The rise of agri-startups: VLEs and agtech fueling entrepreneurial spirit in rural India

Rural areas of India contribute 64% of the population of our country and are highly dependent on agriculture for their livelihood. Of these, only 20% of farmers have access to irrigation, all of whom are affected by climate change and the losses it causes. Acreages of agricultural land have decreased by 50 percent in the past five decades, and although rural youth traditionally pursue farming, low profitability is beginning to force farmers to rethink their profession.

As a result, around 15 farmers quit agriculture and moved to urban areas in 2020, exceeding the previous year’s migration by 5 lakhs. Financial constraints and lack of educational infrastructure limit rural Indian access to higher education, resulting in limited employment opportunities. Thus, they are forced to accept whatever opportunities they can find to support their families.

The advent of agricultural technology has revolutionized the Indian agricultural economy and created potential for rural entrepreneurship. This new technology ecosystem could stimulate a variety of new business models, create millions of jobs in villages and enhance the resilience of the rural economy to the extent that NITI Aayog suggests that digital technologies in agriculture can double farmers’ incomes. This growth will be driven by factors such as the proliferation of smartphones, increased demand for food, and government support for digital technologies in agriculture. Let’s take a look at some of the professions that have already been created by these developments.

Value Added

Adding value to their crops can relieve farmers of the burden, as they no longer have to rely on sales of raw crops. This diversification of income not only provides them with financial security but also enhances their overall earnings. The National Research Council for Applied Economics revealed that adding value led to a 25 percent increase in the income of potato farmers. With the advent of new buyers, such as Ninjacart, Farmizen, FreshoKartz, Crofarm, and others, who are willing to pay premium prices for processed crops, farmers can bypass the middlemen and turn a profit on their produce.

Micro storage

Small stocking can reduce post-harvest losses by 20-30 percent and boost farmers’ incomes by 10-30 percent, the World Bank reported. For farmers who can afford to build larger facilities, additional rental income can be generated by providing storage space to others. Moreover, with the emergence of e-commerce companies that offer last-mile delivery services, having such warehousing facilities can be a huge advantage, enabling them to transform into dark stores and integrate into a wider distribution network. The benefits extend to farm-to-table startups as well, making small warehouses an essential asset. In addition, small stocking gives farmers and farming communities the independence to sell at a convenient time so that they can make better profits.

farm mechanization

Farm mechanization is gaining momentum, supported by state governments such as Punjab, which have launched schemes such as the Sub-Mission for Agricultural Mechanization (SMAM), which provides subsidies for the purchase of agricultural machinery. Small landowning farmers find farm equipment too expensive and are reluctant to buy it, but they can now opt for more affordable rents, eliminating maintenance costs because the village-level entrepreneurs (VLEs) providing these services take care of the maintenance. The FICCI report reveals that India has about 6 million charter entrepreneurs, serving more than 50 million farmers. This rental market is witnessing an annual growth rate of 8%, which reflects the growing demand for these services.

Other than charter entrepreneurs, the service-based industry is also on the rise. These individuals provide spraying services using agricultural equipment that helps provide uniform spraying and better agrochemical results. Thus, the labor-intensive work is taken care of effectively and in a timely manner without the farmer having to hire or purchase equipment.

Drone businessmen

They are revolutionizing the agricultural landscape by harnessing the power of drones to collect essential data on crops, soil health, and weather patterns. This will change agricultural practices and create new jobs in rural areas. With the rapid growth of such initiatives, a new wave of IT-driven jobs is emerging, driven by the demand for skilled professionals. According to a study by IIM Ahmedabad, drone-based services have the potential to generate an estimated 2.5 thousand jobs in rural India by 2025 in areas such as drone piloting, drone maintenance and data analysis using drones.

Young influencers

A new trend is emerging in the farming community, where farmers are becoming micro-influencers, making reels showcasing best farming practices. They have the ability to collaborate with brands and monetize their social media channels and pages in the future. Not only does this provide a unique opportunity for farmers to diversify their income but it also serves as a powerful platform to inspire urban youth to pursue farming, highlighting its many benefits and dispelling prevailing myths about farmers, providing a more accurate and positive picture of the farming profession. As celebrities venture into farming, micro-influencers of these farmers are magnified, shedding light on farm life.

A new generation of entrepreneurs with exceptional problem-solving abilities, coupled with rapid technological developments, has brought about transformational change and fostered the development of an ecosystem in rural areas, supporting the village economy and creating new avenues for rural youth. This reform change has been further catalysed by the emergence of direct-to-customer brands in major cities. The convergence of entrepreneurship, access to the workforce, and advances in technology have empowered farmers, resulting in enhanced incomes and economic opportunity.

The same is reflected in a report by Bain and Co, Google and Temasek that predicts rural growth of 4 percent and urban growth of 3.5 percent in the coming years. This remarkable expansion has been facilitated by the efforts of VLEs, who play a pivotal role in bridging the gap between urban and rural areas.

The author is the Founder and Director, Safex Chemicals