From working a wide range of project such as growing matoke in Uganda, storing apples in Uzbekistan or exporting rice out of Cambodia, I appreciate how innovative technology solutions can help small farmers and businesses in the agriculture sector. Therefore, it was with great interest to read a report published by the GSMA, a UK-based organization that represents the interests of mobile operators worldwide, which presents findings from an assessment of smart farming solutions for smallholders in low- and middle-income countries (LMICs).
With research performed by a team from the Digital Agri Hub, which strives to build a sustainable digital agriculture (D4Ag) landscape towards agriculture transformation LMICs, the assessment examined more than 70 smart farming solutions being implemented in LMICs around the world. The solutions cover three sub-use cases including smart crop management, smart livestock management, and mechanization.
|Image of smart farming sub-use cases: GSMA|
The Digital Agri Hub team focused their research on answering the following questions:
- What are the leading smart farming solutions available in LMICs?
- What smallholder challenges do these smart farming solutions address?
- What are the enabling factors and challenges impacting the growth of technology-enabled smart farming solutions?
- What use cases do the various smart farming solutions support and how do they contribute to climate and disaster resilience, inclusivity and increased productivity and well-being?
- What operational and business models for smart farming are emerging and how can smart farming solutions achieve scale?
- What technologies are supporting the implementation of smart farming solutions?
- How are investors perceiving the smart farming opportunity?
In the data collected from researching the aforementioned questions, six key trends were identified:
- Smart farming solutions have had a strong focus on high-end, capital-intensive crops like horticulture, aquaculture and livestock, in contrast to other digital agriculture solutions where there is a stronger focus on cash crops.
- Smart farming services require a robust technical background and strong digital services know-how. As a result, there are fewer traditional digital agriculture service players (such as mobile operators, NGOs and governments) playing a leading role in the roll-out of smart farming solutions.
- Although achieving scale has been elusive for most smart farming solution providers to date, aquaculture management service solution providers have enjoyed some early successes in expanding their user numbers and attracting funding from investors.
- Smart farming solution providers focused on smallholder farmers are pivoting away from pitching the technology itself (smart sensors, smart greenhouses, smart irrigation systems, etc.) to pitching platforms and solutions that solve specific smallholder problems.
- Smart farming solutions are often bundled with e-commerce platforms that connect farmers to input suppliers, traders and buyers to help them find markets for their increased yields.
- Smart farming solutions have struggled to make inroads with female farmers given the nascent stage of most smart farming companies. In the early stages, D4Ag providers have focused on scale without necessarily taking a gender lens approach.
Researchers also identified six main business models being implemented by smart farming solution providers in LMICs: upfront purchase or asset transfer, pay-as-you-go (PAYG), smart farming-as-a-service/subscription, freemium or tiered, service bundling, and data or insights monetization. The report points out that "These are not mutually exclusive as D4Ag providers may rely on different models to target different customer segments. For example, a D4Ag provider may rely on upfront purchases for their business-to-business (B2B) channel but on pay-as-you-go (PAYG) for their business-to-consumer (B2C) channel."
What is more, "To date, the smart farming services that have had the most success achieving scale are those that rely on the PAYG or smart farming-as-a-service models. These business models lower the barrier to entry for smallholder farmers while creating an ongoing relationship that allows the D4Ag provider to maintain control of the farmer relationship and upsell new services over time."
I appreciate the report's assertion that "Given the nascent stage of the smart farming opportunity in LMICs, investors, donors and other industry stakeholders will need to take several steps before deciding to invest in a smart farming venture." Research from the Digital Agri Hub "has resulted in the following recommendations for ecosystem players seeking to invest in smart farming solutions in LMICs:"
- Prioritize higher-margin value chains for market entry, such as fresh produce, aquaculture and livestock. These value chains give smallholder farmers slightly more room to invest in new technologies than cash crops, which tend to have very low margins and prices are beyond their control.
- Consider the characteristics of a country before deciding on market entry. Pay particular attention to the regulatory environment, available network infrastructure, the competitive environment and the maturity of the targeted value chains.
- Prioritize the right partnerships. Smart farming solutions tend to be more complex than other digital agriculture solutions and, therefore, often require the participation of other ecosystem players. Look to other D4Ag providers to enhance the service offering, to agribusinesses and cooperatives to help aggregate demand, to financial service providers (FSPs) to facilitate financing or identify new target segments (for the monetization of data), to mobile network operators (MNOs) for network access and client relationships and to asset or hardware manufacturers to help reduce the cost of the hardware by creating scale.
- Take a long view. Patient capital from early investors will make it easier for D4Ag providers with smart farming solutions to attract additional investors and scale their business. D4Ag players will need to spend time educating investors about the potential of smart farming solutions.
- Ensure farmers are involved in the design of smart farming solutions. Solutions must solve challenges that smallholder farmers face in their daily lives, not those that governments, investors or other stakeholders perceive they face.
- Understand the total cost of the solution being offered and how that compares with a smallholder farmer’s ability to pay for the solution. This includes understanding the full cost of implementing the technology (e.g. setting up the sensors, installing gateways, etc.) as well as the ongoing support (e.g. access to the platform, data connectivity, etc.).
- Offer more than just data. It is critical, particularly in the context of smallholder farming, that D4Ag solution providers offer more than just the data generated from their smart farming technology. They must translate that data into specific recommendations and, eventually, automated actions. They must also endeavor to offer holistic solutions that help farmers solve a multitude of challenges, not just one specific challenge.
The report correctly notes that "Smart farming solutions can power the transformation of the agriculture sector and assist in the professionalization of smallholder farming by automating decision-making at the farm level." Moreover, "They can help smallholder farmers in LMICs increase their productivity and disaster resilience by opening access to assets and mechanization, optimizing the use of inputs, labor and natural resources and reducing crop and animal losses and waste."
This assessment of the smart farming opportunity in LMICs is the first in a series of reports produced for the Digital Agri Hub that highlight innovations supporting climate and disaster resilience, inclusivity and increased productivity and well-being. I appreciate how the report explores the emergence of smart farming solutions in LMICs and identifies opportunities to scale these solutions. The report also serves as a valuable took in providing supply-side solution providers, such as agritech innovators and mobile operators, as well as the investors and donors that support them, with insights into the smart farming opportunity in LMICs.
What are your recommendations for improving smart farming solutions to help smallholder farmers access assets and mechanization, increase labor efficiency, improve productivity and resilience to climate change, promote the inclusion of groups typically left behind (including women and youth), increase incomes and facilitate smallholder access to credit and insurance products?