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Cash is no longer the king for Indian farmers, with digital payments at the retail level catching on pretty fast. And they are increasingly moving to formal credit channels like banks and subsidised government credit.
While farmers are increasingly buying crop insurance as well as biologicals to improve yields, they still rely on traditional farming methods instead of adopting modern farming technology. And they are the least enthusiastic of growers surveyed globally about digital interactions at all the stages of the purchase journey, from research to planning the next stop, according to the latest survey by McKinsey
The survey was based on interactions with over 1,031 India farmers as part of McKinsey Global Farmers Insight Survey across 4,400 producers in 2024. The consultancy firm had undertaken a similar study in 2022.
The good news is that 40 per cent of the farmers said that they pay electronically compared to just 11 per cent in 2022. The increase is in line with the expansion of smartphones and their penetration led by low-cost data and facilitated by UPI.
Not only that adoption of insurance products is catching on — as much as 37 per cent of the respondents said they used crop insurance compared to only 8 per cent in 2022. This is clearly reflected in the increase in enrolment in the Pradhan Mantri Fasal Beema Yojana, the government’s crop insurance product.
Farmers are also moving increasingly to formal credit channels — 36 per cent of the respondents said they have taken credit from banks, compared to just 9 per cent in 2022. And 26 per cent relied on subsidised government credit which was a mere 1 per cent in 2022. Only 24 per cent of the farmers said that they still use cash payments, which include money order, cheque, and debit cards, compared to a staggering 81 per cent just two years ago.
More farmers are also adopting biologicals (like biostimulants) to improve their yields — their adoption is up to 11 per cent against only 2 per cent in 2022. Farmers said the key reason for their usage is crop protection from insects, lowering cost per acre, and better overall efficiency of the products.
As many as 53 per cent of farmers are relying on government subsidies to aid the adoption of sustainable farming practices like crop rotation. Government offers support through subsidies in various forms — support for upfront costs, incentives on data collection, monetisation through carbon credits, amongst others.
However, there are areas to watch — 95 per cent of the farmers said that they have not embraced modern farming technology because of the high setup time, high cost, no visibility on return on investment, and lack of intuitive digital interface.
Indian farmers are also the most reluctant in the world when it comes to buying online — two key issues causing their reluctance being that sellers don’t provide them the customer service they need, and secondly, they cannot get the flexible payment options they are looking for online (42 per cent of respondents endorsed these two challenges).
