Budget 2018: Rural Farmers can Benefit from Sops for 'Agripreneurship'

There’s one startup named Ergos: “PM wants to double income in five years, I’m saying 1.4x in six months”

Photo Credit : Twitter/@myergos,

Union Agriculture Minister Radha Mohan Singh said 11,400 farmers committed suicide in 2016. Consequently, the 2017-2018 (FY18) Budget allocation for rural, agriculture and allied sectors jumped 24 per cent to Rs 187,223 crore, over the previous year.

The agricultural credit target for FY18 increased from Rs 9 trillion to Rs 10 trillion. Budgetary provision for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), which guarantees work for a hundred days to farmers tied to seasonal crops, was raised marginally to Rs 48,000 crore from Rs 47,499 crore, but the coverage of cropped area under Fasal Bima Yojana, which insures the farmer from the whimsies of nature like floods and droughts, was expanded. The Budget provision for the crop insurance scheme increased drastically from Rs 5500 crore to Rs 9000 crore. The micro irrigation fund got an initial fund of Rs 5000 crore.

Perhaps, the measures did mitigate the distress on the farmlands, but did they fulfill the government's mission of doubling the farmers' income? The BJP lost in Gujarat because of discontent among the rural constituency largely made up of farmers.

The increased Budget allocation hasn’t made farmers happy nor has it improved agricultural output.

Vineet Rai, a venture capitalist and founder of Aavishkaar, continues his work to bring innovation to rural areas sine he was CEO of the Gujarat Government’s Gujarat Grassroots Innovations Augmentation Network. “Last year’s Budget had a few path breaking proposals for the agriculture sector," says he, "unfortunately it did not break the path."

Ramakrishna Nishtala, MD and CEO of Vistaar Financial Services, a loan provider to MSMEs especially in rural areas says, “I think it is completely impractical for the government to give loans and relief packages. There is a lot of empirical evidence to suggest that the farmers' plight is not alleviated even after waivers and that after a couple of years, they are back in the same situation”.

Teaching farmers ‘Agripreneurship’

“Capital is not a constraint if a Budget can create supportive policies. There are investors ready with the money. If the government supports them and improves structural efficiencies then funds too can be channelled efficiently,” says Rai.

Rai feels that marginal farmers could be less risky candidates for bank loans were fund's given for innovation, instead of subsidies. “Instead of giving subsidies, the government should perhaps set down a 10k crore [or very large] guarantee fund to encourage innovation in financial services using technology,” suggests Rai.

“And once you have the guarantee fund, you have to unshackle it (from a maze of bureaucratic procedures)," he goes on to say.

Aavishkaar has invested in a few ‘agritech’ startups, one of which he says, could bring India very close to doubling the income of farmers by 2022.

Ergos is an agri-supply chain firm encouraging smaller farmers to store their produce in warehouses. “Then we help farmers get a loan from the bank against the stored harvest. Five months later we help the farmer sell it at a much higher price. Our calculation is that over the last three years we have been able to increase farmer income by 1.6x on an absolute basis and if you take into account the interest that they have paid, then by 1.4 times. PM wants to double income in five years, I’m saying 1.4x in six months,” said Rai.

“AgroStar has made a change we never thought possible. It’s like Amazon for farmers,” says Rai. AgroStar is a digital platform where farmers can procure quality agri inputs at fair prices just by using a mobile phone – it doesn’t even have to be a smartphone.

Along with entrepreneurs taking an active interest in disrupting the primitive landscape of agrarian India, there is a need to transform the farmers' attitude to farming; from an act of survival to business. “I personally believe a farmer has to become an ‘agripreneur’,” says Rai. The connotation is that a farmer just like any other business professional must draw on methods that won’t leave him completely at the whim of changing weather patterns.

Transforming mindsets will be an uphill task for any government and certainly not as easy to achieve as setting up another fund.

“There is no doubt that a situation where 50 percent of the country's [farming] population contribute only 15 [to 18] per cent of the GDP is not a sustainable one," says Nishtala. "Instead the government should look at investing in rural infrastructure, irrigation, encouraging crop diversity and withdrawing the Minimum Support Price regime all together - all of which would be economically sensible but politically challenging,” says Nishtala. “But someone has to bite the bullet keeping the country's and the farmers' long term interests in mind.”

Incidentally, the Draft Model Contract Farming Act, now on the farm ministries' website, does strive to enhance the income of the farming community, by providing a model for contractual agreements between agricultural producers (including milk producers and poultry farmers) and food processing units or exporters that state governments may adopt. Contract farming is now permissible for some crops in some states. The Lays potato chip producer, PepsiCo, for instance, enters into agreements with potato farmers, for their produce.

The model Act endeavours to simplify and popularise the interface between small cultivators and industry. It has so far not found favour with much of the farming community and farmers' organisations. Will the Union Budget do more to empower cultivators and turn them into entrepreneurs of agricultural produce from subsistence farmers?

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