grain production has largely been possible through irrigated agriculture, over 50 percent of cultivated land that produces more than 80 percent of nutri-cereals, pulses, oilseeds, fruits and vegetables, is monsoon dependent,” Likhi noted.
Focused on producing more food for the growing population with scarce water resources, the Indian government has launched the Pradhan Mantri Krishi Sinchai Yojana programme. One component of the programme, “Per Drop More Crop”, focuses on micro irrigation systems that promote precision farming. The scheme allows for farmer subsidies to encourage implementation, and also makes provision for loans to state governments to undertake special and innovative projects in micro irrigation. Subsidies contribute to 55 percent and 45 percent of the total finances incurred in setting up irrigation systems for small farmers and larger farmers, respectively.
The Task Force on Micro Irrigation estimated in 2004 that the country had the potential for placing 69.5 million hectares under micro irrigation. As per the Doubling Farmer Income committee (DFI) Report of 2018, the coverage of micro irrigation by the end of 2017 stood at approximately 9.5 million hectares. It is proposed to add an additional 10 million hectares by 2022. The task force is specifically looking at introducing micro irrigation to water guzzling crops such as sugarcane, rice, bananas and cotton. These incidentally also constitute the biggest crops grown in India, demonstrating the scale of irrigation required.
Since irrigation is coupled with electricity, the government is also focusing on solar power projects to bring a more consistent supply of electricity to farmers, while alleviating pressure on the national grid. The Kisan Urja Suraksha evem Utthan Mahabhiyan (PM KUSUM) scheme aims to deploy 1.75 million solar pumps by 2022. Through this initiative, individual farmers are supported through subsidies to install standalone solar agriculture pumps, and individual farmers having grid-connected agriculture pumps will be supported to solarize pumps.
The WEF report has, however, expressed concern over subsidized solar schemes for powering irrigation, as this could lead to further depletion of groundwater reserves. Instead, policy makers have been asked to consider linking solar power subsidies to the use of micro irrigation. There is also a concern that subsidies mask the true cost of irrigation, reducing incentives for efficient water use and contributing to the overdrawing of groundwater and depletion of aquifers.
Likhi stated that to be successful, water use efficiency initiatives through micro irrigation would need to include the creation of water harvesting storage structures – which included ponds, tanks and injection wells, and related moisture conservation schemes in over exploited underground water zones to recharge aquifers.
“Another area of concern for the success of these projects is the strengthening of multi-stakeholder institutional support to propagate micro irrigation through public private partnerships,” said Likhi. “The private sector is needed for implementation and maintenance of integrated micro irrigation networks to ensure water efficiency at the farm level and achieve economy of scale. For this to happen we would need to aim for investments in micro irrigation for both social and environmental impacts, coupled with rational returns.”
Room for growth in precision agriculture The very nature of farming in India has inhibited large-scale adoption of precision agriculture (PA). Since most farmers farm on a small scale or even subsistence level, the high cost of PA is a barrier for entry. However, with encouragement from the government, Indian farmers are waking up to better use of resources and the scope for growth for PA technologies is increasing, provided they are tailored to Indian conditions.
One of the challenges in implementing this technology in India is finding suitable alternatives to the traditionally high-tech PA technologies developed in advanced countries. It is expected that future applications will be balanced between soft and hard technologies, with the former depending mainly on visual observations of crop and soil management, and hard PA focused on modern technologies such as GPS and variable rate technology.
PA adoption will be crucial for reaching India’s goals of doubling farming income and progressing the sector, since it is this kind of technology that addresses two critical structural issues affecting Indian farmers: falling water tables and rapid erosion of soil fertility. Further, such technology adoption in farming can significantly boost crop productivity and reduce water and input wastage, in turn increasing farmers’ incomes.
Trimble Agriculture is currently testing its two key products – the Trimble Laser Land Leveller and Green Seeker handheld device – with farmers and agriculture scientists in India. The Laser Land Leveller is a high-precision laser-based land levelling system that helps farmers level their farmland in order to prevent wastage of water. The Green Seeker handheld is an optical crop sensing device that is used to measure and quantify the health of a crop. Trimble believes this will boost farm productivity and increase crop yields of cash crops like potatoes by as much as 30 percent.
Subhash Pattnaik, Trimble India’s manager for business operations and sales, noted that among all PA technologies, water management appears to have higher adoption than others.
“PA is, however, at nascent stage in India, with only one to two percent of all farmers in India adopting PA,” said Pattnaik. “Since these technologies are very expensive, we believe the Indian government should provide an initial subsidy to farmers for adoption of the technologies. Also, equipment manufacturers like tractor companies or implement manufacturers should take the initiative in promoting PA technologies to farmers.”
Since India lags behind world averages on crop yield, with Pattnaik stating yields of a third or half of global averages, India has much room for improvement, which could bode well for PA technology. “There is an increasing awareness of guidance technology by progressive farmers of North India. Also, a few start-ups are working on satellite imagery for pest disease prediction.”
Of the technology that is used, Pattnaik estimated that 60 percent is developed locally and the balance abroad.
This leaning toward local production is supported by the government which has started investing in agritech projects to accelerate commercialization. This includes projects like Agri Udaan where shortlisted agritech startups are guided to scale-up. The focused areas of this project are smart agriculture, agri biotech, supply chain technology, animal husbandry, farm mechanization and farm-fresh retail. Then there is also CropIn and SatSure that utilize technologies such as big data analytics, artificial intelligence, machine language and remote sensing to enable its clients to analyze and interpret data to derive real-time actionable insights on standing crops. Drones are also starting to enter the market, with Thanos developing aerial pesticide drones.
Speciality fertilizer market growing India’s fertilizer market is poised for growth as current usage is below world averages, while the government’s support of micro irrigation widens scope for soluble fertilizers.
Pattnaik puts Indian fertilizer applications at between a third and a half of the global average. “We are looking at 120 kilograms per hectare, whereas China – having a similar population – has average fertilizer consumption of 500 kilograms per hectare.”
According to a report by market research company IMARC Group, the Indian fertilizer market was worth nearly $84 billion in 2019, experiencing double digit growth rates over the past several years. Looking ahead, IMARC Group expects the Indian fertilizer market to exhibit moderate growth during 2020-2025.
Government policy again plays a major role in the types of fertilizers used, with neem coated urea (NCU), soluble fertilizers and micro elements being boosted.
NCU is a scheme initiated by the government to improve fertilizer efficacy. Since urea is highly soluble in water, nitrification and de-nitrification reduces its efficiency. If urea is coated with neem the loss can be minimized, as a coating of urea renders it a slow-release fertilizer, making nutrients available to plants for a longer duration. The Indian government recently allowed fertilizer firms to produce 100 percent NCU.
The Indian water-soluble fertilizer market stood at $12.7 billion in 2018 and is projected to reach $20.6 billion by 2028, according to the same source above. It is not clear what fertilizers are included in that definition. Anticipated growth in this market can be attributed to increased use of drip irrigation which is expected to push up demand for water soluble fertilizers in the coming years.
Benefits of climate control boost greenhouse production Greenhouse production in India is gaining popularity, especially for high-value crops. Growth has been prompted by erratic weather conditions as farmers are seeking indoor options where the climate can be controlled. Here, government support is playing a vital role in uptake, and subsidies between 50 to 60 percent of project cost is being offered to farmers.
A report by the DFI stated that production of crops in a protected environment, be it shade netting, greenhouses or tunnels, is picking up, especially in peri-urban areas. This has ensured a constant, year-round supply of high-quality vegetables and flowers. As such, it has become an attractive agri-enterprise, and bodes well for the further expansion of precision farming principles of micro irrigation and fertigation.
Greenhouses are mostly used in Maharashtra, Uttarakhand, Karnataka, Jammu and Kashmir states. They have proven successful in aiding farmers in drier areas to produce crops due to the lower water requirement compared to open air crops. This has not only brought income to drier regions, but also allows farmers to produce crops in “off” seasons.
Challenges within this sector include the availability of greenhouse-specific inputs and reliable electricity. The committee has recommended that in order to increase greenhouse farming, regular uninterrupted power supply should be provided to maintain optimal growing conditions within protected structures.
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