The agriculture sector in India can be transformed by promoting the use of artificial intelligence (AI) and other emerging technologies, according to a new World Economic Forum report. Releasing the phase-1 report of the 'Saagu Baagu' ('agriculture advancement' in the Telugu language) being implemented by the Telangana government in collaboration with it, the WEF said its AI for Agriculture Innovation (AI4AI) initiative has helped more than 7,000 chilli farmers get access to agritech services in the first phase.

 

These agritech services include AI-based advisories, soil testing, produce quality testing and e-commerce -- all in the project's pilot phase.

 

The state government plans to scale existing and additional agritech services in phase II (from 2023 onwards) to 20,000 chilli and ground nut farmers in three districts. The digital public infrastructure will also be introduced in phase II, while in phase III (by 2025), the target is to reach 1,00,000 farmers in the state.

 

The project was initiated in 2022 and is being implemented by Digital Green (in consortium with three agritech startups) with support from the Bill & Melinda Gates Foundation.

 

The WEF said the project report can serve as a playbook for governments to enable their local agritech ecosystem and uplift smallholder farmers.

 

'As the urgency of the climate crisis becomes more evident and conflicts and natural calamities continue to devastate communities, threatening global food security, the industry is under mounting pressure to embrace sustainable practices and revamp its portfolios.

 

'Consequently, agriculture has evolved into a dynamic arena with investment opportunities and innovative solutions, making it an attractive domain for tech-savvy and entrepreneurial minds,' the Forum said.

 

It said the AI4AI initiative aims to transform the agriculture sector in India by promoting the use of AI and other emerging technologies.

 

While these technologies have the potential to significantly contribute to improving productivity and sustainability, they are often marked by fragmented technological infrastructure, high costs of operations, lack of access to data and limited technical expertise, while hampering the scale of their impact.

 

'The AI4AI addresses these challenges to scale emerging technologies, and it lies at the heart of the 'Saagu Baagu' project,' the WEF said.

 

The WEF described this project as an example of agriculture value chain transformation by focusing on easing agritech services delivery to the end customer through administrative and policy support and digital public infrastructure, including its 'Agriculture Data Exchange' and 'Agritech Sandbox'.

 

'Telangana's experience highlights the need for governments to play an enabling role and consider non-financial yet high-impact areas to help scale agri-tech services. A focus on value chains is also needed to ensure efforts are focused, organised and outcome-oriented,' said Purushottam Kaushik, Head of the WEF's Centre for the Fourth Industrial Revolution in India.

 

'I am thrilled to announce the release of the Saagu Baagu Phase-1 report, highlighting our groundbreaking collaboration with the WEF. Through the utilisation of artificial intelligence, we aim to empower farmers with data-driven crop advisories and market intelligence, ultimately striving to foster agricultural prosperity within our state,' said KT Rama Rao, Minister of ITE&C, Industries and Commerce, and Urban Development of Telangana.

 

A newly formed India-Australia joint working group is looking at the possibility of a mutual recognition agreement (MRA) that would help Indian whiskey makers tap into the Australian market, which has a significant Indian population and growth opportunity, two people aware of the development said.

 

India and Australia are working together on a solution for the smoother entry of Indian whiskey to the Australian market, two people aware of the development said. A newly formed India-Australia joint working group is considering the possibility of a mutual recognition agreement (MRA) in this respect.

 

Under Australia’s rules, the spirit must be matured for two years before it can be labelled whiskey, a disadvantage for potential liquor exporters from India, which has no such rule. Indian companies claim that spirits mature quicker in India due to its warmer climate, and the maturation rule limits access in a market which has a significant Indian population offering good growth opportunities. They claim that a two-year maturation in India will also cause a 10% loss due to evaporation.

 

'There is a difference in maturation rate for whiskey that both countries follow, and that is an obstacle in trade. A joint working group has been formed to look into the issue and find a way out. Several stakeholders are part of the committee, including the ministry of food processing industries that is looking into the matter,' one of the two people said, requesting anonymity.

 

The group’s formation comes seven months after Australia gained concessional duty access for its high-end wines under the India-Australia interim trade deal called Economic Cooperation and Partnership Agreement (ECTA) that took effect on 29 December.

 

The Indian liquor industry is pushing for similar relaxations in the UK as well, where the minimum maturation period is three years.

 

India is particularly interested in market access for rum and whiskey, said an industry executive, the second person cited above. 'It may be difficult for Australia to amend their maturation rule, but maturation equivalency is proved in the Indian climate. An MRA could be a solution. Easing of maturation rules in the UK, Canada, and Australia can open up big markets for our producers because there is a significant Indian diaspora in all these countries,' the person added.

 

The formation of the working group comes after India, for the first time ever, opened up its alcoholic beverage market for foreign players under a free trade agreement with Australia last year. While large foreign firms are keen on access to India’s fast-growing whiskey and wine market, the Indian liquor industry, too, wants a relaxation in non-tariff barriers such as the maturation rules.

 

According to a side letter of ECTA signed by the trade ministers of India and Australia last year, market access for Indian spirits and whisky will be examined by a working group, which shall meet within six months of the agreement coming into force. 'The parties shall consider issues relating to market access, including maturation rules for whisky and other alcoholic beverages…Both parties shall regularly review the progress of the working group through the subcommittee on trade in goods,' it said.

 

The 'Australian rule requiring minimum maturation of two years for whiskey and one year for rum is a big hurdle that denies the majority of Indian liquor products access to the Australian market. We believe that these are legacy regulations, not backed up by scientific facts, and not relevant for products made in India where climatic conditions lead to a much more rapid maturation,' said Vinod Giri, director-general of the Confederation of Indian Alcoholic Beverage Companies (CIABC). These matters could not be concluded in the early harvest deal in the absence of time needed for due process but were acknowledged as outstanding issues to be resolved through a working group later, he said.

 

According to CIABC, India is fast emerging as a producer of high-quality liquor, including single malt whiskies like Amrut, Rampur and Indian craft gin like Jaisalmer, Terai, Stranger & Sons, etc.

 

'We are happy to note the rolling out of the JWG and look forward to an educated dialogue and fact-based review of such regulations and also of any other similar matter which restricts the two countries from maximizing the benefits out of the FTA. We will, of course, be glad to assist in whichever manner our Government deems appropriate,' said Giri.

 

Queries sent to the commerce ministry and the Australian High Commission in India remained unanswered.A 2021 survey by the Indian Council for Research on International Economic Relations (ICRIER) and PLR Chambers showed that over 70% of the growth in alcoholic beverage consumption in India in the next decade will be driven by the lower middle and upper middle-income groups and 26% consumers are estimated to move to higher brands by 2030.

 

Under the trade pact with Australia, India allowed tariffs on wine from Australia with a minimum import price of $5 per bottle to be reduced from 150% to 100% on the deal’s implementation and subsequently to 50% over 10 years. The duty on bottles with a minimum import price of $15 was reduced from 150% to 75% on deal implementation and subsequently to 25% over 10 years.

As per evaluation studies carried out for relevant component schemes of Pradhan Mantri Kisan SAMPADA Yojana (PMKSY), substantial direct/indirect employment opportunities have been created in projects supported through its relevant component   schemes. The evaluation study of Integrated Cold Chain and Value Addition Infrastructure Scheme under PMKSY, conducted by M/s NABARD Consultancy Limited in the Year 2020, has estimated that each project has resulted in creation of about 600 direct/ indirect employment opportunities. It is estimated that about 9.69 Lakh direct/ indirect employment opportunities have been generated through projects completed under component schemes of PMKSY. As Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) and Pradhan Mantri Formalisation of Micro food processing Enterprises (PMFME) are relatively new schemes, no such evaluation study has been conducted for these. 

 

Ministry of Food Processing Industries (MoFPI) is implementing a centrally sponsored PM Formalisation of Micro food processing Enterprises (PMFME) Scheme for providing financial, technical and business support for setting up / upgradation of 2 lakh micro food processing enterprises in the country through credit linked subsidy during five years from 2020-21 to 2024-25 with an outlay of Rs. 10,000 cr. The scheme aims to enhance the competitiveness of individual micro-enterprises in the unorganized segment of the food processing industry and promote formalization of the sector. Under the Capacity Building component of PMFME Scheme, MoFPI provide Grants for training of Trainers, District Resource Persons, Entrepreneurs and various other groups. Grants upto 50% for branding and marketing support to groups of Micro Food Processing Enterprises is available under related component of PMFME Scheme.

 

This information was given by Union Minister of State for Food Processing Industries Shri Prahlad Singh Patel in a written reply in the Rajya Sabha.

India’s share in the world food grains market, based on the exported values in 2022, was 7.79% (Source: ITC Trade Map calculations based on UN COMTRADE and ITC statistics).

 

Details of top 10 agriculture commodities exported from the country and top 10 importing countries of India’s agriculture products, during the last five years, are given in the table below:

 

India’s exports of foodgrains have registered a steady growth in last few years which is reflected in the increase in India’s share in world foodgrain exports from 3.38% in 2010 to 7.79% in 2022 as per UN COMTRADE statistics.  Export promotion is a continuous process. The Government has taken several steps at State/ District levels to promote exports of agriculture products, including foodgrains. State-specific Action Plans have been prepared and State Level Monitoring Committees (SLMCs), Nodal Agencies for agricultural exports and Cluster Level Committees have been formed in a number of States. Country and product-specific action plans have also been formulated to promote exports.

 

The Agricultural & Processed Food Products Export Development Authority (APEDA), a statutory body under the administrative control of Department of Commerce, has been providing financial assistance to the exporters of agricultural and processed food products, including foodgrains, under components such as Development of Export Infrastructure, Quality Development and Market Development under its scheme namely “Agriculture & Processed Food Export Promotion Scheme of APEDA”. APEDA assists exporters in promoting exports by organising buyer-seller meets (BSMs); participation in international trade fairs and exhibitions; taking up the Sanitary and Phytosanitary (SPS), Technical Barriers to Trade (TBT) and Market Access issues with the importing countries; and regular interactions with the Indian Missions to tap export opportunities in various countries.

 

Further, Export Promotion Forums (EPFs) for Rice and Nutri-Cereals have been set up under the aegis of APEDA. The EPFs strive to identify and anticipate developments pertaining to production and exports of these products, reach out to stakeholders across the entire production/ supply chain of exports and make recommendations for necessary policy interventions and other measures to promote exports. 

 

Farmer Producer Organizations (FPO) have been established for the purpose of leveraging collective economies of scale in the production and marketing of agriculture and related products. This helps lower the average cost of production, hence increasing competitiveness in foreign markets.

Thailand and Vietnam increased rice prices by $5-10 a tonne on Friday even as the global rice market switched to a 'wait and watch mode' after India banned exports of (non-basmati) white (raw) rice with immediate effect on Thursday evening.

 

However, traders and analysts expect both rivals of India, the numero uno rice exporter, to increase prices by at least $50 a tonne when the market opens next week. 

 

Neighbour’s pride

'India’s envy, neighbour’s pride is what Indian rice export situation is. Prices will be up at least 10 per cent in the global market,' said Rajesh Jain Paharia, a New Delhi-based exporter. 

 

According to a Thailand trade source, prices of five per cent, 25, and 100 per cent Thai rice have gone up by $5-6 after the ban. 'It has been difficult to get quotes today,' the source said, pointing to the 'wait and watch' attitude. 

 

All grades of Vietnam white rice were quoted above $515 a tonne, while Pakistan rates were above $500 a tonne. Myanmar rice prices were also quoted above $500. 

 

'Prices could rise to $700 a tonne within a month and don’t be surprised if you see a 2008-like bullish run when the rates topped $1,000 a tonne,' a trade source said on the condition of anonymity. 

 

Impact spill-over

'There was not much activity in Thailand and Vietnam. But we expect prices to rise by $50-100 a tonne,' Jain said. 

 

'We have no idea as of now what Vietnam or Thailand are up to. But they will definitely hike the prices and we will see next week,' said VR Vidya Sagar, Director, Bulk Logix. 

 

The increase in rice prices will not be confined just to white rice. Parboiled (boiled) rice rates will likely increase as some countries may shift to that variety, whose exports are allowed. 

 

According to the Thai trade source, India’s parboiled rice prices shot up to $475-495 a tonne, up at least $30 a tonne. 

 

Food price inflation

'If white rice prices rise to say $650 a tonne and parboiled is available at $500, some consumers will definitely shift to the variety,' said the analyst. 'Parboiled rice exports could be next in the line (for export ban),' he said.

 

Research agency BMI, a unit of Fitch Solutions, said the Indian Government’s decision to promptly ban white rice exports was 'the June rise in the rate of Indian food price inflation to 4.5 per cent year-on-year'.

 

The Centre’s decision will have material implications for Indian inflation as well as substantial ramifications for trends in the global rice market, it said. 

 

S Chandrasekharan, a Delhi-based trade analyst, said on Thursday that despite India imposing 20 per centexport duty on white rice shipments in September 2020, they had gone up by 23 per cent.

 

‘Watch out mislabelling’

In addition, he said, white rice monthly exports since the beginning of the fiscal year had increased to over 5 lakh tonnes from around four lakh tonnes a year ago. During April-May this fiscal, nearly 11.5 lakh tonnes of white rice were shipped out of the country. 

 

'The government has now to ensure that no mislabelling of white rice is done as parboiled for exports. It has to also ensure that white rice is not pushed out as some cheap Basmati rice. The authorities have to be strict in enforcing the ban,' he said.

 

In addition, he suggested that the Centre fix a minimum export price for basmati shipments. 

 

Customs authorities got going in Chennai on Friday by not permitting idli rice as it is seen as single-boiled rice and not parboiled. Steamed rice shipments are also expected to be curbed as a result, the trade source said.

 

El Nino factor

Research agency BMI said the global rice market remains tight by recent historical norms, which the Indian ban will exacerbate. 'In conjunction with India’s September 2022 ban on the export of 100 per cent broken rice, between 30 per cent and 40 per cent of India’s rice exports are now offline. In conjunction with the supply-side risks associated with El Niño, we expect the export ban to keep upside pressure on prices,' it said.

 

Rice prices had surged to a five-year high earlier this month on fears El Nino may affect rice production in Asia. Thailand was among the first to say that its rice production might be 6 per cent lower this year. 'Vietnam production will also likely be hit by El Nino,' said the trade source.

 

In India, kharif paddy sowing has encountered different problems. One, deficient rains has affected sowing in key regions such as West Bengal, Andhra Pradesh, Chhattisgarh, Tamil Nadu and Karnataka. The second problem has been caused by floods in Punjab and Haryana, which forced the Centre to ban exports of white rice.

 

Tardy kharif sowing

On Thursday, the Indian Government caught the global rice market by surprise, banning exports of white rice as part of its efforts to control rising foodgrain prices. The move is also seen as a measure to overcome any supply shortage.

 

In addition to rise in white rice exports, at least three lakh tonnes of the rice were under-invoiced and exported below $300 a tonne since September 2022. Over the last two years, India has exported at least 17 million tonnes of non-basmati rice. 

 

The Centre’s decision came following tardy progress in kharif paddy sowing, which was 8.5 per cent lower than last year at 122.18 lakh hectares (lh) as of July 14.  

 

On the other hand, rice stocks with the Central pool maintained by the Food Corporation of India (FCI) dropped to a seven-year low of 25.34 million tonnes. The agency has an additional 23.3 mt of unmilled paddy (15.72 mt of rice). 

Agriculture is a victim and a source of climate change. But it also offers solutions. Developing countries heavily depend on agriculture and lack the resources to look for cost-effective solutions to climate change in agriculture itself. India has committed to achieving the target of net-zero emissions by 2070, and towards this, it has taken several proactive actions. The Government of India enacted “The Energy Conservation (Amendment) Bill, 2022” for promoting the use of renewable energy and creating a national carbon market.

 

The recent Union Budget 2023 lays considerable emphasis on Green Growth for sustainable economic development. Nonetheless, most of such actions are broad-based and indicative and not specific to any economic activity. Recognising this gap, the Ministry of Environment and Forests has recently proposed a Green Credit Programme under the Environment Protection Act, 1986, which provides a basic framework for harnessing the green growth potential of different farm and non-farm activities through economic incentives.

 

Nodal agency to issue credits

The programme provides for a market-based mechanism to reward voluntary environmental actions that help conserve nature and mitigate climate change. It offers green credits as incentives for specific activities that deliver positive environmental outcomes. The programme involves all stakeholders, that is, individuals, industries, farmer producer organizations, urban local bodies, gram panchayats, and private entities to earn green credits for the adoption of eco-friendly practices including tree plantation, water conservation, sustainable agriculture, waste management, mangrove conservation and restoration, eco mark labelling, sustainable building and infrastructure, and air pollution reduction.

 

The Indian Council for Forestry Research and Education (ICFRE) is designated as the main agency to issue green credits, and oversee its implementation and tracking the progress. The green credits earned through these activities can be traded on a domestic market platform. In addition, the activities generating green credits are also eligible for carbon credits for trading in the carbon market.

 

The Government of India has taken several initiatives for promoting sustainable development of agriculture, but it is for the first time a dedicated domestic voluntary national market mechanism has been proposed to incentivize stakeholders engaged in agriculture for their adaptation and mitigation actions.

 

Repurposing subsidies

The Programme can be a game changer for providing much-needed market mechanism for sustainable development of agriculture and enhancing farmers’ income. First, several agricultural practices such as zero-tillage, direct seeding and alternate wet and drying systems in rice, green manuring, organic manure, cultivation of legume crops, rainwater harvesting and conservation, organic or natural farming, precision agriculture, and agro-forestry generate several intangible ecosystem services, which are not valued but are freely available to the society. Through the green credits the farmers will be rewarded for the adoption of farm practices that generate positive externalities to the environment, human and animal health.

 

Second, the programme can serve as an entry point for repurposing agricultural subsidies, which have become detrimental to natural resources and unsupportive of sustainable production patterns. For instance, the heavily subsidised electricity for irrigation has caused a significant reduction in the groundwater table in States such as Punjab and Haryana. The burning of paddy straw pollutes the environment, affecting human and animal health. The current subsidy regime can be transformed by linking economic incentives for the green credits with the adoption of environmental-friendly agricultural practices.

 

Challenges

Though quite promising, several practical challenges are likely to crop up while operationalising the Green Credit Programme. The biggest challenge is the establishment of an equivalence factor for allocating green credits across different activities. For example, estimating equivalence factor for water conservation and carbon sequestration is complex and difficult task.

 

Another hurdle is the valuation of intangible ecosystem system services that agriculture generates. As the primary objective of the Programme is to provide monetary incentives for the protection of the environment, the absence of robust mechanisms for the verification of green credits and their monitoring may lead to greenwashing. Furthermore, measuring green credits at the farm level is a difficult task due to the significant diversity in farm size, cropping patterns, and agronomic practices. Of the total farm households, about 86 per cent have landholdings of less than or equal to two hectares, and they often face significant financial constraints on the purchase of eco-friendly inputs and the adoption of capital-intensive farm practices.

 

The first step for implementation of the Green Credits Programme is that the prices of the green credits from agricultural practices need to be differentiated from the prices of the practices in other sectors. There is a very probability of a reduction of crop yields in the initial years of switching over to green practices. Second, the programme should adopt a community approach for the certification of green credits to minimize transaction costs. Third, to avoid the risk of greenwashing, the pricing of the green credits must be differentiated by the type of activity. Finally, agriculture mitigates the greenhouse gas emissions and enhances carbon sequestration; hence the price of green credits should be fixed higher for the agricultural activities.

In order to ensure overall growth and development of food processing sector across the country including Karnataka, Ministry of Food Processing industries (MoFPI) has been implementing Central Sector Umbrella Scheme - Pradhan Mantri Kisan SAMPADA Yojana (PMKSY) since 2016-17, centrally sponsored PM Formalization of Micro Food Processing Enterprises Scheme (PMFME) since 2020-21and Production Linked Incentive Scheme for Food Processing Industry (PLISFPI) since 2021-22.

 

Under component schemes of PMKSY, MoFPI mostly provides credit linked capital subsidy with total outlay of Rs 4600 Cr for 15 Finance Commission Cycle. Ministry also provides financial, technical and business support to micro food processing enterprises through PMFME scheme with outlay of Rs 10,000 Cr for a period of 5 Years (2020-21 to 2024-25), whereas PLISFPI is targeted to facilitate expansion of food processing capacity by creating champion brands in Food Processing Sector with total outlay of Rs 10,900 Cr for a period of 6 years (2021-22 to 2026-27).

 

Since 2019-20, a total of 373 food processing units have been approved for assistance under Creation/ Expansion of Food Processing & Preservation Capacities (CEFPPC), a component scheme of PMKSY, out of which 16 units are located in Karnataka.

 

A total of 38466 micro food processing enterprises have been approved for assistance under PMFME since 2020-21, out of which 2444 micro food processing enterprises are located in Karnataka.

 

This information was given by Union Minister of State for Food Processing Industries Shri Prahlad Singh Patel in a written reply in the Rajya Sabha.