Government, NGO, and business leaders typically see great promise for digital tools to empower smallholder value chains and make them more efficient and profitable for farmers.
However, hope is not enough - new technologies only reach scale when they are delivered within a functioning business model. That said, finding a business model that is financially viable when your customer-base contains growers on small, remote farms is tricky.
By observing the full range of solutions that have been developed across the ASEAN region, we see startups migrating to five business models which seem to show the greatest potential in reaching smallholder farmers at scale.
In the third session of the Grow Asia Digital Learning Series in 2020, we:
Provided an overview of these five business models; and
Presented a startup showcase - one startup to represent each model - to learn more about each startup’s journey in relation to the business model they have employed.
Click here to read the report that this session was based on.
Here is a recording of the webinar:
How to empower farmers using digital technologies
By Hataikan Kamolsirisakul, Group Strategy and Innovation Director, Chief of Staff at Thai Wah
“Let’s become farmers,” I said to my 7-year-old daughter.
“No. Mommy,” she said firmly as she looked into my eyes. “Farmers work so hard in the sun all day, but they don’t get any money. Then they get sick and can’t see the doctor and just die.”
My daughter’s statements left me stunned. Those were observations of a little girl who has traveled several times from Bangkok to Pichit and Pitsanuloke, to visit her nanny’s tapioca and corn plantations. In that area, families typically make an income of no more than 70 USD per rai (1 rai = 6.25 HA) per crop.
By 2050, there will be a lot more people to feed as the global population grows to 9.7 bn. In Southeast Asia, there are 100 million smallholder farmers who produce our food, who are faced with a variety of challenges on a daily basis. To continue to ensure food security while lifting the livelihoods of smallholder farmers we need to transform the way we produce our food, making it more efficient, inclusive and profitable for farmers.
Digital technologies - such as tools for finance, logistics and learning - are a set of solutions widely believed to have the potential to bring greater efficiency to value chains by significantly lowering transaction costs, while improving farmers’ prosperity. It’s with this in mind that I find the boom of over 100 Ag tech start-ups in Asia over the last 5 years incredibly encouraging, especially as these digital solutions are serving areas as diverse as precision farming, crop analytics, farm management, robotics, and e-marketplaces.
At Thai Wah, we purchase tapioca from 30,000 farmers across 10 regional sourcing hubs. We have identified the top “asks” from our farmers which are:
Access to “help” during plantation and harvesting
Access to know-how on yield improvement techniques and crop protection
Access to clean stems, high yield crop varieties, and agriculture inputs
Over the last 2 years we have moved to digitize our farmers and farm records with the vision to understand each individual farmer and personalize support by our farm development and agronomist teams.
For these digital tools to sustain, however, they must operate using a business model that lowers the Cost of Acquisition, increases efficiencies in the value chain, and delivers a Lifetime Value that out weights the Cost of Acquisition - a point that’s very clearly articulated in Grow Asia’s “Smallholder Agri Tech Business Models” report.
Both the private and public sectors’ collective mission is to build or support efficient and profitable smallholder value chains. However, without a well-functioning business model, the idea is a half-baked plan at best. During the Grow Asia Digital Learning Series event on Smallholder AgriTech Business Models on 8 September 2020, we heard several key factors that we should keep in mind to ensure a well thought of solution:
Business models must create and drive Lifetime Value. Farmers are our customers with earnings range between USD 500 – 900. A model that can deliver an incremental income increase of 5 – 10% annually will gain traction faster.
We need multiple stakeholders to play a role governments, regulators, banks, corporates, startups, FMCGs. Each stakeholder plays a different role in the design and implementation of the digital solutions. A solution developer must understand the role of each stakeholder in the value chain, so that it could create a business model that addresses their needs - and thus increase the likelihood of the business model to survive and thrive.
Business models must evolve over time. The relentless pursuit for creating and recreating value will lead to that. We must aim to offer a better way than the existing alternatives or better yet replace the old ways of doing things and set the new standard for the next generation.
The real life lesson gathered from field trips and over 100 collective conversations with farmers is that solutions must be simple. Simple to adopt and simple to maintain for both user experience and cost perspective. Let us build solutions for our farmers by adapting the services to make them more user-friendly, accessible, affordable, and inclusive.
The journey will never end. Smallholder farmers have worked tirelessly to put food on our tables. Let us help rewrite their story together.
Visit the Grow Asia Digital Directory to access a range of digital solutions to challenges from farmer training to traceability and lending. The Digital Directory has over 60 (and counting) agricultural digital solutions that are gaining traction in ASEAN.