Farmers have not been passively watching the technology revolution for the last 20 years. Yet most technical advances have targeted commercial farmers in the global North, with limited uses for a half-billion small-scale farmers in the global South.
That is beginning to change. A range of new technology-based businesses are helping the world’s small farmers manage farm logistics and boost produce traceability, access working capital and insurance and connect with local and global buyers. Impact investors finally have opportunities to help scale solutions that work for the small farmers who produce the majority of the food for the nearly six billion people living in Africa and Asia.
Commercial-scale focus
“Precision agriculture” captures how new technology is being applied in large-scale commercial agriculture.
Farmers are using sensors, drones, satellites and the global positioning systems to monitoring and measure what is going on in their fields. These tools are gathering data on soil health, disease identification and moisture levels, and directing farmers to apply fertilizer, pesticides and water exactly where it needs to go. These tools also are estimating yields, defining planting and harvest timing, tracking performance and creating other meaningful management tools for what are quickly becoming tech-savvy farmers.
Precision farming is only one reflection of the high-tech adoption in commercial farming. Agribots are rapidly changing how crops are harvested. LED indoor farming allows some crops to be harvested 20-25 times a year. Hydroponics techniques grow food without soil.
Although these technology advances are remarkable for the 95 million commercial farmers, who produce food for the global North, they have limited application or adaptation for the 475 million small-scale farmers working throughout the global South.
Small-farmer solutions
Small farmers, mainly in Africa and Asia, are far more relevant to global food security and employment than the commercial farmers. Five out of every six farms on the planet are less than two hectares in size, and support financially roughly 1.5 billion people. These small farmers produce over 70% of the food calories for the 5.7 billion people living in Africa and Asia.
>>FUND: Omnivore raises $46 million in second fund for Indian agriculture
Technical advances have been slower to impact the vast community of small farmers. Much of the historic technological farming practices introduced to small farmers were on improving yields through better seed varieties, fertilizers, pesticides and herbicides. Other efforts have focused on simple ways to get access to water (e.g. solar pumps, peddle pumps) and distribute it more precisely via drip irrigation.
This wave of technological advances have largely bypassed constraints preventing small farmers from selling their crops, competing with commercial farmers or integrating into large food supply chains. Now, a wide variety of new technologies are emerging to address a broader set of smallholder farmer constraints.
Logistics
Small farmers, generally isolated and far from global supply chains, struggle to sell their produce at prices that deliver a profit. Tech solutions are beginning to facilitate and manage relationships between large-scale buyers and small-scale providers.
GreenFingers Mobile, a Cape Town-based startup, enables impact-driven agricultural organizations to digitally manage their farmer networks, evaluate their impact on smallholder livelihoods and enable intelligent, data driven decision-making. Farmforce, a Norwegian company, helps smallholders gain access to formal markets by making traceability and compliance a part of smallholder production. TaroWorks, based in San Francisco, sells an advanced mobile data platform to help organizations enhance data collection, monitoring, sales and inventory management with small farmers.
>>DEAL: TPG’s Rise Fund’s second deal is a $50 million investment in an Indian dairy
Financing
Financial innovations like alternative credit scoring and microinsurance are beginning to help farmers access long-inaccessible debt-based financing for capital expenditures likes building wells, as well as working capital to smooth irregular cash flows.
Bankable Farmer, a Thomson Reuters Africa Labs initiative, uses alternative data sets and advanced data science to design a reliable credit score that meets the standards of more traditional banking institutions.
Groups like ACRE/Syngenta Foundation are using satellite weather data to determine the damages to a farm, reducing the cost of in-person farm visits for insurance claims. The Chinese and Indian governments are working with private sector insurance firms on similar initiatives. “Index insurance” pays out benefits on the basis of a pre-determined index like rainfall levels, for the loss of a crop. Mobile technologies are also being used to locate, register, and pay farmers (via mobile money), reducing the cost of sales teams and claims payments.
Market Access: Helping smallholder farmers in Africa move up the food value chain
Market access
Distance to market, lack of refrigeration and little market intelligence makes finding and securing buyers for the crops small farmers produce is one of their biggest challenges.
A range of applications and web-based platform businesses have emerged to address market intelligence and more. Kenya’s M-Farm, AgroSpaces in Cameroon, and Farmerline, Esoko, and AgroCenta in Ghana, provide a combination of market intelligence data to remove price asymmetry between farmers and buyers, bidding sites between farmers and buyers, weather data to assist in the planning process, farming advice, weather forecasts, and financial tips.
Larger food buyers like Nando’s, ETG and Nestle are integrating these technologies to make small farmer inclusion into their values chains possible.
Creating long-term global food security and a bridge out of rural poverty will require technology solutions not yet developed. Their plots may be small, but the opportunity to tackle challenges of the world’s smallholder farmers is huge.
Tanner Methvin is a partner at Impact Amplifier, a startup accelerator in Cape Town.
This piece has been edited for length.
