This article discusses about the need for Hydroponics, pros and cons and why Hydroponics is here to stay.
India is currently the 5th largest economy in the world and is projected to become the 3rd largest economy by 2030. India’s population growth during the same period is projected to increase to 1.5 Billion. It is one of the fastest growing world’s economies and is on course to witness a 4x growth in consumer spend by 2030. % of middle-income households is expected to increase from the current 50% to 80% propelling the growth in consumption. Growing population and increasing prosperity are expected to see an upward trend in expenditure of food. Indian households are expected to spend 35% of budget on Food in 2025.
Growing population, evolving customer preferences and increasing income are expected to put significant stress on our existing food systems to secure our country’s consumption and sustainable growth.
In order to cater our country’s food needs, the country needs to focus on Increasing food productivity output or Importing the delta of food needs.
However, catering to the consumption needs of the country comes with its own set of constraints and challenges which require significant monetary and non-monetary investments from public and private sector in addition to changes in policy to enable sustainable growth.
Evolution of the household-income profile in India
In order to accommodate the country’s rising food consumption, the output needs to keep pace to accommodate the needs. There are two different ways through which output can be increased :
- Increase area of land under agriculture
- Improve productivity & operational efficiency
However, the solutions aren’t as straight forward as they appear and come with their own set of challenges which have explored in detail below.
Land under agriculture has been steadily declining and is not a viable option to increase agricultural output
Increasing the area under agriculture comes with its own set of challenges and is not an easy task. With growing population, rural to urban migration and infrastructure development , there’s an increasing demand for land.
During the period of 1991 and 2019, India has lost over 3 million hectares of agricultural land while the urban regions have gained ~9 million hectares area.
Productivity & Operational Efficiency are heavily correlated to several factors that negatively influence and can have a cascading effect on output
There six key factors that threaten the agricultural output and are key areas that cause operational inefficiencies Improving agricultural productivity and addressing the operational inefficiencies is key to bridge the gap between output and consumption.
The 2nd way to meet our country’s food requirements is by importing the delta in the food needs of our population. Reliance on food imports can have several negative consequences for a country like India.
- Dependence on foreign countries
- Economic instability
- Impact on domestic agriculture
- Food safety concerns
- Environmental impacts
As seen above, the number of variables that can impact the agricultural productivity are high. However, with latest technological advancements there are methods available that are with in the reach of humans that can help control the uncertainty that these variables bring to the table.
One of the most spoken about technology is the adoption of Hydroponics to produce our food.
Adoption of Hydroponics can help achieve the food security and make nations self-reliable through sustainable practices.
Hydroponics uses science and engineering to efficiently mimic the vital elements of a plant’s natural environment, delivering precise quantities of nutrients at appropriate times. The advancements in science, technology and ability to process data has led to the culmination of the modern Hydroponics.
Modern Hydroponics is a highly precise, data driven, automated and scalable farming solution. Hydroponics systems today are extremely sophisticated with systems in place to monitor the pH, level of nutrients, temperature of the water and the amount of light being received by the plants. Hydroponics enables a sustainable way of growing crops.
Hydroponics offers a host of benefits that overcome the existing issues that plague today’s conventional method of farming
| Higher Yield | Continuous Production |
| Control Over Produce | Toxin Free |
| Less Water Consumption | Faster Distribution |
| Season Agnostic | Predictability of Prices |
However, It isn’t all smooth sailing in the Hydroponics ship. Failing to stay vigilant and cautious could tilt the tide.
| Technical Knowledge | System Vulnerability |
| Capital Intensive | Varying Nutritional Value |
| Limitation on type of crops | Water Borne Diseases |
| Reliance on Power/Electricity | Low Return on Investment (RoI) |
Additionally, the sustainability of Hydroponics can be at risk due to the higher prices of its crops
As per our analysis, despite the feasibility of multiple production cycles in Hydroponics, unit economics of crops grown through conventional farming at scale is more lucrative than Hydroponic farming. The operating costs incurred in Hydroponics are significantly higher and add up to the cost of the commodity. So, regularly consumed crops grown hydroponically would cost more than a conventionally grown crop over large areas.
Reasons for continued growth in Hydroponics
- Locally Grown Food
- Technological Advancements
- Food Security
- Agri-tech Startups
- Diversity of Choice
- Access to Capital
- Minimal Wastage
- Traceability of Produce
- Need for locally grown food: Food security, sustainability and increased focus on individual health has led to an increase in locally grown food. Consumers are taking actions to support local food systems by growing their own food or sourcing food from local farmers and markets
- Technological advancements: Advancements in technology have helped improve the efficiency and effectiveness of Hydroponic systems. Automation and control systems further reduce the operational cost of running Hydroponic farms
- Food security: The ability to produce food year-round with efficient use of resources aids in food security. Further, the predictability of supply chains with Hydroponics ensures a reliable and consistent supply of fresh produce
- Evolving consumption preferences and diversity in choice : Indian agriculture is heavily dependent on food grains. With evolving consumption preferences and diversity in choice , consumption of agri-produce that are not native to Indian climate has risen. Hydroponics enables to produce crops such as berries, saffron, peppers, zucchinis, green leafy vegetables etc. without having to depend on climatic conditions
- Access to capital: Hydroponic farms are capital intensive. Affordability is a key issue. However, access to VC money and Indian government promoting and subsidizing innovation in agriculture has led to a growth in the Hydroponics farms
- Agri-tech startups that aid in Hydroponic farming: Several start-ups in India that aid / provide individuals and corporates set up and maintain the Hydroponic farms. They bring awareness by educating the people and provide Farming as a Service (FaaS) offering
- Minimal Wastage: Crops are grown in an extremely controlled environment thereby minimizing wastage. Additionally, the shorter supply chain aids in minimizing the post-harvest wastage
- Traceability of Produce: Hydroponic farms are usually located closer to urban centers. This gives them a shorter supply chain and provides the ability to reach directly to the customer cutting out middlemen
Harsha Kamepalli
Harsha Kamepalli is a strategy consultant with experience in performance improvement, commercial planning, bid management and reporting. He is also a graduate from SIBM Pune specialising in Operations and Supply Chain Management. He enjoys long drives and exploring different cuisines of food in his free time.
