Indian farmers expect better near-term prospects following a year of steady output and multiple years of market and weather-related disruptions. About three-quarters of farmers (76 percent) say they anticipate higher profits over the next two years, with more than 65 percent citing improved yields and higher crop prices as catalysts. This is a substantial improvement over 2022, when just 37 percent of farmers expected increased profits.
These are among the findings of a survey of 1,031 Indian farmers, a regional view of the McKinsey Global Farmers Insights survey of 4,400 producers fielded in early 2024. (McKinsey conducted a similar survey in 2022). Indian farmers recognize challenges such as worker shortages, increased input prices, and water scarcity affecting total yield. At the same time, farmers have increased their adoption of bio-based products, tapping into innovation that can further enhance yields and improve crop quality and profitability.
Indian farmers’ outlook is leading them to adopt new products and services. Biologicals adoption in 2024 increased 1.5 times from the levels reported in our 2022 survey. There has also been an increase in the use of digital payment services, formal credit, and insurance products. However, services with unclear ROI are seeing limited traction. For example, in the past two years, there has been only a limited increase in adoption of sustainability and digital levers in farming practices.
Farmers are increasingly adopting digital payments and formal financial products
Cash is no longer king with Indian farmers, the survey found. Digital payments have gained prominence at the retail level: more than 40 percent of farmers said they pay electronically, compared with 11 percent in 2022 (Exhibit 1). This growth is in line with the expansion of smartphone usage and internet penetration in India, driven by low data costs and the digital payments boost facilitated by the Unified Payments Interface (UPI).1 The majority of these digital payments are likely to occur in person, for instance, at retail stores where farmers are buying agricultural inputs and paying through digital options such as a UPI-enabled QR code scan.
Similarly, adoption of insurance products (for example, crop or equipment insurance) has also increased. About 37 percent of farmers said they used crop insurance in 2024, compared with 8 percent in 2022. This finding is also reflected in increasing enrollments in Pradhan Mantri Fasal Bima Yojana, the Indian government’s crop insurance scheme.2
Farmers are also increasingly turning to formal credit channels as a source of capital (Exhibit 2). Thirty-six percent of farmers said they use bank financing—compared with 9 percent in 2022—as well as options such as subsidized government credit and short-term in-store credit. The survey also found that most capital is allocated toward procuring seeds, inputs, and agricultural equipment.
Other industry surveys support the finding of growth in formal credit channels, including the 2023–24 Economic Survey by the Government of India, which noted that agricultural credit increased by 1.5 times from 2021 to 2024.3 Our survey finds that while formal credit sources have gained traction, farmers continue to encounter hurdles. For example, three-fourths of farmers cited interest rates as a challenge in obtaining formal financing.
Farmers are increasing use of biologicals
Indian farmers are better understanding the potential of biologicals to improve yield, the survey found.4 Growers have gradually increased the use of such bio-based products in the past few years. Adoption of biologicals in India has risen from 7 percent of farmers in 2022 to 11 percent in 2024 (Exhibit 3). The biostimulant segment saw the largest jump, with 13 percent of farmers currently using biostimulants, compared with 5 percent in 2022.
Respondents stated lower cost per acre (74 percent), crop protection from insects (74 percent), and better overall efficacy of product (55 percent) as three reasons for adoption. Notably, two-thirds of farmers said they are likely to increase their spending on biologicals and about 28 percent said they are likely to maintain spending.
Government incentives drive farmer adoption of sustainable practices
Fifty-four percent of farmers who have adopted sustainable practices said government subsidies were the major driver of adoption (Exhibit 4). However, high interest rates and insufficient insurance coverage (for example, limited coverage for yield loss) have deterred farmers from further scaling these practices.
Crop rotation continues to be the most prevalent practice, the survey found.5 While comprehensive implementation of sustainable practices has been limited, there has been a positive trajectory in adoption, with 15 percent in 2024, compared with 10 percent in 2022.
Modern farming technology takes halting steps
Indian farmers, for the most part, rely on traditional farming methods. More than 95 percent of them said they have yet to embrace modern farming technology (for example, precision agriculture hardware, electric equipment, and farm management software). Only 2 percent said they have adopted precision agriculture hardware and farm management software; just 4 percent have adopted digital agronomy tools such as yield monitoring. Major barriers to adoption are a lack of technical support, time-consuming setup, and high implementation and maintenance costs (Exhibit 5).
Indian farmers are the least enthusiastic of growers surveyed globally about digital interactions at all stages of the purchase journey, from research to planning the next crop. Just one in ten farmers said they prefer digital interactions at all stages of the purchase journey. Growers cite inadequate customer service and ill-matched payment conditions as the top barriers to online transactions (Exhibit 6). On the other hand, a combination of in-person and digital models has worked well for agribusinesses to establish trust among Indian farmers.
Farmers of specialty crops such as fruits and vegetables are three times more likely to choose digital interactions than row crop farmers. Specialty crop farmers who are export-oriented tend to leverage digital channels to facilitate their business.
Build an ecosystem responsive to farmer needs
Farmers are open to investing in products and services for which they see a clear ROI. This is an important consideration for industry players looking to partner with farmers to help them capture more value. Organizations collaborating with farmers can help them capture opportunities in several ways:
- Continue to promote awareness of financing and insurance options available to farmers, and make the application process easy and seamless.
- Become the “innovator” and partner of choice, because farmers say they are open to experiment and curious to try new products and technologies to spur yield and reduce costs (for example, through bio-based solutions and precision farming).
- Strengthen on-the-ground demand generation to help farmers improve their economic prospects through, for example, yield improvement benefits and market linkage support.
- Encourage adoption of quality biological products while continuously clarifying to farmers how effective biologicals can lower cost per acre and increase efficacy.
- Help farmers better understand the ROI of sustainable practices and programs by providing data-driven education on yield and cost and support implementation.
- Build out the omnichannel experience, because farmers prefer in-person or call-center conversations; offer incentives for digital adoption (for example, through loyalty programs); and increase personalized offline and online experiences. Omnichannel product, service, and advice delivery will be critical in serving the farmer of the future. It’s imperative for businesses to incorporate both physical and digital service-delivery models when catering to Indian farmers. It will be equally important to strive for ease of service and encourage the use of digital payments.
India’s agricultural sector growth is encouraged by farmers’ changing outlook toward adoption of new products and services such as biologicals, financial services, and digital payments. The industry can create value through partnerships with agribusinesses, using technology and sustainable practices to address challenges and work toward a greener future.
