OPPORTUNITIES FOR SMEs INDIAN AGRICULTURAL SECTOR
Updated: Mar 15
India’s agricultural sector serves as a source of income and livelihood to 58% of country’s population. Exports of Indian agricultural products stand at 38 billion USD and can rise further up with more conducive policies. India, being trade-surplus on commodities like rice, meat, milk products, tea, honey, horticultural products, etc. may seize the opportunities by exporting such products with a stable agro-exports policy.
The agricultural value chain in India has been adversely affected by the Covid-19 crisis and the resultant lockdown. With about 85% of Indian farm households being small and marginal farmers, and a significant part of the population being landless farm laborers, welfare measures to contain any damage from COVID will be fruitful. There are a number of things that need to be done if we want to make Indian agriculture Covid-resilient. These include mechanization of agriculture, bringing traceability from farm to fork, and promoting genetic heterogeneity to reduce the chances of infection.
Technologies like block chain and cloud computing must be harnessed to ensure food traceability in food chains. These technologies will also enable farmers to use knowledge-based repositories containing a wealth of information related to farming practices, crops input, agricultural innovations, pesticides, seeds, fertilizers, nutrients and weed resistance, as well as on equipment. Also, efforts to boost international co-operation must be made in order to overcome the impact of reduced air and sea cargo possibilities.
The value of these technologies and understanding of supply chain can only be reaped if the farmers are educated on how these function and what benefits can be reaped by them through the use of these technologies. These are areas where any small enterprise can setup business and find innumerable opportunities available in the sector’s supply chain. The needs of SMEs in agriculture may vary by the function they serve in the value chain in which they work. For example, an SME that focuses on production may need financing for purchase of inputs at the beginning of a harvest cycle, whereas an SME in processing may need this capital at the end of harvest, to purchase produce for processing.
The type of assistance they need may vary too. For example, SMEs in agricultural inputs and technology may need laboratory testing facilities to test and validate their products; whereas those in processing or trading may need access to high-value markets. The Indian government has been making commendable efforts to empower SMEs to overcome these hurdles.
A technology provider is a charming designation for SMEs in agricultural sector for the Design, assemble, or manufacture key inputs or equipment for use in agriculture. Research and development of aids for agricultural sector is very much needed in India as approx 25% of the produce are often destroyed due to lack in storage or scientific measures in cultivation.
SMEs can act as producers in this sector by combining a set of farmers and overlook the production in terms of Sowing, farming and harvesting crops, raise poultry and livestock, or fish. These will ensure the timely harvesting and optimum utilization of produces. Focus on one or a list of produces can ensure the maximum benefit from the particular product.
Another bright are of scope for SMEs lies in the logistics, trade and distribution of produces in the domestic as well as international market. Warehouses, cold storage, transportation vehicles are few of the critical links of the supply chain that is in ever rising demand and thereby promising a great revenue generation.
Some produces like canned tomatoes, cashews and honey among many others are such that they require processing to extend the lifetime from a few days to probably months. Here SMEs can easily set up canning or packing facilities which will ensure the proper manufacturing of canned or processed foods that has a huge market all over the world. Many schemes are tenders being invited by government in improving the processed food sector to extend help into the agricultural sector.
As middle men between the producers (farmers) and end users (retailer or customers), SMEs have a plethora of opportunities in playing the role of wholesalers or even retailers. No consumer deals with the raw produce directly from the producers in a normal scenario and goes for retailers or even wholesalers. This shows the importance of a wholesaler or retailer in the sector which is irreplaceable. SMEs entering this sector are well supported by the government in terms of financial aid and infrastructural aid also in some cases.
Small enterprises in agriculture value chains have the potential to create sustainable social and environmental impact in their communities. While on one hand global leaders are rallying unprecedented support for ensuring food security and sustainable agricultural practices; on the other hand, there is a widening pool of impact investors looking for opportunities to invest in high-impact solutions.
By improving market conditions for SMEs in agriculture, India is set to precedent for development programs working with impact investors and global DFIs to establish the foundation for strong financial and developmental growth in the agriculture sector. Development organizations can empower SMEs in agricultural value chains to ensure agriculture sustainability and food security that can leverage impact investments