Accelerating Digital Transformation in Agriculture

Author: Sander Janssen

Publish Date: 11 October 2021

Digital technologies have strong potential to support the transformation of agriculture, building a resilient, sustainable and inclusive agrifood system [1]. As key enablers, digital innovations can play a catalytic role – especially in the wake of COVID-19 – by improving the capacity of small-scale producers (SSPs) to adapt to external shocks and increasing productivity and profitability. With more than 33 million smallholder farmers and pastoralists [2] already registered on such platforms, sub-Saharan Africa alone has seen a rapid increase in the adoption of digital solutions, recording an annual growth of 44 per cent over the three-year period ending in 2018. Despite a rapid expansion of the digitalisation for agriculture (D4Ag) sector across low-and-middle income countries, the reach and sustainable use of D4Ag solutions remains fairly low, especially among SSPs. Only 13 per cent of smallholders in sub-Saharan Africa are registered for any digital service and far fewer are actively using such services [3]. Inadequate access to the Internet and digital services, coupled with issues of affordability, disability and a growing digital divide, are among factors that have widened the disconnect. One of the main barriers holding back investment in D4Ag solutions and their impact at scale is lack of cost-effective ways of comparing and contrasting solutions, and making informed decisions on which ones will really work.

Promoting alliances and investments

Despite a highly complex and fragmented digital sector, there is significant potential for establishing sustainable partnerships and investments. For this reason, there is a growing need for greater coordination of D4Ag solutions and their overarching ecosystem, but how best to achieve this?

Stewart Collis from the Bill & Melinda Gates Foundation (BMGF), says that Digital Agri Hub (the Hub) can play an important role in driving D4Ag solutions for small-scale producers: “Evidence suggests bundled digital farmer services positively impact small-scale producers’ livelihoods by improving access to inputs, information on managing crops and livestock, obtaining climate mitigating finance and insurance and accessing markets. Digital Agri Hub will collate the essential data necessary to understand which combinations of services are reaching men and women small-scale producers at scale with impact, and act as a guide for investment and adoption of the most impactful digital agriculture products, solutions and services.”

Josh Woodard from The United States Agency for International Development (USAID) adds: "As the number of digital solutions in the agricultural sector continues to grow, the Digital Agri Hub will allow practitioners to make more informed decisions and bring clarity to a fragmented information landscape. We're excited by the potential for greater impact as a result of a more cohesive digital agriculture space."

Convinced of the scope for digital technologies in the agriculture sector, FCDO, BMGF and the United States Agency for International Development (USAID) are co-funding the Hub to monitor and track the development of digital for agriculture solutions, and their impact in helping to achieve a climate-resilient, sustainable and inclusive food system. Responding to the direct needs of the diverse stakeholder groups that play an active role in D4Ag will be an important focus for the Hub. To this end, it has conducted a needs assessment, with the aim of identifying, unpacking and addressing the major needs for each of the different actors on the pathway towards the sustainable growth of the sector.

The emerging issues

Across the nine identified stakeholder groups, made up of donors, (impact) investors, D4Ag solution providers, agri-food value chain actors, agritech companies, innovation repositories, policy makers and direct implementers (farmers’ organizations and non-governmental organisations), a broad range of issues has emerged. Tomaso Ceccarelli, the lead coordinator on this Ecosystem coordination activity from the Digital Agri Hub team, observes that: “Stakeholders have different perspectives and goals. But there is one trait that unites most of them, and this is the need for a structured overview on initiatives and reliable insights on the impact of D4Ag.”

Gigi Gatti from Grameen Foundation USA – one of the Digital Agri Hub partners – says that: “It is essential to work with existing D4Ag networks and Communities of Practice to understand how to best connect them to the Hub.”

Responding to these diverse needs is a key success parameter for the Hub, integrating such crucial and different perspectives in its programme of work. Simona Benvenuti from the Netherlands Advisory Board on Impact Investing (NAB) – a Digital Agri Hub partner – experiences that "to accelerate the mobilization of private-sector capital into D4Ag it is critical to provide impact-based data on existing D4Ag solutions and insights to mitigate investment risk, thus facilitating collaboration amongst the different types of capital providers and knowledge exchange globally across the value chain".

Daniele Tricarico, from GSMA, also a Digital Agri Hub partner, has closely assessed the development of the D4Ag sector and worked with a number of different solution providers in collaboration with mobile operators. From his perspective, "it is exciting to see a growing number of D4AG services coming to market, but this fast-paced sector also experiences a high level of fragmentation and many short-lived initiatives. It is therefore crucial to quickly identify emerging best practices and highlight the operational and business models that can support truly sustainable, scalable solutions".

Inclusion for all stands out as a critical prerequisite for the sustainable development of D4Ag. In support, Eunice Likoko, from Wageningen University and Research (WUR), adds that: “For women and marginalised groups, improved access to D4Ag solutions will be stimulated by understanding and addressing the barriers they face in accessing digital solutions. Intervention strategies need to go beyond minimal participation of excluded groups, to adopt more empowering approaches that address underlying barriers to promote sustainable and realistic adoption of digital solutions for these groups’’.

A hub for inclusive agricultural transformation

To ensure the strong and sustainable growth of the D4Ag sector, a better tracking mechanism will be central to the success of Digital Agri Hub, while supporting the everyday decision-making process of D4Ag actors across the agrifood system. Whether the decision is to partner with another D4Ag solution provider, to invest in a D4Ag solution, to create awareness and stimulate the development of the sector in a particular country, or to invest in digital developments for societal impact, access to insights, data and knowledge is crucial. It is Digital Agri Hub’s firm intention to truly act as a hub, bringing partners together, creating capacity and connecting actors to one another, helping them to share their insights and best practices towards inclusive agricultural transformation.

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[1] World Bank, 2019. Future of Food: Harnessing Digital Technologies to Improve Food System Outcomes (available here).
[2] 13% of all sub-Saharan African smallholders and pastoralists and up to 45% of smallholder households, depending on assumptions used to calculate penetration.
[3] D4Ag solutions refer to the digitally enabled business models and technologies to address farmers and food system actors’ constraints (e.g. around market access, inputs, financing and climate).

Author: Inder Kumar

Publish Date: 4 November 2021

Digital Climate Advisory Services (DCAS) are digital services (mobile apps, radio and climate information platforms) together with digitally-enabled services (printed bulletins and extension services) offering climate information that target small-scale producers (SSPs), helping users to adapt to climate variability and change. Digital technologies have transformative potential for climate finance, deploying effective climate services and bringing them to the last mile – small-scale producers. The Food and Agriculture Organization of the United Nations (FAO) has highlighted the existence of a significant gap in institutional (public and private sector) investments, climate science, and inclusive planning and policy for transdisciplinary co-design and co-production processes. This blog investigates the potential of Digital Climate Advisory Services to attract more private sector finance and leverage private capital to support SSPs in adapting to climate change. (Impact) investors have a growing interest in designing and deploying innovative investment solutions that embrace diverse business models and adjust to the local context (see, for example, www.acumen.org). Digital Climate Advisory Services fit well with principles applied by impact investors, as they can help small-scale producers and other value chain actors to build resilience to the climate impacts that threaten present and future agrifood systems. In addition, digital technologies and services have the potential to reach scale fast.

Strong local partnerships required for the development of DCAS

For strong DCAS to emerge, a local community of innovative SMEs, food value chains and financial institutions in the digitalisation for agriculture (D4ag) ecosystem is required, facilitating and leading to the establishment of robust partnerships. These partnerships can ensure that technology is at the core of the DCAS infrastructure, and such alliances are crucial if DCAS providers are to build tailor-made services for the last mile in reaching SSPs. The following highlights the different types of partnerships and their orientation for building a local community around a DCAS.

DCAS costs are highly dependent on local digital infrastructure. This includes up-front investment costs and annual recurrent costs to maintain service provision. For this reason, the focus of partnerships around a DCAS must first and foremost be the investigation of sustainable business models, revenue structures and governance, which can translate DCAS into added value for the farmer, and thereby secure a user base.

Second, DCAS solutions and service providers require a well-functioning investor ecosystem to grow from pre-seed to growth finance. Impact investors from different stages of funding series diverge in approach and rigour, adopting several methodologies and practices, hence a successful pipeline handover and impact measurement might be a bottleneck and requires attention. As a result, investors may need the patience to make a later exit than first planned. SSPs are usually not able to pay directly for the services, so other value chain finance and non-financial actors (digital service providers, agtech companies, agribusiness companies, cooperatives and agri-service providers) are likely to be crucial for local and long-term partnerships. Such players can couple DCAS provision with that of other services. Financial inclusion mechanisms for SSPs, in particular, (such as savings, credit and insurance) are highly suited to combining with Digital Climate Advisory Services, as DCAS then become a vehicle for climate finance.

Third, in the case of climate services, there is a need for knowledge institutions to fill the current research gap on scalable use of technologies, helping DCAS to provide impactful solutions. One example would be improving the accuracy of longer-term (seasonal) forecasting and ensuring inclusive access to delivery channels that enable women, youth and other marginalised groups to use Digital Climate Advisory Services. Knowledge institutions and DCAS providers can co-design and co-deploy services, thereby generating scalable data-driven advisory products with a hyper-local infrastructure, capable of disseminating services for last-mile recipients with low literacy levels. For example, the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) and Microsoft in India have teamed up to develop the Intelligent Agricultural System Advisory Tool, which has reached 40,000 farmers in two years, resulting in a 20 per cent increase (contributing US$225 per hectare (ha) to farmer income) in groundnut and chickpea yields, by integrating farmers in the value chain.

To summarize, investors need to look for capacity in the local community for building partnerships around DCAS providers. This will increase the prospects of scaling Digital Climate Advisory Services to manage climate risks, while contributing to food system resilience and enhancing adaptation.

To showcase the community around DCAS, Digital Agri Hub assessed two case studies in order to examine various commercial models, such as Business to Business (B2B) and Business to Consumer (B2C), with a geographical focus on India:

CropIn (HQ: Bengaluru, India, founded in 2009)

Stage: Series C
Total funding amount: $32.6M
Funding rounds: 10; Pre-seed (1), Seed (5), Series A (2), Series B (1), Series C (1)
Annual Revenue: $2.26M
Business model: B2B

CropIn is an earth observation and AI-led agtech organization that empowers the farming community by dynamically utilising agricultural data. The core value proposition of CropIn is bundling a wide range of services to offer holistic and comprehensive solutions. By making dynamic use of data derived from technologies such as satellite imagery, the Internet of Things and field data, CropIn has developed a community around farming companies, seed production companies, agri-input companies, financial lending institutes, crop insurance providers and government advisors. Leveraging the data across multiple stakeholders has enabled CropIn to provide bundled services, such as satellite- and weather input-based advisories, robust and flexible systems for farm management, traceability and output predictability, a package of best practices, and crop reports and insights. CropIn currently provides SaaS (Software as a Service) solutions to 225 agribusinesses and numerous governments and non-governmental organizations in more than 52 countries and has digitized more than 6.1 million acres (2.46 million ha) of farms.

BharatAgri (HQ: Pune, India, founded in 2017)

Stage: Seed
Total funding amount: $3.16M
Funding rounds: 5; Angel (1), Seed (4)
Annual revenue: $131K
Business model: B2C

BharatAgri is a farming technology platform that integrates farmers within the agriculture value chain. Its core value proposition is providing critical weather-related information, a personalised crop calendar and regular monitoring. BharatAgri systematically implements scientifically proven technologies such as satellite imagery-based farm mapping, a smartphone application for personalised farming solutions, and a call centre to provide crop-related expert consultation. BharatAgri bundles its weather-based advisory services together with a package of practices, market information and access, and soil and water testing services. By leveraging the data and bundling a wide range of services, BharatAgri keeps transaction costs low ($4-5 per annum (p.a.)) to support the last mile ($0.5-1 p.a. for SSPs).

Lessons learned

Involving value-chain finance and non-financial actors as active partners in local communities can help DCAS providers to scale up. This will increase the likelihood of impact investors filling the investment gap, while contributing to food system resilience, managed climate risks and enhanced adoption.
Developing a local community around science-based digital innovation has the potential to drive the co-design and co-production of DCAS solutions and services.
By leveraging data across multiple stakeholders and bundling services, DCAS can be scaled up to make effective use of climate finance, while keeping transaction costs low enough to reach and support the most vulnerable.