Three ways IFAD can support digital agriculture in the Asia-Pacific region
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Three ways IFAD can support digital agriculture in the Asia-Pacific region22 September 2021
Over the last two decades, mobile phone and smartphone ownership, along with broadband network coverage, have steadily increased across rural Asia. As a result, farmers and agribusinesses are increasingly making use of new technologies such as digital finance applications, mobile payment options, and trading support. However, there are still many systemic constraints on the adoption and implementation of these technologies, including a lack of funding for start-ups; difficulties coordinating between start-ups, investors and governments; and little to no policy support for the sharing of infrastructure for broadband network coverage. Donor support therefore remains crucial to driving positive outcomes for small-scale farmers in these areas.
IFAD’s commitment to promoting digital agriculture in the Asia-Pacific region goes back many years. A key part of this effort is IFAD’s long-standing collaboration with Grow Asia, an organization dedicated to helping the region’s small-scale farmers sustainably improve their productivity and increase their incomes.
As part of this collaboration, IFAD recently commissioned a report with Grow Asia to explore how digital technologies are reshaping agriculture in the region and to highlight how IFAD’s strategic investment decisions can best accelerate the adoption of those technologies. The report highlights some of the significant contributions IFAD and Grow Asia have already made and presents a series of action steps for future work.
- Offer early-stage funding to start-ups.
Despite the excitement around digital agriculture, the reality is that venture capital funding for this sector remains limited. However, this also means that even small amounts of funding can have impressive results – especially if funding is closely tied to positive outcomes for the small-scale farmers using these technologies. Although the risk of failure is ever-present (as it is with start-ups of all kinds), it is possible to both deliver significant value and hedge risk with a portfolio of varied investments.
As one example of this, IFAD recently collaborated with the Helvetas/Value Chain Capacity Building Network in the Asia Agri-Tech challenge, an opportunity for developers of agricultural support applications to compete for a monetary prize. Similarly, Grow Asia has also organized hackathons and innovation challenges. Events like these are an excellent way to support agritech start-ups at their earliest stages.
- Expand awareness of, and opportunities for, the use of these technologies.
Many digital agriculture start-ups also struggle with visibility and access. For example, there are plenty of investors out there who would happily support them – but the start-ups are simply not on their radar. Governments, too, are often unaware of existing technologies that could improve their extension services, and even those that are aware of them may lack the in-house capabilities to deploy them. Additionally, useful data on the small-scale farmers themselves, and the specific challenges they face, are often lacking. Knowing more about these farmers and their needs would enable businesses, governments and donors to make more targeted interventions to improve farmers’ productivity, livelihoods and sustainability.
To address these connection problems, we should accelerate our efforts to help start-ups reach the key actors they need. Conferences, pitching contests, showcases and reports all represent simple, low-cost ways to build networks, broker partnerships and facilitate information sharing.
We can also address the gaps in data on small-scale farmers by enabling the farmers to collect and share these data themselves, through efforts such as trainings, digital literacy capacity-building, and the provision of necessary equipment. Government agricultural extension agents can also be involved in these efforts. Importantly, this would also empower farmers to decide how their data are shared and with whom.
- Engage in advocacy for more digital-friendly policies.
Many current policies inadvertently hamper the growth of digital agriculture solutions. For example, know-your-customer legislation can be an obstacle to digital payments services. And policies like these are more than a nuisance: the more digital lenders struggle to sign up customers, for example, the fewer the loans for small-scale farmers. Similarly, data privacy laws can prevent start-ups and other agribusinesses from offering effective cloud storage services. Additionally, not all governments are proactively adopting digital agriculture, even though doing so would be beneficial to their small-scale farmers, and even though there is potential for them to become flagship early users – and therefore initial anchor clients – of promising technologies such as digital lending, digital payments, and farmer advisory and extension services.
IFAD has already commissioned empirical research from Grow Asia aimed at deepening governments’ understanding of how policies favourable to digital payments can benefit the most vulnerable farmers. As an example, this report produced through this research highlights the digital needs of small-scale farmers and how they currently use technology. We hope the findings in this report will help agribusinesses and governments develop new technologies that will address farmers’ needs and preferences.
However, there is still plenty of room to step up efforts in this area. For example, case studies and policy briefs can be invaluable references to help governments enact more effective policies. Moreover, IFAD could drive adoption of these policies by supporting the costs of government adoption of digital agriculture technologies, potentially on a trial basis to start.
Even as these and other action steps get under way, IFAD and Grow Asia continue to look for new opportunities. For example, the two agencies are currently exploring opportunities to collaborate with the Republic of Korea’s Ministry of Agriculture, Food and Rural Affairs on digital solutions to support small-scale farmers’ economic empowerment.
Read the full report here.
Find a summary of the ongoing digital agriculture work in the Asia-Pacific region here.
Abdelkarim Sma is Lead Regional Economist for IFAD’s Asia and the Pacific Division.
Paul Voutier is Senior Advisor on Innovation at Grow Asia.