Digital technology has long been touted as the key to helping smallholder farmers around the world overcome barriers that have kept them trapped in poverty, though initial innovations did not always deliver on this promise. Now developers of digital tools for agriculture are trying to refine their offerings, focusing on products that farmers want to use and that align with their priorities. And at the top of that list is getting fair prices for their products.
“Farmers want direct access to markets,” said Daniel Monehin, MasterCard’s division president for sub-Saharan Africa. Through MasterCard Labs for Financial Inclusion — its research and development arm — the company launched 2Kuze earlier this month, a pilot program that connects farmers in Kenya directly to buyers, who buy and then collect their product without the services of middlemen who can cut into a farmer’s profit.
2Kuze, drawn from a Swahili word that means “let’s grow together,” builds on lessons from earlier digital efforts, including introducing a service that is holistic and only requires farmers to have a feature phone.
“We’re not introducing technology that is new,” Monehin said. “But we can still engender their financial inclusion. Hopefully that will be something we can replicate all over the world.”
The challenge
The Food and Agriculture Organization estimates that of the 2.5 billion people in poor countries who make their living off of the food and agriculture sector, 1.5 billion of them are small-scale farmers.
Addressing global poverty hinges on finding ways for these workers to earn more for their labor and increase their output. As digital technology has advanced and penetrated remote corners of the world’s poorest countries, it has increasingly been viewed as the tool to do that. Among the poorest 20 percent of the developing world, 70 percent have access to mobile phones, according to the World Bank.
“To meet any appropriately ambitious productivity target, we have to think hard about how to start taking advantage of the digital revolution that is multiplying the rate of agricultural innovation,” Bill Gates told the International Fund for Agricultural Development’s governing board as early as 2012. “A huge part of the job we share is bringing today’s breakthrough agricultural science and technology to poor farmers.”
That has been easier said than done, it seems. In a sweeping evaluation last year of the impact digital technology has had on the agricultural sector, World Bank Group researchers concluded that despite the proliferation of digital offerings for small-scale farmers, there was “evidence that these innovations often fail to scale-up and achieve wider acceptance.”
They pointed to a number of problems, including innovations that relied on technology — specifically smartphone technology — that many rural farmers still do not have access to or cannot afford.
There was also a problem of providing information, such as market prices, that farmers could not take advantage of. Many small-scale farmers have no direct access to buyers and must sell their produce through middlemen, even if they know they are being gouged.
The result is that small-scale farmers remain mired in poverty, even as broader production demands are unmet. Although 70 percent of Africans make their living from agriculture, according to the World Economic Forum, the continent still had to import $40 billion worth of food in 2015.
Designing a solution
A key to developing something that is ultimately useful to farmers, said John Logan, Technoserve’s Kenya country director, is a willingness to encourage the people expected to use the technology to have a hand in refining it once it is introduced.
Technoserve, a nonprofit that helps encourage the development of the private sector, launched the three-year Connected Farmer Alliance in 2012. Working with farmers and agribusinesses, the CFA encouraged the development of mobile platforms to improve a variety of tasks, including offering farmers digital receipts after they dropped off their produce and encouraging electronic payments. The program ultimately included more than 500,000 smallholder farmers in Mozambique, Tanzania and Kenya.
The farmers came to champion many of these innovations, Logan said, and although the CFA wrapped up in 2015, private businesses talked to farmers about the elements that had been most useful and adopted them among their own services.
“It’s a catalytic kind of program,” he said. “That’s really what it was. A lot of what we do in Technoserve is try and demonstrate something’s possible and encourage private sector players to get on board and run with it.”
And that role is still critical, Logan said, especially because private companies remain reluctant to invest in unproven technology. It is the role of development agencies and their partners to innovate and to encourage feedback from the people the new products are designed to help, he said.
2Kuze
That is what Mastercard’s Financial Inclusion lab is designed to do. It began with an $11 million, three-year grant from the Bill & Melinda Gates Foundation to make financial services accessible, affordable and secure for the world’s poor, said Dave Kim, Gates’ program officer on the Financial Services for the Poor team.
“With this grant, we have had the opportunity to move very quickly, incubate actual products in the field and extend solutions regionally and possibly globally,” he said. That now includes the 2Kuze pilot, which involves 2,000 farmers in western Kenya.
Early on, the 2Kuze team had to confront many of the challenges that have stymied similar efforts. That included going beyond a payment solution — “usually our starting point” — and looking at the entire sales process, Monehin said. Otherwise, they were in danger of creating a mobile product that farmers would not use.
The team started with an interface that connects three large-scale buyers — two in Kenya and one in Tanzania — with the smallholder farmers. Through a simple text interface, the buyers can put out a call for a product, along with a price. Farmers can then respond with an amount they are willing to sell.
This gives farmers — who are trained on the interface by 2Kuze agents — an alternative to middlemen, who have a reputation for exploiting them (even if it is not always deserved). The buyers send an agent out to collect the produce and, upon pick up, can immediately deposit a payment into the farmer’s electronic account.
“Their money begins to flow through formal bank sectors and banks are able to see their work and extend credit,” Monehin said. “You should then see a rapid expansion of farmer’s capabilities because they will now have access to credit.”
He said he hopes the approach will help the farmers go beyond learning about market prices and lead them to actually take advantage of that information.
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