The Fourth Industrial Revolution has disrupted industry after industry. Better information flows, lower transaction costs and faster communication have made doing business easier and more efficient, and have proven to be major drivers of economic growth.
It is easy to imagine that traditional smallholder value chains are somehow immune - that the remoteness of small farms cuts them off from the tsunami of change that has rocked the hotel, taxi, education and banking industries.
At Grow Asia, we hold enormous hope that digital technologies will deliver on our vision of small farmers in Asia becoming more profitable and sustainable. We have seen our member companies adopt the same view, transforming their businesses for change. Here in Singapore, at the regional headquarters of many of the largest trading, input and FMCG businesses, we have seen the rise of digital disruption units - small groups specially tasked to partner with start-ups, conduct technology trials and transform internal cultures.
In our view, there are three technologies which show the greatest promise for smallholder supply chains: intelligence tools, digital finance and mobile-based training. We asked three of our partner companies to share their thoughts.
East-West Seed Group - a leading supplier of tropical seeds
East-West has always provided significant smallholder training. How are digital technologies supporting your work?
Bert van der Feltz, President and CEO: “Our company started with an economic vision to improve the income and livelihood of smallholder farmers, and to contribute to increased availability and quality of vegetables in the tropics. We believe that technological innovations such as new breeding techniques will revolutionize horticulture and allow us to develop better varieties in a much shorter amount of time. But aside from having these tools to make better products, what will really make a difference is increasing the access of farmers to these inputs and to the knowledge of how to take advantage of better varieties. At East-West Seed, our main instrument for farmer development and market stimulation is Knowledge Transfer (KT).
In the places where we operate, traditional practices still keep farmers from maximising the potential of their land and labour. High technology and cutting edge innovations are sexy and exciting, but access to practical technologies such as mulching, drip irrigation and hybrid seeds remain very relevant and urgent for the tropical smallholder farmers that we serve. EWS-KT is currently supporting knowledge transfer activities in Cambodia, India, Indonesia, Myanmar, the Philippines, Thailand, Tanzania and Uganda. These activities will soon expand to other countries in which the company aims to grow new markets.
Last year, we trained 70,000 farmers directly. In the long run, we want to train 100,000 farmers annually through direct outreach, and many more through tools including our YouTube channel and GrowHow, our digital platform which contains hundreds of crop guides in 14 languages - all free for farmers to download. More knowledgeable farmers create a positive long-term impact on the industry as a whole."
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MUFG - Japan's largest financial group, which owns several banks across ASEAN
MUFG has ambitious plans to bring formal financial services to smallholders. What is going to enable this transformation?
Shue Heng Yip, Head of Asia Oceania Digital Transformation: “Improved access to broadband, together with a planned rollout of national digital identity (“NDI”) systems - notably by Myanmar, Thailand, Indonesia and the Philippines - are critical to empowering 100 million smallholder farmers to have proof of identity and access to vital services. Legal recognition of NDI’s digital signatures will further smallholder farmers’ ability to exercise their rights.
A borderless and cashless agriculture ecosystem powered by harmonized QR-based e-payments is required to realize greater market reach, better cash flow and reductions in both middlemen fees and transaction costs for smallholder farmers. To raise their incomes, timely access to credit for better crop quality and yield is key. This calls for a new digital credit scoring platform, leveraging machine learning technologies to score socially and fiscally responsible smallholder farmers.
Finally, where digital technologies advance, nationalistic data localization laws can impede if they are enacted as barriers to data flows - a form of “data protectionism”. It is therefore critical that policy-makers promote international interoperability in privacy and data protection to enable global digital trade for smallholder farmers.”
Koltiva - farming technology provider
Koltiva helps companies build a digital map of their supply chain. How is traceability transforming supply chains?
Manfred Borer, CEO, PT Koltiva: “There is no sustainability in smallholder farmer agriculture without product traceability. And there can be no traceability without digitizing smallholder farms and the supply chain up to processing factories.
Through a mapped, traceable and transparent supply chain, sustainability activities can be targeted to those in the chain who need improvement. And there is a lot of improvement needed, from unprofessional and unprofitable smallholder farming to low-quality post-harvest management and waste in the trade. On mobile and web applications, smallholders, small and big traders, input suppliers and banks can be connected through sustainability and traceability platforms such as our SupplyChainTrace product.
Koltiva has developed the FarmCloud to provide smallholder farmers with access to all information collected by traders, input suppliers, Koltiva Field Agents and Extension Staff. The FarmCloud provides unique access to inputs, knowledge, finance and markets for smallholder farmers, and lets them decide the use of their personal data.
Less than 30% of the more than 200,000 smallholders with data stored in Koltiva have a smartphone. To ensure that smallholders can fully benefit from technological innovation, low-cost but powerful smartphones must be available in remote areas. Collaboration with telecommunications operators and governments must be improved to provide reliable and affordable data.
To avoid shortcuts and unsustainable practices, consumers and consumer brands require full traceability to plantations. Smallholder farms must work closely with the processing industry so that everyone in the agriculture product chain makes a profit, and services are accurately paid for.”
Each of these three technologies - traceability, digital finance and mobile-based training - alone has the potential to makes farmers’ lives better, by lifting yields, improving suitability and linking farms to markets. However, it’s only when all three are working together in concert on a single farm that transformation is created. The days of ad-hoc and unstructured smallholder supply chains are numbered. Companies such as MUFG, Koltiva and East-West Seed are ready.