Saurav Rauniyar/Kushankur Dey
The planet, people and profit are three important factors in the sustainable business and development paradigm. In pursuit of sustainability, agriculture and rural ecosystem services remain uncharted territory with little depreciation or erosion of value, especially agro-tourism.
Agritourism is an emerging niche and market segment of the tourism industry. Global Agritourism Market was valued at USD 42.46 Billion in 2019 and is projected to reach USD 62.98 Billion by 2027, registering a CAGR of 13.4% from 2020 to 2027.
Agritourism is a non-urban hospitality product, serving an agrarian way of life, culture and heritage with an abundance of natural resources. In India, agritourism revenues are growing at an annual growth rate of 20% (Business Economics, 2019). Thus, agritourism has gained ground in the tourism industry.
But some concerns have arisen: Why agrotourism? What can it bring to farmers? What are the main characteristics of agrotourism? How can it contribute to sustainability?
First, rapid climate change and the level of pollution induced by tourism and GHG emissions have led to an increasing demand for natural and rural destinations as tourist attractions and which can provide environmentally friendly tourism experiences such as agrotourism in the main activity.
Second, Indian agriculture has been strained due to rising input costs, yield volatility, climatic adversaries, land fragmentation, etc. Although a mainstay of the economy, farmers have turned to other industries in search of alternative livelihoods and income diversification (World Bank, 2021). Agritourism can address the ‘mitigation’ effect of rural decline and restore farmers’ confidence in agriculture and ecosystem services.
Furthermore, agrotourism can serve a dual purpose of supporting farmers’ incomes and creating new forms of tourism for tourists contributing to the economic, social and environmental dimensions of sustainability.
Third, agritourism acts as both a promoter and an inhibitor to change farmers’ attitudes or preferences towards agriculture. It encourages farmers to use land that would otherwise be left fallow or uncultivated. On the other hand, it also prevents part of the agricultural land available to a farmer engaged in agrotourism from being cultivated and instead uses it for tourist activities.
Similarly, active farmers may tend to ignore their agricultural activity if their attention and focus shifts to agritourism, if it becomes a more lucrative source of income.
Fourth, as an emerging segment of the tourism industry, agritourism brings value propositions across various business segments. For example, its market is divided into activity, sales channel and region/spaces. The business segment categorizes this market into on-farm sales, outdoor recreation, agri-entertainment, educational tourism, etc. According to activity, the farm gate segment accounted for 57.9% of the cake. The sales channel segments this market into travel agents and direct. The travel agent segment held 67.5% of the share. Physical evidence, people and processes as critical determinants of service marketing can affect agritourism sales destinations.
Regional segments include North America, Europe, Asia-Pacific including India, Latin America, Middle East and Africa. The North American region held 38.7% share in 2019.
Political attention needed
Fifth, agritourism deserves greater political attention in developing countries where the majority of the population depends directly or indirectly on agriculture. With perpetual adversities like uncertain cash flow, a recurring debt trap, and an unpredictable climate, agritourism can be promoted as an income-generating activity for farmers and build economic, cultural, and ecological resilience in rural areas.
Market research indicates that tourists prefer to visit agritourism centers with a larger area and multiple fun and recreational activities. This contrasts with the very purpose of agritourism which is to support small and marginal farmers, who are unlikely to have larger agritourism centers with multiple amenities. One way to serve the tourist market is through land consolidation through cluster farming or One District One Crop services.
State agencies can take into account farmers’ economic dependence on farms and the perceived popularity of agritourism activities to create a business environment for agroecosystem-based services. Social or impact investors can leverage private capital into agritourism depending on the stage of the business and the business model adopted by the agri-entrepreneurs.
The Agri Tourism Development Corporation can attract start-ups and impact investors to harness the business potential of the agri-tourism landscape in India.
In sum, an enabling environment is necessary for agritourism to thrive and have a 15-20% share in the tourism industry. The 2023-2024 Union budget may increase allocations for these green businesses.
Rauniyar holds a PhD in Agribusiness Management from IIM Lucknow, and Dey is Chairman of CFAM, IIM Lucknow. Views are personal
May 13, 2022