Lack of access to information is one of the largest factors constraining growth in smallholder markets. For smallholder farmers, this knowledge gap prevents them from using the inputs, applying the data, acquiring the credit, and reaching the markets needed to increase their productivity and contribute to improving food security in their communities. For companies and financial institutions, it is often difficult to access reliable, timely, useful, and comprehensive data about rural, low-density smallholder markets. For these organizations, this knowledge gap heightens perceived risks, limits their customer base, and increases operating costs – reducing the incentive to expand into smallholder markets.
Fortunately, rapid advances in geographical data technologies (geodata) and information and communications technologies (ICTs) are closing this knowledge gap, helping smallholder farmers and financial and agricultural companies work better together. Geodata and ICT applications, such as real time weather, market, and pest data can help farmers increase their productivity and access markets and finance. In turn, these ICT platforms can provide financial institutions with information about these farmers, lowering farmers’ risk profile and making them more attractive potential loan recipients. Additionally, these technologies can also decrease financial institutions’ operating costs by making it easier to keep records of farmers’ performance, better understand farming, and bring down transaction and monitoring costs, making these institutions more efficient and enabling them to reach more customers. Grameen Foundation Kenya Office and Musoni, a microfinance institution in Kenya, recently started using a new SMS-based ICT platform for its customers, allowing them to access and manage their accounts from their phones. At the same time, the company fully digitized its loan operations with a tablet-based platform, reducing the amount of time and effort required for loan officers to manage clients and enabling them to dramatically increase the number of smallholder customers it could reach.
For companies, integrating geodata and ICT platforms into a business model can offer a number of benefits. First, young farmers are more attracted to agriculture when new technologies are involved, and are often willing to act as early adopters in their communities. Second, improved data plays an invaluable role in tailoring marketing campaigns, such as through segmenting, marketing, and positioning. These technologies can also distinguish a company from its competitors, making it more attractive to potential customers by offering an informational service along with its other products. These technologies also lower the cost of providing extension services. When properly packaged and paired with in-person interaction, these platforms can improve farmers’ productivity and incomes. Finally, ICT platforms can help companies integrate smallholder farmers into formal markets. For example, in Haiti, SOLUTIONS S.A. and GeoNova are using the AgroTracking platform for farmer group registration and to formalize produce collection points and facilitate transportation between farmer groups and exporters’ packaging plants. The platform’s traceability system enables exporters to meet traceability requirements in US and European export markets.
However, companies should also be aware of a number of challenges. First, smallholder farmers are very risk adverse and may not have access to certain technologies, such as smartphones, or may be digitally illiterate. As a result, technologies should be built with smallholders in mind, packaged to their needs and abilities and paired with in-person contact. Simple SMS platforms or voice messaging services for illiterate farmers can be useful. Second, geodata and ICT platforms advance rapidly, so companies must work hard to stay up to date and modern. Third, the policy and regulatory environment also has a significant impact on using these types of technologies. The personal data gathered by these platforms can be considered sensitive and thus may be regulated by the government. ICTs raise important questions about data ownership and privacy. Finally, many of these new technologies may require significant initial investment and have low early uptake in low-density rural markets. Outside funding or subsidies may be necessary for long-term sustainability.
Geodata and ICT platforms have a huge potential to change agriculture for farmers and for companies. Do you have experience working with geodata and ICT? If yes, tell your story below!
Learn more about how geodata and ICT platforms can help both smallholder farmers and the companies that work with them: ‘Geodata and ICT Solutions for Inclusive Finance and Food Security’ report).