Q&A: Digital tech is like eBay or Amazon for smallholders

Digital solutions for smallholders risk failure unless ‘human-centred’ but technology can ‘de-risk’ commercial investment in small-scale farming, writes Ruth Douglas for SciDev.Net.

Cutting-edge digital technologies can do for smallholder farmers what online marketplaces such as eBay and Amazon have done for small businesses across the world, according to Paul Voutier, director of knowledge and innovation at Grow Asia, an organisation which stimulates sustainable agriculture in south east Asia.

However, Voutier cautions that “human-centred design” is the key to making technology work for farmers and investors alike, explaining that a “benevolent”, top-down attitude to small-scale farmers is rarely a recipe for success when designing digital solutions to improve their livelihoods.

Grow Asia seeks to involve venture capital companies, big agribusinesses and start-up founders in smallholder value chains and raise awareness of available technologies in the sector. Voutier spoke to SciDev.Net about the organisation’s work and the opportunities and risks of new technology for smallholders and those investing in them.

Can you describe the role of technology and digitisation in the work of Grow Asia? What are the key digital projects benefiting smallholders?

Our work on the digital front at Grow Asia is entirely focused on digital technologies for small farms. Finance is probably the largest of our focus areas, but we’re also very interested in drones, in traceability platforms [to track food products through the supply chain] and data exchanges, and in mechanisation platforms – so hiring out tractors and other equipment over digital platforms. And we’re interested in training and information on good agricultural practice.

One project that has come together through our programme is a project that [Japan’s] MUFG Bank is working on with palm oil traders to digitise the payments of traders purchasing palm oil from farmers and using that digital payment record as a basis for improving access to credit. That clustering of data collection around farms and using data as a basis for improving access to credit is very much a theme of the programme.

What are the challenges in scaling digital solutions across Asia’s fragmented agricultural sector and how can these be overcome?

One of the challenges that we have is that we tend to adopt a very benevolent attitude towards smallholders. We start with the idea that smallholders should have access to a particular piece of technology, or to information, or credit… But unfortunately that kind of attitude is not particularly helpful when you are trying to introduce a digital solution, because you can end up building something that’s not scalable.

A lot of early-stage digital solutions were developed out of an ambition to improve the livelihoods of farmers, but they tended to not grow past about 2,000 households – they sort of ran out of steam. I think one of the challenges is trying to help founders to focus on the business model around their solution, not just the technology.

The other thing we’ve seen is there’s a big difference between on-farm and supply chain tools. If you think about an on-farm tool, like a pest and disease identification tool… if you’re going to scale that, then you’ve got to find ways of engaging potentially millions of households around the idea, training them in how to use it, and the reality is that most of those on-farm solutions are pretty tricky to build a business model around.

Where you can scale a business model more easily is downstream of the farm. Once the palm oil, or the cocoa, or the rice has left the farm, there are lots of really interesting things we can do to digitise payments, to digitise the flow of that product through the value chain, so that there’s more efficiency in the way that it’s traded, in the way that it’s transported. Once we can digitise that side of things, I think we can work backwards and start to digitise some of the elements of the farm, particularly while we wait for mobile phone ownership and network coverage to increase.

New technologies like drones and AI are exciting but are they viable options for smallholders?

I think that human-centred design is really important in this industry, so sitting down with the farmer or the trader and trying to work out what the problem is that you’re trying to solve. What can happen is that you become very technology-led. So you say, ‘we’ve got these things called drones, we’re just going to have to find somewhere where we can make it work’ – that tends to be problematic.

How important is it for businesses to invest in smallholder farmers and how can farmers be protected from potentially aggressive corporate interests?

I think businesses are absolutely critical. That doesn’t mean there isn’t a role for NGOs in stimulating the sector and trying to help farmers, but you really need to start getting businesses engaged from the outset.

In terms of protecting interests… one of the distinctive features we notice on all the value chains is that the trader – the person that’s buying whatever the farmer’s selling – is in a very powerful position over the farmer. They’re often the source of credit and the only route to market. One of the things that really excites me is the ability of digital solutions to free all that up – to give farmers access to multiple different options when it comes to financing their farm.

If you look at what digital technologies have done – the way the [online platforms such as] eBay and Amazon help small businesses access markets they would never dream of before – I think the internet can democratise markets a lot and make things more accessible.

What do businesses have to gain from investing in smallholders and how is technology enhancing those gains?

If you look at it from a business point of view, what technology does is it resolves the inefficiencies in value chains – inefficiencies in matching buyers and sellers, matching investors with opportunities. There are massive inefficiencies in smallholder value chains around the allocation of capital and of resources, so there’s loads of exciting opportunities to reduce those inefficiencies – and when you do that it creates a business opportunity.

Smallholder farming may be seen as high-risk for investors. How can technology be harnessed to mitigate those risks?

What I hope to see is we get to the point where farmers have a lot more information on their farms about what they’re growing, what the soils are like and what the weather’s like, what the cropping cycle looks like. And that de-risks a whole lot of different business models. Once we have better, more transparent data, that will de-risk and reduce the cost for businesses that want to invest in smallholder value chains.

This article originally appeared in SciDev.Net.
CASA is supporting a series of articles on SciDev.Net on hi-tech farming, find the others under https://www.scidev.net/global/article-series.Hi-tech-farming.html