Policy uncertainty, export bans hurting farm ecosystem: Agri-startup execs

Agri-startup executives said policy unpredictability hits processors first but the impact eventually reaches farmers through lower prices and altered sowing decisions

Frequent export bans, abrupt duty changes and policy unpredictability are hurting India’s agriculture ecosystem and distorting market signals, agri-tech and agri-finance executives said on Wednesday.

 

During a panel discussion moderated by Business Standard’s Vikas Dhoot at the Manthan Summit, Anand Chandra, co-founder and executive director, Arya.ag; Amith Agarwal, chief executive officer, AgriBazaar and Adarsh Srivastav, co-founder, DeHaat, called for greater stability in policymaking to enable long-term investment and growth. 

“Everybody talks about being market-led. But the moment you control the market, you are not market-led anymore,” said Chandra, referring to abrupt restrictions on rice and wheat exports, zero-duty on imports of pulses, and imposition of stock limits. He argued that such moves disrupt price signals and discourage long term investment. 

Agri-startup executives said policy unpredictability first hits processors, such as rice and pulses millers, but the impact eventually reaches farmers through lower prices and altered sowing decisions. “The moment the government says it will import pulses at zero duty, the local miller’s profitability goes for a toss. Then, he is not able to give the right price to the farmer,” said AgriBazaar’s Agarwal. The farmer feels cheated and decides to produce something else next year, he added.

 

On technology, panelists also linked artificial intelligence (AI) to better policymaking. “AI is needed for all stakeholders at the policy level to take proper decisions. What is plaguing the sector is the uncertainty and randomness at which decisions are taken,” Chandra said. AI has to be used by market participants before it goes down to the farmer level because farmers will not pay for it, he added.

 

While much of the discussion focused on policy volatility, Chandra also called for reducing excessive state intervention in agriculture. “We have overdone intervention at the farmer level.” He suggested that while direct income support to farmers may continue and may even be enhanced, the government should step back from micromanaging markets. “You want to give support to the farmer — make it ₹6,000, ₹8,000, ₹10,000, ₹12,000, whatever number you decide. Stop your interference after that. Let the market drive it. Things will automatically fall into place,” Chandra said.

 

Beyond trade policy, structural issues such as land fragmentation were flagged as a major constraint on farm productivity and profitability. The executives cautioned that technology could help but only to a certain extent.

 

“As a country, structural changes such as land aggregation have to come in. You cannot continue with land getting fragmented with every generation,” Chandra said. He warned that without improving unit economics, taxpayers’ money will continue to subsidise inefficiencies through grants, soft loans or price support.

 

Farmer Producer Organisations (FPOs) were cited as a potential solution to fragmented holdings, but execution remains weak. “This (FPO) is the solution for land fragmentation, or you can say the solution for small and marginal farmers. This is the policy which empowers farmers. The question is about execution, implementation. That is something missing,” said DeHaat’s Srivastav.

 

Chandra questioned whether there are enough capable professionals to sustainably run thousands of FPOs once initial funding dries up. “How many CEOs do you need to run an FPOs? Do you have that kind of caliber of the CEOs available to run those FPOs? And look at the stage at which most of the FPOs are getting closed. After the initial funding rounds are over, very few are surviving,” Chandra said.

 

At the same time, executives argued that the focus of the next “green revolution” must shift from production to markets. “The green revolution was about increasing production. Now the time has changed. It is very important to have a market revival,” Srivastav said, calling for demand-led production planning and full value chain digitisation.

 

Agarwal stressed on the need to improve quality and marketing to meet global standards, noting that while India has achieved self-sufficiency in staples such as wheat and milk, it remains heavily dependent on imports for edible oils. Crop diversification to oilseeds is critical to reducing that import bill, he added.