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Logistics Tech and Lessons for the Agriculture Industry

The Food and Agriculture Organization estimates that up to a third of all food produced is wasted. More importantly, half of this wasted food occurs post-harvest, before the crops are even processed. Transport infrastructure, digitalisation, education, marketplace economics, and crop technology, are all key components of the logistic chain whose gaps have led to widespread crop losses. While much effort has been focused on developing faster growing crops, better fertilizers, and more efficient harvesting systems, it could all go to waste if crop logistics continue to be neglected. Fortunately, the agriculture sector can draw on the wealth of knowledge from successful logistics companies in other industries. The logistics industry across Southeast Asia is catching onto key trends and technologies such as digital platforms, data analytics, and information transparency. How can we apply this to the logistics inefficiencies that plague our food supply chain? In the fourth session of Grow Asia Digital Learning Series in 2020, we:

  1. Provided an overview of the existing challenges and opportunities for logistics in Southeast Asia

  2. Spoke to startups about their approach to disrupting logistics

  3. Explored how crop logistics solutions can be developed based on the lessons learned from the broader logistics industry

Here is a recording of the webinar:


The Challenges of Rural Logistics

By Woo Wei-Li, Manager, Innovation, Grow Asia

Much of the discussion around smallholder farming in ASEAN is about on-farm issues such as the provision of fertiliser, seeds and improving farming techniques. However, supply chains matter – inefficient trucking of inputs into rural areas and the lack of consolidation of crops being transported out places a heavy burden on the rural agricultural sector. The COVID-19 pandemic also highlighted the vulnerabilities and fragmentation of rural supply chains.

To round up the Digital Learning Series for 2020, Grow Asia organized an event on rural logistics that brought together five speakers from China, Indonesia, the Philippines and Thailand. Several themes on the role that digital solutions can play in rural logistics emerged from the discussion:

Adoption of mobile e-payments is an important enabler

Financial inclusion is a crucial underlying support factor. In Indonesia, MAPAN, a social enterprise which was acquired by GoJek, started off by organising group-buying of simple items like cooking pots (that rural families used to buy for much higher prices on credit) for lower prices through an informal rotating savings and loans group. This would be coordinated by local community influencers, often women, who essentially act as the informal banks of their communities. MAPAN is now exploring ways of enabling these community influencers to identify the best farmers in their communities, to help disseminate training to farmers, and to function as first-mile collection points for agricultural produce.

In the case of China, the widespread adoption of mobile e-payment platforms like Alipay and WeChat Pay has been an important driver of rural e-commerce. This was enabled by surging smartphone penetration rates and the expansion of internet access in rural areas. The rapid development of China’s parcel express industry, from 1 billion parcels a year at the start of the 2006 postal reform to 14 billion in 2014, and subsequent consolidation of the industry was an important enabler as well. Pinduoduo benefited from all these broader developments when it was founded in 2015. In five years, Pinduoduo has acquired about 640 million monthly active users, of which more than 40% are buying agricultural products. Almost $20 billion of agricultural products were sold on the platform in 2019.

Tapping on community resources in rural areas

Rural communities are often fragmented and dispersed; having each household arrange their own trucking is out of the question. This makes the role of digitally connected local community influencers crucial.

I use the word ‘influencer’ deliberately, as this person does not need to be an appointed community leader and might not be the wealthiest or most powerful person in the community either. To overcome the lack of smartphone penetration in rural areas, MAPAN is enabling community influencers to be the ‘smartphone of their village’ as they can aggregate demand and disseminate information to their communities. Chilibeli’s part-time agents, often housewives, play a similar role and earn a commission from the sales they make in their local communities. Essentially, the community takes care of its own first-mile and/or last mile logistics.

Pinduoduo is also working with local businesses or individuals, who serve as aggregators for local smallholders, to match local supply with demand. This works particularly well for perishable foods like fresh vegetables that have a shorter shelf-life and do not travel as well. In some of the most remote parts of China, the local China Post office plays an aggregation role and provides services such as packaging for farmers who drop their products off there.

In the Philippines, Morination Agricultural Products has started a digital source mapping initiative among farming communities to provide domestic food businesses with a database for local sourcing that will also help manage logistics costs. Their long-term goal is to create a B2B platform to match local supply and demand for agricultural products. Matching local supply and demand is another way to keep logistics costs low, minimize food losses and reduce the climate impact of transportation.

Digital ecosystem mapping would also give Thailand’s fruit and vegetable cooperatives better visibility of their end-consumers, producers and enable better supply chain management, a challenge highlighted by NR Instant Produce (NRF).

The rural first-mile is also the last-mile

Goods need to flow into rural areas to make rural logistics economical; rural communities are both potential consumers as well as producers, particularly as rural connectivity improves and smartphone penetration increases. Digital tools which deliver better coordination of inbound and outbound freight would deliver greater efficiencies.

MAPAN started by addressing rural communities as consumers, albeit with low purchasing power. One of the strengths of Pinduoduo’s platform is that the company targeted lower-tier Chinese cities and rural areas at a time when internet penetration into rural areas was increasing. This led to a rapid acquisition of users. In Pinduoduo’s case, focusing on low-cost agricultural products gave users an easy entry point to access the cost-savings of the platform’s group-buying model.

The rural logistics space, especially for agricultural products, is a complex one and addressing the challenges will require collaboration among an ecosystem of stakeholders across the public and private sectors. Hopefully these disruptive e-commerce platforms and business models will also empower smallholder farmers, especially women, and enable them to be agents of sustainable and inclusive development in rural areas.


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