Every meal we eat is the result of the hard work of millions of farmers, moving through a complex network of traders, processors, and markets. In India, agriculture underpins national food security, with over 40 per cent of the workforce dependent on the sector.

India today is the world’s largest producer of dairy and pulses, and a leading producer and exporter of rice, wheat, sugarcane, and cotton. Agricultural exports were valued at $51.2 billion in FY25, with $16.9 billion already recorded in the first four months of FY26. Rice alone contributes over 30 per cent of these exports, underscoring India’s role in global food trade.

However, this success masks a fragmented structure. India has over 150 million farmers, of whom 86 per cent (130 million) are smallholders cultivating less than two hectares. Production dispersed across millions of farms makes aggregation and market access critical. Many farmers depend on intermediaries, limiting price realisation and market visibility. The resilience of the food system depends on the economic viability of these smallholder farmers and the supply chains connecting them to markets.

Daily reality

Climate variability is no longer a distant risk, but a daily reality for farmers. Erratic rainfall, rising temperatures, and water stress are affecting productivity and shifting cropping patterns. Yields of staples like rice and wheat could decline by up to 15% over the next decade. Efforts to sustain yields have increased reliance on chemical fertilizers, raising costs while degrading soil health. These pressures result in unpredictable harvests and income instability.

For corporates, these disruptions translate into supply chain volatility and complex procurement decisions. In a fragmented system with unpredictable yields, price discovery becomes harder, impacting costs, quality, and margins. These are now structural risks, driving a shift toward more resilient, data-driven sourcing strategies.

At the same time, global corporates are addressing their environmental footprint, particularly Scope 3 emissions embedded in agricultural supply chains. As sourcing reliability becomes a concern, companies are engaging more closely with producers, regulators, and partners to build sustainable supply chains.

Sourcing is no longer just a procurement function; it is a strategic lever influencing environmental outcomes, farmer livelihoods, and business resilience. Corporates are increasingly engaging upstream with farmers and producer organizations. This creates a symbiotic relationship where investments in farm-level resilience strengthen supply chain security.

Make small farmers’ participation viable

This is particularly relevant in India, where agricultural output is high, but smallholder incomes remain low. Stronger linkages between farmers and buyers can improve market access and supply chain reliability. For instance, direct procurement agreements with global brands can provide stable and transparent pricing linked to quality standards. This reduces uncertainty and encourages farmers to invest in better practices. Companies benefit from a consistent, traceable supply aligned with their sourcing requirements.

Ecosystem efforts such as the promotion of farmer-producer organisations (FPOs) are strengthening these linkages by improving aggregation, bargaining power, and access to inputs, credit, and services. Together, institutional mechanisms and private sector engagement are making smallholder participation in formal markets more viable.

Assured offtake also supports income stability, especially as climate disruptions intensify. Between 2015 and 2021, India lost 33.9 million hectares of cropped area to excess rains and floods, and 35 million hectares to droughts. Sustainable sourcing programs promote climate-smart practices that can help maintain yields while reducing input costs.

Global buyers and regulators are increasingly emphasizing traceability, environmental performance, and social accountability. This strengthens the role of aggregation platforms and FPOs, improving visibility across smallholder networks. Sustainability is no longer a differentiator but a requirement for market access.

The future of India’s agri-value chains will depend not just on how much is produced, but how responsibly it is sourced. Aligning commercial incentives with environmental stewardship and farmer prosperity is critical. Stronger partnerships between corporates, farmer organizations, and the broader ecosystem will be key.

At a time when supply chains are both strategic assets and vulnerabilities, sustainability is central to long-term value creation. The strength of the food system ultimately depends on the strength of its farmers, and securing their future is essential to securing our own.

(The author is Country Director, India, TechnoServe)

Published on April 11, 2026