We’ve heard about how Uber has reshaped the taxi industry and how Airbnb is giving established hotels a run for their money. However, there is a group that is fundamental to the survival of our society, yet little is done to alleviate their economic woos. This group cultivates the food that we consume, from the avocado to the fancy wines we sip at dinner. This group are farmers.
Farming has been a cornerstone of the development and success of mankind. Our ability to economically grow large quantities of produce has enabled us to colonize every habitable corner of this planet. However, the people at the heart of this industry are some of the most economically exploited in society. Farmer debt is rising rapidly globally, and in the US it has led to significant suicide incidents in the farming community.
How has farming worked?
Traditionally, farmers have had to rely on central exchanges to bring their produce to market through either middlemen or major distributors. These middlemen and distributors would share the profits of the retail price of the produce. In the case of small-scale farmers, intermediaries have significant clout to fix prices to their benefit as without them, the small-scale farmers would not be able to bring their produce to the retail markets. This problem is made more severe by mismanaged co-operatives that leave the large-scale farmers vulnerable to the price exploitation as well.
The issue of price exploitation hurts the bottom line of farming communities as they must pay significant sums to the intermediaries. Farming assets (except for land) and products are deemed too risky for financing and this limits the availability of funding to farmers. Farms are expensive to operate, and with environmental risks affecting the yield of produce, farmers are constantly at the mercy of debt financing.
Mobile phones to the rescue!
In both these cases, significant barriers currently limit the access to information and markets for farmers in emerging and developed markets. Powered by the dropping costs of mobile phones virtual platforms have emerged across Africa to enable disruption of the traditional agricultural industry.
Wefarm is attempting to disrupt farming in East Africa by offering farmers a platform to not only exchange information among farmers regarding their concerns but also wants to establish the continent’s first online marketplace for farmers. It uses artificial intelligence and SMS (no internet needed!) to improve the economic livelihood of small-scale farmers who are the most vulnerable to intermediaries in the agricultural value chain by providing its users farming tips and information from other farmers and by enabling small-scale farmers to avoid intermediaries and still access the produce market.
In southern Africa, the World Food Programme’s Innovation Accelerator provides an open and trustworthy platform for small-scale farmers and buyers to negotiate fair prices for their produce. The Maano – Virtual Farmers’ Market has piloted its virtual marketplace mobile application in Zambia to conduct purchases of produce between small-scale farmers and buyers. The platform enables a transaction to be closed electronically allowing the farmers to broaden their market and helps them connect with peer farmers to share knowledge and boost farmers’ productivity by ensuring market access free of intermediaries.
Both these examples, one done by private individuals and the other funded by a large global organization illustrate the need to disrupt an industry that is inefficient in value creation and value capture for its stakeholders. These platforms are revising the value distribution by enabling both farmers and buyers to capture the value previously taken by intermediates. Furthermore, the entire value chain for small scale farmers is being redefined with the elimination of non-value adding services such as intermediaries and adding value-adding services such as peer-to-peer communication. Wefarm allows farmers to ask questions to other farmers, thus encouraging information sharing and collaboration by enhancing the spread of knowledge.
Crowdfunding for produce
Both the above to examples help overcome barriers small-scale farmers face in getting their produce to market. However, another major issue facing farmers is financing. In Nigeria, Thrive Agric and Complete Farmer aim to use the power of retail investors to provide farmers with access to financing in exchange for a share of the farmer’s profits. Both these platforms are more complex, providing a marketplace on which farmers can sell their produce and gain funds from either customers or investors to help them prepare for the next season. This two-way platform disrupts multiple traditional avenues of financing for farmers. Crowdfunding provides the farmers access to a broader range of financing sources and enables the farmers to select their preferred terms and conditions for funding. Such decentralization empowers farmers to be better informed financially.
Incumbents aren’t dropping the ball
Although the examples illustrated so far indicate that new entrants into the industry are disrupting the established processes of commerce. However, the incumbents are not far behind, Mastercard has partnered with Rabobank to improve Mastercard Farmer Network to make it easier for farmers to sell their produce directly to consumers. Such measures suggest a significant effort to shift the dynamics of power in the agricultural value chain back to the farmers even in the developed world by providing a modern platform for produce exchange that greatly reduces the power of intermediaries.
Regaining validity
A cornerstone industry for mankind is entering the age of decentralization, its value chain is undergoing the most significant readjustment in almost a century. For farmers, this is a chance to recapture the value they create by toiling in the sun-drenched fields of the grain baskets of the world.
Decentralization is providing farmers with an opportunity to regain validity in the world. Improved transparency for produce prices and access to crowdfunding are increasing farmers’ ability to navigate the changing economic landscape. However, adopting to the new platforms will not be easy, farmers need to have access to both informational and educational resources to adapt to these changes, and their customers need to embrace the numerous virtual marketplaces and enable the platform economy.
Strategy in the Age of Decentralization 