The country’s Agri Fintech ecosystem has taken the bull by the horns in amassing national support for hapless low-tech farmers.
In India, farmers getting trapped in debt cycles have been committing suicide. According to official statistics from Aurangabad Provincial Committee, more than 600 farmers died by suicide in Maraswada district, Maharashtra, between 1 January 2022 and mid-2022 (August).
Most of the peasants were in debt for their farming expenses which did bear fruit in terms of revenue and profit. In an interview with DigiconAsia.net, Navneet Ravikar, Chairman and Managing Director, Leads Connect Services, shed more light on the alarming trend.
DigiconAsia: Despite India being predominantly an agro economy, why have farmers been hit with such life-threatening business conditions?
Navneet Ravikar (NR): Although agriculture is part of the priority sector lending, due to lack of proper financial inclusion policies, the group of small and marginal landholding farmers of India do not have access to formal credit.
Due to this, farmers are forced to choose to get access to credit through secondary and improper lending channels with hefty interest rates. When extreme weather events and localized calamities strike, farmers already saddled with debt are unable to produce better yields and hence do not get good market prices for their produce.
With no other avenue of financial help, more farmers have tried to end their troubles by suicide. This ends up affecting the overall livelihood of their families who have to bear the debt obligations.
DigiconAsia: How can small-time landholding farmers in India be empowered to manage the funding and agricultural challenges better?
NR: To address these challenges and the threat to food security and agriculture, India’s Agri FinTech ecosystem is coming up with innovative and disruptive solutions.
The latest technological enhancements in terms of data collection, storage, ingestion, and analytics have given rise to innovation in terms of lending and financial products.
Agri FinTech players are using AI and ML to underwrite the financial products such as crop loans and insurance. Also:
- Automation and application programming interfaces (APIs) are making the process of Know Your Customer and Land Records Verification seamless — speeding up disbursements of loans through digital platforms with the help of loan origination and loan management systems.
- Satellite and Weather Derived Datasets are being used to analyze the historical activities in a farmland to determine the crop health and stress. This enables the fintechs to analyze the credit worthiness of the farmers that do not have any credit information reported by the bureaus, and to facilitate underwriting more crop loans.
- Agri Fintechs are also innovating in Dairy Loans using AI and ML for Bovine Identification and checking the liveliness of the cattle to avoid any fraudulent activities and falsified or exaggerated insurance claims.
- Digital lending platforms are also enabling large landholding farmers, dairy, fisheries, poultry farmers, joint liability groups, self-help groups and Farmer Producer Organizations to access financial services and providing timely access to credit. This supports the farmers and agri businesses for acquiring farming resources, capital loans, invoice discounting, warehouse receipt financing, etc., to set up warehouses and cold room facilities.
DigiconAsia: How will the authorities help farmers to survive risks such as climate change, acts of Nature and other inherent uncertainties in this business?
NR: Agri Fintechs are helping the farmers manage risks better —through continuous monitoring. Real time climate/weather alerts and advisories enable the farmers to plan for and mitigate more risks. Financial institutions and banks have been encouraged to provide support to the farmers on the management of credit risk. Overall, agri fintechs are playing a major role in financial inclusion of small and marginal landholding farmers.
With further support from government and RBI in terms of strengthening the priority sector lending policies and fintechs’ association with banks and financial institutions, fintechs will be able to provide better services to the farming community.
On a national level, the added support for farmers are part of the measures needed to address food security and agriculture-related challenges and issues. Banks and financial institutions have to meet the mandate set by the government in terms of issuing loans to agriculture and allied activities, under the Priority Sector lending scheme.
At a global level, India is a major agro-economy country: she plays a major role in producing the agri commodities for internal consumption as well as for export, so helping the small-time farmer community is in many countries’ interest.
DigiconAsia thanks Navneet for shedding light on the current situation in India.
