Entries in agriculture (9)


Gates on communication, technology and the future of smallholder farming

Bill Gates is best known for his role in founding Microsoft, but his interests -- and the interests of the Gates Foundation -- include the search for ways to improve the lives of poor, smallholder farmers in Africa. He blogged this month about ways in which he sees technology enabling a better future for agriculture on that continent.

Noting that the rapid spread of mobile technology is revolutionizing financial services for those with smaller incomes, Gates suggests that the same infrastructure can change the face of farming as well.

The key issue is the farmers' lack of ability to communicate with the broader agricultural markets. Without this stream of information, farmers can’t grow crops based on the market’s requirements because they don’t know the specifications.

Further, without a more direct and rapid channel of communication, farmers have no way to learn the agricultural practices that could allow them to vastly improve yields. Instead, they grow mostly what they can eat or trade locally, the way they’ve always grown it.

Gates is hopeful that, with time and effort, mobile technology can bridge the communication gap and transform the African agricultural landscape.

When information can flow easily, when data is democratized, the cost of doing business in agriculture goes way down, just as transaction costs go way down when financial transactions are digital."

I encourage you to read the blog, and check out the associated video.

-- Yan Toh




Social entrepreneurship – new management theory or new marketing buzzword?

Social entrepreneurs, social enterprises – you’d be hard-pressed not to find these terms in recent headlines. Many businesses are starting to turn their attention and their dollars towards making a social impact. But are these terms simply new marketing buzzwords or part of a new management theory set to transform the corporate world?

In a recent Forbes article, Willy Foote, CEO and founder of Root Capital, a non-profit agricultural lender building rural prosperity in developing markets, set out to determine the difference between social entrepreneurship as a marketing buzzword and as a true management theory.

Foote turns to Sally Osberg and Roger Martin, experts in the field. Osberg, president and CEO of the Skoll Foundation, and Martin, a former dean of the University of Toronto’s Rotman School of Management and a Skoll Foundation board member, co-authored the book Getting Beyond Better: How Social Entrepreneurship Works.

The book explains that in its true form, social entrepreneurship doesn’t aim to replace an existing broken system. Rather, the enterprise takes direct action by leaving the broken system in place, with the ultimate goal being to transform it permanently into a superior and stable system. Take small-scale farmers in developing markets for example. A true social enterprise doesn’t aim to replace the existing system of workers, operations and supply chain management. Rather, the goal becomes providing financing and training so jobs are created and incomes increased, and as a result, related issues such as food insecurity, emigration and youth unemployment are addressed. A true social enterprise recognizes that challenges won't be solved overnight and that changing equilibrium takes time and patience. To become a true social enterprise, Osberg and Martin offer the following four-step management-style approach:

•    Understand the system in its current state;

•    Envision a future state;

•    Build a sustainable model for achieving the future state; and

•    Scale the model appropriately.



Looking at smallholder farmers and sustainable productivity

Modern agricultural practices and new technologies in many cases have yet to reach small and very small farmers for various reasons, according to a recent Next Billion blog post. Among other issues, these smallholder farmers are faced with a lack of cash, unpredictable personal circumstances or a lack of safety net, should a harvest fail. There are certain companies and organizations that are making efforts to increase the livelihood of these smallholder farmers, by sourcing produce from them or selling products to them.

A recent study by consulting firm Hystra, “Smallholder Farmers and Business: 15 Pioneering Collaborations for Improved Productivity and Sustainability,” compares the performance of 15 companies and organizations worldwide who are pioneering this movement. Key findings from the report include:

  • Farmers can increase their net yearly incomes by 80% to 140% when they have access to productivity-enhancing technologies, including improved seeds, micro-irrigation systems or improved cow breeds. Notably, other interventions, which focused solely on “fixing” dysfunctional markets and redistributing value in the supply chain, only resulted in a 20% to 60% increase in income for farmers;
  • Smallholder farmers, commonly thought to be risk averse to new practices and technologies, in reality, aren’t. What is important to them is being able to reverse their decision, should they change their mind;
  • Early adopters of such development programs are found within the “enlightened” middle – farmers resilient enough to invest in new advancements, but not prosperous enough to be satisfied with the status quo;
  • Offering a wide range of benefits, becoming essential to farmers’ success allows the organization to become irreplaceable, creating a cycle whereby year after year organizations and farmers alike continue to invest in each other; and
  • The decision to work directly with farmers, rather than through an intermediary, can lead to greater success. While not always the case, some intermediaries can lack control and poor proximity.

Sustainability and the art of the deal

For an insightful look at one of the ways in which sustainability is becoming a more tangible factor in business deals, I recommend a recent report in the Financial Times on Mitsubishi's acquisition of a 20% stake in Olam International.

Based in Singapore, Olam is a global integrated supply chain manager, processor and trader of soft commodities that has developed some expertise in sustainable agricultural products. The company fosters the notion of sustainability within its workforce from the very start, sending new employees to remote rural locations to foster a sense of "Olam's place in the community and ecosystem," according to Sunny Verghese, Olam's CEO.

This emphasis on sustainability is producing tangible results that can be measured--among other ways--financially. Mitsubishi's $1.1 billion investment was driven in substantial part by its desire for access to Olam's expertise in sustainable and traceable agricultural products. The FT report indicates that Mitsubishi paid a premium for this, and further, that the deal is evidence that the concept of food production based around caring for the environment, efficient use of non-renewable resources and quality of life for farmers and society — is starting to affect deals further up the agricultural supply chain.

-- Graphics source: Financial Times and the International Institute for Sustainable Development

-- Clara Shen


The benefits of connected farming in emerging markets

Click on image to enlargeFarmers in emerging markets are facing their fair share of challenges when trying to improve their livelihoods and increase production to meet growing demand - a lack of infrastructure and information, financial barriers and the looming threat of water scarcity and climate change, to name a few. According to a recently released report by Vodafone, in order to overcome these challenges farmers in emerging markets are turning to mobile solutions.

The report explores the successes achieved and further potential impact from Vodafone rolling out six connectivity services to India, designed to help farmers and agricultural businesses to increase yield, improve efficiency and to boost incomes and rural livelihoods, all while reducing their environmental footprint.

Vodafone's six initiatives help support information services, receipt services, payments and loans, field audits, access to local markets and smartphone-enabled services. The benefits of the services are abundant – better access to information about agricultural best practices and weather forecasts, better access to information on market prices and the ability to connect more easily with buyers, improved communication and efficiency in agricultural supply chains, a reduction in fraud and losses, better access to capital and financial services and reduced travel time and costs.

According to the report, these six services alone have the potential to positively impact the lives of nearly 70 million Indian farmers in 2020, generating over $9 billion in additional annual income for farmers – that's an average $128 increase in income for over 60% of Indian farmers.

Image source: Vodaphone

-- Yan Toh