Making agri-tourism a sustainable business

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Saurav Rauniyar / Kushankur Dey

Planet, people, and profit are three important factors in sustainable businesses and the development paradigm. In search of sustainability, agriculture and rural ecosystem services remain a greenfield without much depreciation or value erosion, notably agri-tourism.

Agri-tourism is a niche and an emerging market segment of the tourism industry. The agri-tourism market globally was valued at $ 42.46 billion in 2019 and is expected to reach $ 62.98 billion by 2027, registering a CAGR of 13.4 per cent between 2020 and 2027.

Agri-tourism is a non-urban hospitality product, serving an agrarian lifestyle, culture and heritage with an abundance of natural resources. In India, revenue from agri-tourism is growing at an annual growth rate of 20 per cent (Business Economics, 2019). So, agri-tourism has gained traction in the tourism industry.

But a few concerns have emerged: Why agri-tourism? What can it offer to farmers? What are salient characteristics of agri-tourism? How can it contribute to sustainability?

First, rapid climate change and tourism induced pollution levels and GHG emissions have resulted in rising demand for natural and rural destinations as tourist attractions and that can bring eco-friendly tourism experiences such as agri-tourism into the mainstream business.

Second, India’s agriculture has been under stress due to increased input costs, volatile returns, climatic adversaries, land fragmentation, and so on. Although it is a mainstay of the economy, farmers have shifted to other industries in search of alternative livelihoods and income diversification (World Bank, 2021). Agri-tourism can address the ‘hollowing out’ effect of rural decline and restore farmers’ confidence in agriculture and ecosystem-based services.

Furthermore, agri-tourism can serve a dual purpose of supporting incomes of farmers and create novel tourism forms for tourists contributing to economic, social, and environmental dimensions of sustainability.

Third, agri-tourism acts as both a promoter and inhibitor to changing farmers’ attitudes or preferences to farming. It incentivises farmers to use the land which would otherwise be left fallow or uncultivated. In contrast, it also prevents a portion of farmland available to a farmer engaged in agri-tourism from cultivation, and instead uses it for tourism activities.

Similarly, active farmers may tend to ignore their farming activity if their attention and focus shift towards agri-tourism, if it becomes a more lucrative source of income.

Fourth, as an emerging segment of the tourism industry, agri-tourism brings in value propositions in various business segments. For example, its market is split into activity, sales channel, and region / spaces. The activity segment categorizes this market into on-farm sales, outdoor recreation, agri-tainment, educational tourism, and so on. Based on activity, the on-farm sales segment accounted for 57.9 per cent share of the pie. The sales channel segments this market into travel agents and direct. The travel agent segment held 67.5 per cent share. Physical evidence, people and process as essential determinants of service marketing can affect agri-tourism sales destinations.

Region-wise segments include North America, Europe, Asia-Pacific, including India, Latin America, Middle East, and Africa. The North American region held 38.7 percent share in 2019.

Policy attention needed

Fifth, agri-tourism warrants greater policy attention in developing countries where a majority of the population is either directly or indirectly dependent on agriculture. With perpetual adversities like uncertain cash flow, recurring debt trap and unpredictable climate, agri-tourism can be promoted as an income-generating activity for farmers and strengthen economic, cultural and ecological resilience of rural regions.

The market survey indicates that tourists prefer to visit agri-tourism centers with a larger area and multiple fun and recreational activities. This contrasts with the very purpose of agri-tourism that is to support small and marginal farmers, who are unlikely to have larger agri-tourism centers with several amenities. One way to serve the tourist market is land consolidation through cluster-based farming or One District One Crop services.

The state agencies can account for farmers’ economic dependence on farm operations and the perceived popularity of agri-tourism activities in order to enable business environment for agri-ecosystem-based services. Social or impact investors can mobilize private equities into agri-tourism based on the stage of the business and business model adopted by agri-preneurs.

The Agri Tourism Development Corporation can attract start-ups and impact investors to harness the business potential of agri-tourism landscape in India.

In sum, an enabling environment is required for agri-toursim to thrive and have a 15-20 per cent share in the tourism industry. The Union Budget 2023-24 can increase allocations for such green ventures.

Rauniyar holds a PhD in Agri-business Management from IIM Lucknow, and Dey is Chairman of CFAM, IIM Lucknow. Views are personal

Published on

May 13, 2022

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