Incubators have an important role with start-ups in raising awareness about carbon farming, and quantifying the carbon savings of their products
India has a unique carbon profile with agriculture being the second largest sector, after energy and power generation, contributing to emissions. We are also the world’s leading GHG emitter from agriculture - rice cultivation and dairy farming being the main contributors. While this statistic should trigger introspection, it also reminds us that we have the largest opportunity to become world leaders in carbon farming - a topic that is gaining a lot of interest across the globe.
Carbon farming can be defined as carbon removal and storage on farmland but more broadly refers to agricultural practices like agroforestry, cover cropping, rotational grazing, reduction of chemical fertiliser and minimal tillage, that sequester carbon dioxide from the atmosphere and store it in the soil or plants.
Many of these sustainable and regenerative agricultural practices have been receiving government support through initiatives like the National Mission for Sustainable Agriculture (NMSA) and the Paramparagat Krishi Vikas Yojana (PKVY) which encourage the adoption of organic farming and other conservation practices through incentives to farmers. There was also support from the prime minister in his Independence Day (2022) speech where he referred to chemical-free and organic farming giving a boost to India’s self-reliance.
However, now there is a carbon lens being applied to these initiatives with the Ministry of Power and the Ministry of Environment, Forests & Climate Change collaborating to establish the indian carbon market (ICM) to promote the transition towards a sustainable and low-carbon economy.
One of the reasons for the government supporting carbon farming, apart from the climate focus, is to reduce the pressure of fertiliser subsidies on public finances. India subsidises 90% of the cost of urea, which is much more than any other Asian country. With the international prices of chemical fertilisers increasing, the pressure is only growing.
Carbon farming calls for technological and process innovations. Indian startups are at the forefront of this movement, playing various key roles in creating the carbon ecosystem.
The Innovators
Cultyvate, an innovative agri-tech startup, uses their patented technology to enable smallholder paddy/rice farmers to switch from flood irrigation to the Alternate Wetting and Drying (AWD) method. AWD reduces the amount of water used by 40% and averts methane generated from flooded paddy fields to the tune of 50%. The carbon savings from AWD are precisely quantified, and hence the method lends itself easily to carbon projects. Cultyvate uses IoT technology and AI models to deliver cost-effective irrigation advisory to 5000 smallholder paddy farmers in Punjab, helping them to transition from their traditional flood irrigation to AWD. With precise soil moisture measurements over multiple growing seasons that help track carbon savings, the startup is well positioned to foray into the carbon farming space .
Burning of paddy stubble at the end of the Kharif season is a big contributor to air pollution in North India. Startups providing alternate uses for this paddy residue - such as green jams which use paddy straw to make bricks and Dharaksha which makes environmentally friendly packaging material from paddy stubble - could be potential use-cases for carbon projects. There is also Climate Sense developing agro-forestry credits by working with farmers in Maharashtra to grow food forests on barren land which restores soil fertility while sequestering carbon.
The Farmer Aggregators
One of the big hurdles to developing carbon projects in India is the fragmented landholdings and asymmetric information across rural markets juxtaposed with the scale that carbon projects demand. Startups like Dehaat and Bharat Rohan, along with FPOs and NGOs, in their regular course of business like selling agricultural inputs or buying output, have direct access to farmers practicing or willing to practice sustainable agriculture. This enables them to play the role of aggregator, bringing the scale required to carbon projects.
The project enablers
Apart from providing solutions and scale, startups are also playing the role of enabler. Trace X, an agri-tech startup, has collaborated with Olam, a large international agribusiness providing a blockchain powered traceability solution for Olam to monitor their AWD and drip irrigation projects for Basmati rice. This end-to-end traceability is allowing Olam to register their rice project for carbon credits.
Other startups like Nurture Farms, Varaha and Climes provide advisory to help large and small players in the agricultural sector develop carbon projects, avail of sustainable financing and navigate the complex carbon markets.
The New Kids on the Block
In addition to carbon farming initiatives, startups like CarbonCraft who use CO2 to cure their building materials (thereby sequestering this greenhouse gas) or Zerund who blend problem plastics into bricks, are contributing to a more sustainable construction sector. There are also many startups like Krimanshi (converting wet waste to insect protein) and Hydrogreens (producing low emission cattle feed) which are creating strong use-cases for carbon emissions avoidance from the Dairy Sector, as they scale.
Startup incubators play a very important role by collaborating with these startups to raise awareness about carbon farming, and quantify the carbon savings of their products using scientific methods like Life Cycle Analysis (LCA). Through LCA, startups obtain an accurate measure of carbon negativity, ensuring transparency and preventing greenwashing. By connecting outcomes to the carbon credit market, enabling patient capital required for developing carbon projects and leveraging their vast network of partners, these incubators help create crucial market access.
With the largest area under agriculture and sufficient scope to increase agricultural efficiency, India has the potential to become the leading market for carbon farming credits. The only caveat is that certain carbon farming techniques like switching from chemical to organic cultivation lead to a temporary fall in yields. At the same time, the risk to food security due to climate change is growing with every passing year. Given India’s large population and role in feeding the world, a decrease in food production as in the case of Sri Lanka’s transition to organic farming, cannot be risked.
And so, the move to climate smart agriculture will need to be a carefully calculated one. We will need to rely on solutions that present a win-win scenario which reduce the environmental footprint of indian agriculture while increasing its productivity and profitability. With policy support, start-up led innovations and a nascent but growing market for carbon farming, this might finally be possible.
(Ananth Aravamudan is the Chief of Strategy and Sector Lead Climate Action, Villgro and Maithili Rege is the Associate Sector Lead Agriculture, Villgro.)