Imagine a farmer in rural Maharashtra ordering high-quality value-added hybrid seeds from smartphone, delivered within 48 hours, alongside a video tutorial on planting instructions or a cooperative in Punjab ordering fertilizers, tracked in real-time via an app. This isn’t a distant dream—it’s already starting to take shape. 

Agri retail is historically retailer/ dealer driven by over more than 2.5 lakh sale points that serve as vital sources for farmers, providing seeds, fertilizers, pesticides, and tools. Despite their indispensable role, these retailers grapple with challenges such as limited product variety, variable pricing, and high working capital costs. As per recent data on sale points by DPPQS^[1], the year-on-year growth of traditional sale points has steadily declined from 24% in 2020-21 to just 3% in 2023-24. 

On the other hand, farmers also face issues related to misinformation, counterfeit inputs and exploitation. This is truer for farmers in remote areas with limited access to retail shops. E-commerce has the potential to overcome various challenges by creating links across the agriculture input supply chain.  

Evolving landscape: 

In agri, the e-commerce companies primarily act as fulfilment agents, connecting farmers to various agri-inputs from brands. These companies typically source products and meet the demand from the farming community. As the market has evolved, some of these platforms have gone a step further by developing and promoting their own private-label products. By doing so, they aim to offer more affordable or specialized alternatives to well-known brands. This shift allows these platforms to capture a broader market share and create a more personalized connection with their farmer base. 

In the early stages of agri e-commerce, these companies’ primary focus was on the Direct-to-Farmer model, aiming to sell products directly to individual farmers through online platforms, eliminating middlemen and improving cost efficiency. However, due to challenges like last-mile delivery to remote areas and lower ticket sizes, many have begun shifting towards a B2B approach. 

What’s fueling the agri-inputs e-commerce boom? 

• Growing internet access in rural areas: The widespread availability of affordable smartphones, data plans and improved internet connectivity, even in rural areas, have made online platforms more accessible. As per the latest report released by the Internet and Mobile Association of India^[2], 55% of the active internet users belong to rural India. Out of 480 Mn users who are engaged in product and service e-commerce in India, 40% are from rural areas. This highlights the potential growth opportunities for e-commerce in rural India. 

• Government push: Policies like 100% FDI in B2B e-commerce encourage global players to enter the market, bringing advanced technology and expertise. Additionally, regulation changes like the amendment to the Insecticides Act 2022 to legalize the online sale of pesticides have also facilitated the growth of agri-input e-commerce. 

• Rising demand for quality inputs: Farmers frequently fall victim to counterfeit products and profit-driven retailers, resulting in misinformation, excessive costs, and difficulties in making informed decisions for their cropping operations. A FICCI assessment^[3] reveals that approximately 25% of India’s agrochemical market by value and 30% by volume comprise non-genuine or illicit pesticides. Similarly, recent reports on the seizure of counterfeit wheat seed and BG-III cotton seed, underscores the issue of counterfeiting in seeds. The widespread use of these counterfeit products significantly contributes to crop failures, leading to severe financial and agricultural losses. These kinds of losses push young and educated farmers toward alternative channels (e-commerce) that can offer transparent solutions and quality inputs and empower them with the knowledge to make informed decisions.  

Possible solutions to the challenges:  

• Last-mile delivery: One of the major challenges in agri-input e-commerce is ensuring timely deliveries, especially in remote areas where last-mile logistics are hindered by inadequate infrastructure, such as poor road networks and limited transportation options. However, these challenges can be addressed through strategic public-private partnerships. Leveraging the vast network of public institutions like India Post, which operates approximately 165,000 post offices across the country, can significantly enhance accessibility and streamline the delivery of agricultural inputs to even the most remote rural areas, thereby fostering inclusive growth in agri-input retailing. 

• Lower ticket size: Another significant challenge in agri-input e-commerce is the small ticket size of transactions, driven by the average landholding of 1.08 hectares in India, often making it difficult for e-commerce platforms to generate larger revenue per transaction and maintain profitability. To address this challenge, a possible solution could be targeting Farmer Producer Organizations (FPOs) and Farmer Producer Companies (FPCs). FPOs and FPCs unite many farmers, often pooling resources for bulk purchases. By allowing multiple farmers to place a combined order, FPOs and FPCs can increase the size of each transaction, making it more viable for e-commerce platforms to service them efficiently. In line with this approach, companies like AgroStar, BigHaat, and BharatAgri etc. are actively targeting FPOs to increase their average ticket size and value. 

Way forward: 

Farmers, the end customers of agri-inputs, are rapidly evolving their buying behaviour with increased access to information. The future of agri-retail lies in e-commerce. Digital advisory services on e-commerce platforms, such as video tutorials, mobile-based agronomy support, and AI-powered predictive analysis, will further guide farmers with essential education and guidance on input needs and usage. Businesses that embrace this transformation will not only stay ahead of the evolving agri-retail landscape but also drive efficiency, profitability, and sustainability in agriculture. 

References: 

[1] Database titled “Number of Sale Points for Distribution of Pesticides during the year 2019-20 to 2023-24” published by Directorate of Plant Protection, Quarantine & Storage, GOI 

[2] Report titled “Internet in India 2024” published by Kantar and IAMAI 

[3] Study titled “Study on Sub – Standard, Spurious/Counterfeit Pesticides in India 2015” by Federation of Indian Chambers of Commerce and Industry (FICCI) 

Author

Connect with Author at: E-mail agribusiness@sathguru.com