Demand for phone-based agricultural services has shot up almost 60 per cent across Asia and Africa this year, but many services struggle to raise the funds to survive longer than a couple of years.
This means small scale farmers lose access to much-needed services and information, while promising small- and medium-sized agribusiness enterprises fail before they can flourish.
‘Bundled services’ have the greatest potential for impact, in terms of business growth and wider economic development, according to a September report from the Commercial Agriculture for Smallholders and Agribusiness (CASA) programme.
Bundled services — which include multiple services in a package that is often cheaper for customers than subscribing to services separately — can be used for tracking payments, productivity and staff logistics, while also connecting smallholders with markets.
“We had to adjust from being exporters to now selling software and the hosting, staff and legal implications. It took us two to three years to get it right.”
Almut van Casteren, eProd Solutions
“The more complex a service is, the more impactful it can be because it’s addressing financial, information and market access constraints that have benefits on an agribusiness level and a farmer level,” says report author Alvaro Valverde, a relationship manager at CASA.
“At the same time, they are increasing the likelihood of generating revenue because some of those stakeholders will start paying and supporting the sustainability of the service.”
Attracting paid subscribers is vital, says Valverde, as services that use donor funding to get off the ground strive to become financially sustainable.
Kenya-based eProd Solutions is a supplier management service that provides farmer profiles, field activity monitoring, financial transactions, training and more.
“We developed this comprehensive platform for ourselves and thought it was only relevant for our chilli business,” says co-founder Almut van Casteren. When a local non-profit saw the technology, the service’s potential was recognised.
“They introduced us to their agribusiness partners, who would become our first clients,” says van Casteren. But, there were challenges along the way.
“We had to adjust from being exporters to now selling software and the hosting, staff and legal implications. It took us two to three years to get it right,” she says.
Now, eProd is self-funded, is available in 14 countries and in nine languages. “We are offering new services and evolving, but from day one the business model was focused on a commercially suitable product,” says van Casteren.
Services targeted to small and medium enterprises (SMEs) are on the rise, but they also have a high failure rate, says Valverde, who works for CASA project partner CABI, SciDev.Net’s parent organisation.
“Services that have SMEs as their clients can increase investibility while also having an impact on the smallholder farmer,” he says. “We wanted to identify key pieces of success for developing these services by looking through a business lens and not just a developmental angle.”
Business-to-business services were most likely to succeed, with 61 per cent of those with more than 250,000 users adopting this model.
“These are services that charge the agribusinesses and are free for the smallholder farmer, or are combining both and often charging farmers a small fee for financial transactions,” says Valverde.
Critically, he says, this means a move away from relying on donor funding or subsidies.
Paul Voutier, director of knowledge and innovation at Grow Asia, an incubator for sustainable agriculture solutions in South-East Asia, says there are an increasing number of donor-funded services that are development projects ‘in disguise’.
“As a result, services aren’t thinking about how to serve the customer, but how to serve the farmer,” says Voutier. “They’re not building demand driven business models and their incentives are all wrong.”
“Donors have a role facilitating information flow, networking and the exponential learning that comes when people aren’t sitting around in silos,” he says.
Notable gaps in access to these agricultural services remain, however. In Sub-Saharan Africa, where the majority of smallholders are women, just one quarter of female farmers have access to these tech services.
“There are still issues around mobile ownership, where women don’t access phones and don’t own phones,” says Valverde.
“[Information and communications technologies] aren’t a silver bullet for development, but they really can help address some of the constraints that smallholder farmers and agribusinesses face,” Valverde says.