Partnerships between agri-technology start-ups and financial institutions could help more farmers access finance through the formal sources, according to a study.

The study, sponsored by Rabobank Foundation was conducted by ThinkAg, a platform for agri and food innovation, and MSC Consulting. The study revealed that only 30 per cent of the farmers access finance from formal sources, while about 50 per cent of the small and marginal farmers are unable to borrow from any source.

Banks provided agri credit of about $168 billion in FY18-19, of which half of it was offered to medium and large farmers, who accounted for only 13.8 per cent of total land holdings. Further, the study revealed that banks are reluctant to offer credit to small and marginal farmers due to poor access, limited information, and unpredictable policy environment.

Hemendra Mathur, co-Founder, ThinkAg, said by partnering with start-ups, the banks and financial institutions, apart from enhancing their reach, could also look at lowering transaction costs.

There are about 3,116 start-ups in India in the agriculture and food sector, most of them registered in the past few years. A majority of these start-ups have been directly working with farmers in areas such as agri input and output marketplaces, agri financing, livestock management, mechanisation, farm management and analytics, where an opportunity exists for fintech solutions.

Farmer financing

The agri-tech start-ups have a role to play in farmer financing — from origination to assessment, monitoring, and recovery. Digitisation, access to alternate data and transactions in the agri supply chain will improve the integration of financing solutions, the study said. Creation of a single unified digital agri-database ‘AgriStack’ for India can enable financing for small and marginal farmers, it said.

Further, the study revealed that India could emerge as the hub of developing agri-fintech solutions for rest of the world particularly for regions such as Africa, South Asia and South East Asia, which have similar farming profiles

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