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NABARD has partnered with ONDC to push e-commerce in the agriculture domain. To that end, the duo is hosting the NABARD-ONDC Grand Challenge in July: Agri Grant Challenge will enable existing e-commerce players in the agriculture domain with ONDC protocols and establish market linkages for the enabled players with market-ready Farmers Producers Organisations (FPOs) in the country and Agri Innovation Hackathon aims to promote the development of innovative solutions to aid adoption of e-commerce in the agriculture domain.
e-commerce has huge potential to address several constraints plaguing the Indian agricultural sector. In the traditional agricultural value chains, the potential for e-commerce disruption is high where intermediaries eat into farmers’ margins. Agri e-commerce can help do away with intermediaries by establishing direct linkages between farmers and buyers (wholesalers, retailers and consumers). Direct linkages with potential buyers and quality storage facilities can substantially reduce post-harvest wastage, especially perishable products. According to IFPRI, the post-harvest losses in India amounted to USD 13 billion in 2020.
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e-commerce platforms also help create new linkages among various stakeholders along the agricultural value chain—for example, farmers and input suppliers, logistics providers, etc. Farmers gain access to higher-quality inputs through online suppliers at a better price than local markets leading to cost efficiencies. In addition, quicker access to efficient transportation helps farmers substantially reduce the time it takes for produce to reach consumers.
In informal cash transactions with middlemen, farmers cannot keep a record of their past sales as these transactions typically happen without a purchase receipt. This, in turn, could deprive farmers of accessing credit. However, agricultural e-commerce platforms generally keep a record of transactions made on their platforms. With the help of these records, farmers can create a digital history of their sales and revenue flows based on which they can access credit.
Online platforms provide greater transparency and visibility of market prices to farmers resulting in fairer prices than those offered by intermediaries. The transparency that e-commerce platforms provide also helps buyers trace the origin of the supplies, encouraging farmers to enhance and maintain the quality of their produce.
Agricultural e-commerce creates a virtuous cycle. The initial benefits that agri e-commerce generates–like improved incomes, reduced wastage and access to financial services–not only attract more and more farmers to the e-commerce ecosystem but also incentivise individual farmers to increase their on-farm investments and productivity. As a result, along with an increase in volume and frequency of agri e-commerce transactions, investments in agri e-commerce infrastructure get a boost.
Under the hood
Ninjacart, DeHaat, Bijak, Way cool, Farmizen, StoreHippo, and Agrostar are the major agri tech startups in India addressing different pain points. For example, Ninjacart works closely with farmers to procure fresh fruits and vegetables and supply them to retailers, hotels, restaurants and even apartment complexes; Farmizen enables buyers to buy organic agricultural products from farmers directly; DeHaat provides full-stack agricultural services to the farmer in the form of quality material inputs, science-based personalised farming advisory and a platform to sell agri produce to institutional buyers; StoreHippo is a SaaS-based e-commerce platform that helps other firms in leveraging e-commerce. So far, StoreHippo has helped agritech platforms like Arya.ag and Plantix in their e-commerce-based solutions.
The e-commerce firms deploy several technologies like ERP, omnichannel platform, chatbots, recommendation systems, smart search, pricing tools, retention pop-ups, social media monitoring, indicator analysis tools, payment integration systems, blockchains, augmented reality, big data, cloud computing, electronic data interchange (EDI), inventory management systems and automated data collection systems. Agri e-commerce platforms leverage tech to optimise their operations, integrate sales and communication, predict customer behaviour, retain customers, increase sales, optimise strategies and secure data.
Key factors that have enabled the adoption of e-commerce in the agricultural domain are tech-enabled innovations like hyper-local logistics, mobile internet penetration levels, the availability of digital payment solutions, IT infrastructure and ICT application in agricultural fields. The farmers and buyers now depend more on technology for their transactions, driving the adoption of e-commerce. Timely distribution of agriculture information, effective and agile response from experts, training and education, price forecasting etc. have also facilitated this shift.
The predominance of small farmers, fragmented supply chain dominated by middlemen, inadequate logistical support, issues related to data security, and insufficient use of ICT for agriculture are the few challenges Indian agritech is looking to solve.
To effectively realise the optimum potential, the agri e-commerce platforms can provide add-on services apart from a marketplace. Further, converging offline assets with online services can ensure satisfactory after-sales service and support. Integrating small farmers into the Agri e-commerce ecosystem can go a long way. Agri e-commerce platforms need to conduct a SWOT analysis of various business models at work to innovate and adapt sustainable business models that account for the local market conditions.