On 8th November 2016, Indians experienced an earthquake. However, it was not caused by the movement of tectonic plates. It was because of the shocking announcement of demonetizing INR 500-1000 high value currency notes by India’s Prime Minister Shri Narendra Modi. As twitter erupted and reactions from across the globe started to update on my news feeds, I could not help but wonder how it would affect our (farMart) business in the future. For those of who are not familiar with farMart, we are a technology platform that connects farmers owning agriculture machinery with fellow farmers on a pay-per-use basis via a mobile APP and call center.

Sectors which were heavily dependent on cash (agriculture, logistics, real estate construction, etc.) were predicted to be most affected by such an announcement. However, our farmers stood up to this challenge and yet again performed better than expected. This resulted in a higher (6%) area sowing of rabi crops when compared to last year. I would not disagree that there were short term problems which farmers were facing due to demonetization. However in the medium and long term, farmers and agripreneurs will be one the biggest gainers from this policy intervention. The reasons to support my argument are listed below:

• ‘Cash-heavy’ to ‘Cash-lite’: one of the fundamental problems of building a business in agri sector is farmers over dependence on cash. With banking infrastructure yet to reach every village of our country, cash handling is an expensive activity for all stakeholders- banks, agri-companies, startups, and most importantly farmers. Farmers have to travel long distances in order to withdraw cash to pay for farming services and daily needs. Every farmer who shifts to digital mode of payment will educate another one from his/her village. Resulting in a human chain network effect. As payments are a critical component of scaling a business, the current environment is more suited for agripreneurs to scale businesses than 3 months ago (pre-demonetization).
• Jio movement is working: Jio is truly making a large scale impact. Its free internet scheme has introduced Indians to the power of technology. There is a paradigm shift in customer behavior as India move from a data poor to data rich country. The biggest gainers from Jio movement are none other than the farmers. Farmers are now surfing the internet to look at technology companies who can help them increase their yields and assist them in selling their produce at better prices. By 2021, nearly 800 million Indians will own a smartphone in India. Smartphones along with low data prices will drive the next green revolution in India.
• Access to formal capital: In the past, small and marginal farmers (who constitute 80% of farming population) preferred keeping cash stashed up in their homes. They did not believe in formal banking and accessed credit from local money lenders at exorbitant interest rates. Demonetization has led to restoring farmer’s faith in formal banking channels. With bulk of their money being deposited in the bank, farmers would now have a digital footprint, which would help them gain access to credit from formal banking institutions. On 31st December 2016, PM Modi announced that 3 lakh new kisan credit cards will be issued to farmers. With deposits in their banks, small and marginal farmers will now be able to apply for such credit facilities which were earlier out of their reach. This will help startups in reducing their operational and cash handling risks, as farmers will pay for service via digital modes.
• Government ‘Cashless India’ push: In the upcoming Budget, expect additional incentives for citizens to move digital under the cashless economy drive. A transaction fee on withdrawal/deposit of cash is expected to de-incentivize people from using cash. Agripreneurs will no longer need to spend both time and capital explaining farmers the benefits of going cashless as government is already taking care of that.
• Willingness to move digital: Farmers are often perceived as illiterate, old school individuals who are not willing to experiment or try new things. However, today’s farmers are different. They are more business oriented and have broken away from the social shackle of their community which often used to act against farmer interests. For assessing the willingness of farmers to move digital, farMart conducted a quantitative and qualitative survey with 150 farmers as respondents. Over 85% of respondents were willing to transact digitally via debit card or Aadhaar (AePS), if guided properly.

Agripreneurs should view demonetization event as a huge opportunity rather than a setback. Taking cue from the sudden boom in the FinTech sector post-demonetization, agripreneurs are in similar position and should look to expedite their growth as they are offering farmers an alternative to cash and introducing them to new technology to help increase their incomes and yields. With USD 500+ billion agri-market opportunity, the time to disrupt the agri sector has never been better.

This is a guest post from Alekh Sanghera who is Co-founder & CEO at farMart AgriTech that helps help farmers increase agricultural productivity, at the same time generate an alternate sources of income for machinery owners which are mostly large farmers. Prior to farMart, Alekh was a digital payments consultant with MicroSave.

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