How rural entrepreneurs are driving agritech adoption

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Pushkar Limaye, Co-Founder and CTO, Carnot Technologies, Devansh Pathak, Strategy and Community Engagement, World Economic Forum, Sandeep K Sinha, AVP – Fintech Strategy & Partnerships, Carnot Technologies

• Rural entrepreneurs in India face different challenges to their Western counterparts.
• Agritech is helping these farmers build more sustainable and profitable businesses.
• Innovative technology supports global food security and the Sustainable Development Goals.

Western tech and business models do not apply to India simply because of the difference of scale. While there are fewer farmers in the West, their typical land holding is over 1,000 acres. Products that make sense for such large farmers often have zero utility in a typical Indian farm size of 2 acres. In India, the cost of mechanising agriculture has been a barrier to making small rural farms more efficient and profitable for farmers. Tech delivery is going to be a major problem for Indian farmers.

In order to overcome tech delivery challenges, agritechs need to get the distribution and adoption right. This is where village-level entrepreneurs (VLEs) are critical. Linking VLEs with private capital is ushering in social development and change. From an investment standpoint, the success of the business strategy and financial capital is intrinsically linked to the quality of human capital driving it. Enabling an ecosystem for VLE helps attract better local talent, reduces turnover rates, and develops local champions.

Various types of VLEs are emerging as critical stakeholders in the agritech ecosystem:

• Farm-gate value-creators: Value adding through simple processes like sorting, grading, packing, milling, extraction, pulverisation, dehydration, cooling and freezing can remunerate farmers 30-50% over and above farm gate price. Some of them have demonstrated secondary processing innovations like S4S technologies (solar conduction drying of vegetables) and have propped up new-age rural job creation opportunities.
• Micro-warehousing: Decentralized, affordable, and accessible warehousing for farmers coupled with the option for post-harvest financing is key to improving farmer income.
• Drone-preneurs: Mainstreaming drone use for pesticide spray, crop health monitoring etc.
• Farm mechanization services: Indian farms need affordable mechanization in the wake of disappearing and expensive labour. Rental entrepreneurs are solving this need and emerging as a large segment with approximately 6 million rental entrepreneurs in India.

All these VLEs can create new jobs and are vital pillars of the ecosystem. But they face all kinds of challenges in running their businesses sustainably and profitably. Their productivity must be increased to ensure the flow of private capital towards impact. Some of these issues can be solved using new technologies.

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What is the World Economic Forum doing to help ensure global food security?

Two billion people in the world currently suffer from malnutrition and according to some estimates, we need 60% more food to feed the global population by 2050. Yet the agricultural sector is ill-equipped to meet this demand: 700 million of its workers currently live in poverty, and it is already responsible for 70% of the world’s water consumption and 30% of global greenhouse gas emissions.

New technologies could help our food systems become more sustainable and efficient, but unfortunately the agricultural sector has fallen behind other sectors in terms of technology adoption.

Launched in 2018, the Forum’s Innovation with a Purpose Platform is a large-scale partnership that facilitates the adoption of new technologies and other innovations to transform the way we produce, distribute and consume our food.

With research, increasing investments in new agriculture technologies and the integration of local and regional initiatives aimed at enhancing food security, the platform is working with over 50 partner institutions and 1,000 leaders around the world to leverage emerging technologies to make our food systems more sustainable, inclusive and efficient.

Learn more about Innovation with a Purpose’s impact and contact us to see how you can get involved.

Technology is accelerating the entrepreneurial journey in rural India

Let’s take tractor rental entrepreneurs (REs) for example. They play a critical role in the agriculture ecosystem. But there has been something fundamentally wrong in traditional tractor rental businesses. Most rental entrepreneurs can’t keep a track of exact billing. Put simply, it’s like operating a taxi without a meter. This is a major problem limiting profitability and increases investment risks in these businesses. The rental business is seasonal and REs’ capital investment is at risk for a long time as payment from the farmers is often delayed. This RE community heavily relies on informal sources of lending and uses its hard-earned savings to continue its business operations.

Carnot technologies is empowering many aspirational rural entrepreneurs who have grown from owning the first tractor financed through banks to growing a fleet of tractors and harvesters running as a business.

“Krish-e Smart Kit” is an AI and IoT-based telematics system that goes on any tractor in the world and helps improve their productivity in the tractor rental business. This mainly happens via three features: live tracking, farm and haulage work identification, and fuel monitoring. Overall, an average rental entrepreneur saves close to INR 15,000-20,000 in one season of tractor operation due to insights from the Krish-e Smart Kit system.

• Farm and haulage work identification: An AI model helps the RE keep a track of exact billing using the IoT data to estimate farm work as well as road travel in terms of acres and hours for each of the farms.
• Fuel monitoring: Derive insights around fuel level, and fuel theft/refuel events.
• Working capital: Carnot has launched the industry’s first IoT-backed working capital while leveraging Krish-e’s unique IoT data to underwrite the customers better and offer credit at a reasonable cost.
• Live tracking: Business can only scale when a rental entrepreneur is assured about the exact location of his assets in real-time.

Approximately 30 million farmers’ lives can be impacted by empowering approximately 6 million REs in India with AI and IoT technologies. If rental entrepreneurs can run their businesses sustainably and profitably, studies suggest mechanization saves input like seeds up to 15-20%, fertilizers by 15-20%, increases crop intensity by 5-20% and increases farm productivity by 10-15%.

These lessons can be applied to the rest of the world

To ensure food security for the predicted population of 9.6 billion people by 2050 the FAO predicts that food production must increase by at least 60% to meet demand. With yields declining due to climate change, farm mechanization has to scale up to boost demand, especially in developing countries where technology adoption levels are low and have promising potential.

Farm mechanization, especially tractors, should be accessible to every smallholder farmer around the world, and maximize the earning potential from the power of indigenous technology. After product-market fit in India, Carnot’s IoT platform went global, and rental entrepreneurs in Tanzania, Benin and other developing countries are utilizing the platform and maximizing their income potential. Mahindra & Mahindra is a strategic investor in the company helping the model to scale through its distribution globally.

The pandemic threatens the progress towards the Sustainable Development Goals including Goal 1 (no poverty) and Goal 2 (zero hunger), but indeed has the potential to reverse the gains made in recent years, thus jeopardizing the global community’s shared promise to “leave no one behind”.

We think of a tractor as a machine that pollutes the environment, but a decision to use a tractor versus an animal is effectively an eight-fold boost in productivity per acre in terms of time. There is a body of research which points out that using a tractor over an animal almost saves 5KG of carbon emission per acre.

Considering the number of small and marginal farmers in India, the government should promote, and enter into public–private partnerships with innovative technology players following the build, own, operate and transfer (BOOT) model to promote adoption and scale-up the mechanization.