The financial and technological landscape of Indian agriculture is undergoing a shift, with farmers increasingly turning to digital payments, formal financial services, and bio-based products, despite challenges such as labor shortages, rising input costs, and water scarcity. According to a recent McKinsey survey conducted in early 2024, which gathered insights from 1,031 Indian farmers as part of a global study covering 4,400 producers, 40% of Indian farmers are embracing digital transactions and modern agricultural practices, signaling a transition towards a more technology-driven and sustainable farming ecosystem.
Farmers Optimistic About Future Profits
After years of weather-related disruptions and market instability, Indian farmers are expressing renewed confidence in their economic prospects. The survey found that 76 percent of farmers expect higher profits over the next two years, a significant increase from just 37 percent in 2022. Improved crop yields and better market prices are the primary drivers of this optimism, motivating farmers to explore new products and services that could enhance their agricultural productivity.
However, challenges persist. Farmers cite rising input costs and unpredictable weather patterns as obstacles to achieving stable profits. Despite these difficulties, many have begun to adopt innovative agricultural solutions, including bio-based products and financial services, to ensure better yields and long-term growth.
Digital Payments Gain Popularity Among Farmers
One of the most notable changes in the agricultural sector is the widespread adoption of digital payments. The survey found that over 40 percent of Indian farmers now use electronic payment methods, up from just 11 percent in 2022. This shift reflects broader trends in India’s digital economy, where increasing smartphone usage, affordable mobile data, and government initiatives like the Unified Payments Interface (UPI) have made electronic transactions more accessible.
Most of these digital transactions occur in person, particularly at agricultural retail stores where farmers purchase seeds, fertilizers, and other inputs. The convenience and security of digital payments are driving their popularity, reducing the dependency on cash transactions that were once the norm in rural markets.
Growing Interest in Insurance and Formal Credit
Alongside digital payments, more farmers are using formal credit and insurance products to manage financial risks and invest in their agricultural operations. The survey indicates that 37 percent of farmers now use crop insurance, up from just 8 percent in 2022. This increase is aligned with higher enrollments in government-backed insurance schemes such as Pradhan Mantri Fasal Bima Yojana (PMFBY), which provides financial protection against crop losses due to natural disasters.
Similarly, farmers are increasingly turning to banks and government-subsidized loans for financing. The proportion of farmers using bank credit has surged from 9 percent in 2022 to 36 percent in 2024. However, access to credit remains a challenge, with three-fourths of surveyed farmers citing high interest rates as a major barrier. Despite these hurdles, the expansion of formal financial services is enabling more farmers to secure the capital needed for purchasing essential inputs like seeds, fertilizers, and agricultural equipment.
Increased Adoption of Biologicals in Agriculture
Farmers are also showing greater interest in bio-based agricultural products, recognizing their potential to enhance crop yields and improve sustainability. The survey found that the adoption of biologicals—such as biostimulants and biofertilizers—has risen from 7 percent in 2022 to 11 percent in 2024. Among these, biostimulants have seen the most substantial growth, with usage climbing from 5 percent to 13 percent over the same period.
The primary reasons for this shift include lower costs per acre, improved crop protection from pests, and overall higher product efficacy. With two-thirds of farmers indicating plans to increase spending on biologicals, the trend suggests a growing commitment to alternative agricultural solutions that balance productivity and environmental impact.
Government Incentives Drive Sustainable Farming Practices
Sustainability is another area where Indian farmers are gradually making changes, though progress remains slow. The survey found that 15 percent of farmers had adopted sustainable practices in 2024, up from 10 percent in 2022. Crop rotation remains the most widely implemented sustainable practice, as farmers look for ways to maintain soil health and boost long-term productivity.
Government incentives have played a crucial role in encouraging sustainable agriculture. More than half of the surveyed farmers who have embraced eco-friendly practices cited subsidies as a key motivation. However, barriers such as high interest rates and limited insurance coverage for yield loss have prevented wider adoption. Addressing these financial concerns could help accelerate the shift toward more sustainable farming methods.
Slow Progress in Adopting Advanced Agricultural Technologies
Despite the increased use of digital payments and bio-based products, Indian farmers have been hesitant to adopt modern agricultural technologies. The survey found that more than 95 percent of farmers still rely on traditional farming methods, with only 2 percent using precision agriculture hardware and farm management software. Similarly, digital agronomy tools such as yield monitoring have been adopted by just 4 percent of farmers.
The reluctance to embrace these technologies stems from multiple challenges, including high setup and maintenance costs, lack of technical support, and the time required for implementation. Farmers also expressed concerns about the return on investment, indicating that unless the benefits of these technologies are made clearer, adoption rates will remain low.
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Limited Preference for Digital Transactions in Agricultural Purchases
While digital payments are becoming more common, Indian farmers continue to favor traditional interactions when purchasing agricultural products. The survey found that only one in ten farmers prefer digital interactions at all stages of the purchasing process, from research to final transactions.
The main obstacles to online purchases include inadequate customer service and unfavorable payment conditions. However, farmers who specialize in export-oriented crops, such as fruits and vegetables, are three times more likely to engage in digital transactions than those growing staple row crops. Agribusinesses that integrate both digital and in-person models have been more successful in building trust and catering to farmers’ needs.
The Path Forward for Indian Agriculture
The evolving landscape of Indian agriculture presents opportunities for both farmers and industry stakeholders. While challenges such as financing constraints and slow technological adoption persist, farmers have shown a willingness to invest in products and services that demonstrate clear economic benefits.
Organizations working with farmers can play a crucial role by simplifying access to financial services, promoting awareness of bio-based solutions and ensuring that new technologies are easy to adopt. Strengthening digital and in-person engagement models will also be essential, as most farmers still prefer personal interactions when making important business decisions.
As Indian agriculture moves forward, the continued expansion of digital payments, insurance and sustainable farming practices will be key drivers of growth. By addressing existing challenges and fostering innovation, the agricultural sector can support farmers in achieving long-term success while contributing to the broader economic development of the country.