Around 60% of Indians derive their livelihood from agriculture, though its contribution to the Gross Domestic Product (GDP) of the country is less than 15%. Agricultural growth has long been recognised as an important instrument for poverty reduction. Studies have shown that every 1% growth in per capita agricultural GDP led to 1.61% growth in the incomes of the poorest 20% of the population – much greater than the impact of similar increases in the manufacturing or service sectors. Further studies concluded that, on average, every 1% increase in labour productivity in agriculture reduced the number of people living on less than a dollar a day by between 0.6 and 1.2%.
Small holder farmers of agriculture value chain face several issues. There is lack of institutional support for production, post production handling and marketing of produce. Due to fragmented land holdings, producers have poor economies of scale. There is poor accessibility and affordability of timely credit confining producers to traditional agriculture with very less value addition. There is low adoptive researches and low feedback in extension services leading to low technological innovations. Lack of access to quality inputs ensures that productivity is kept low. There is low investment in rural infrastructure for storage and transportation. There are huge numbers of players in the system and diseconomies of scale responsible for the huge loss of produce post-harvest. Low access to markets, weak marketing links and low governance of the value chain by the producers has led to poor realisation for the produce.