This is the second blog in a series introducing the grantees and key partners supporting The GSMA Innovation Fund for Digitisation of Agricultural Value Chains.
“I’ve heard of mobile money, but I’m not really sure what use it is to me…”
An elderly farmer said during a recent fact-finding visit in the Southern tea growing district of Sri Lanka. “This is a typical response; we’re still trying to strike a balance between driving supply chain optimisation through digitisation and traditional approaches to farming” reflected Srinath Wijayakumara, Product Manager at MNO Dialog Axiata Sri Lanka (Dialog). In 2020, Dialog was awarded a grant under the GSMA Innovation Fund for Digitisation of Agricultural Value Chains (funded by the UK’s FCDO) to test new methods and approaches for driving financial inclusion of smallholder farmers using digital services.
Dialog has been very active in the agriculture vertical with smart farming being a core facet of their forward-looking commercial strategy. Sri Lanka’s Ministry of Agriculture estimates there are approximately 1.65 million smallholder farmers who account for 80 percent of the total annual food production in Sri Lanka and operate farms averaging less than 2 hectares in size. Agriculture has been an important driver of poverty reduction accounting for about one third of the decline in poverty over the past decade. The tea industry represents 65% of Sri Lanka’s agricultural exports, 17% of overall exports and contributes 2% of GDP (Tea Research Institute and FAO). In 2018, the International Labour Organization (ILO) recommended the use of information and communications technology to streamline supply chain operations and improve the sustainability and productivity of the tea smallholder subsector in Sri Lanka.
We recently interviewed Srinath to understand what attracted Dialog to the Innovation Fund and the team’s experience, approximately 8 months into the two-year grant.
What attracted you to apply to the Innovation Fund?
“At Dialog, we felt confident in our ability to deliver on the grant objectives having gathered valuable experience in understanding farmer’s needs and areas of interest through the development and scaling of our digital advisory service for farmers, Govi Mithuru. The GSMA’s Innovation Fund offers the potential to apply many of our strengths in areas such as enterprise account management, digital tools and services and sustainability. In order to best capitalise on this opportunity, we created a consortium of partners who could support the goals of the Innovation Fund.
Agrithmics, our technology partner, was able to bring a road-tested digital tool as the foundation of the digitisation process and also supported us in identifying appropriate agribusinesses who could see the value in integrating digitisation into their farmer relationship and management activities.” According to Prashanth Premakumar, CEO of Agrithmics, “the vision for the company is to positively contribute towards digitally enabling agricultural industries and their ecosystems, bringing innovative technology benefits to smallholder farmers”.
Srinath continues: ”The risk capital available through the Innovation Fund offers the consortium a high degree of flexibility in testing new methods and models of farmer interaction. For instance, we have integrated the ability for tea factories to pay smallholder farmers through the eZ Cash mobile money system and developed a new model based on mobile money that allows farmers to request procurement payment advances and withdraw the funds through their eZ Cash accounts”.
What are the biggest challenges that you are facing in agricultural digitisation?
“It is important to understand the broad range of stakeholders involved in the deployment of digital technologies. Sri Lanka has over 450,000 smallholder tea farmers. Many aspects of agriculture have hardly changed over the last century. The manufacture of today’s orthodox tea for instance, follows similar processes to when the tea bushes were planted by our target farmer’s parents! Therefore, there is a lot of work to do to introduce smallholders and the crop buyers to the potential benefits and operational efficiencies from digitisation”.
What is the most exciting part of the work you are currently involved in?
“A really interesting area for us is understanding where digital payments can deliver most benefit to smallholder tea farmers. Farmers regularly request procurement payment advances from the factories to help them pay labour costs or deal with sudden expenses. Essentially, approving an advance comes down to a relatively simple calculation of the amount requested by the farmer versus supply history, any outstanding loans and the expected supply going forward. While an element of subjectivity comes into this decision making, digitisation could make this process much quicker and even instant through mobile money.
We are also keen to explore how services can be bundled to provide farmers with a holistic suite of services which helps them not only improve their crop quality and productivity but also supports them to improve their climate resilience. We already provide agronomic advisory through Govi Mithuru and are exploring opportunities to add crop-specific weather-index insurance and agri-specific loans. We are also aware that digital services are rapidly evolving, whereas the immediate ecosystem around smallholder farmers is not changing as rapidly”.
Breaking down barriers
Dialog’s user experience research indicates that while there is demand from agribusinesses to digitise information management, including for processes such as crop procurement and payments, farmers are more reluctant to adopt new digital technologies due to low technology literacy or lack of trust in the source of the information. Through the Innovation Fund, GSMA have supported Dialog with developing farmer friendly awareness-raising and onboarding materials, however these are not the only barriers that Srinath’s team is facing with scaling innovative solutions for smallholder farmers.
Regulation is another factor that often delays testing and refinement of new services , not because they are bad ideas, but where there is no precedence from which to make decisions on their suitability for the market; decision-making can be very slow for those working in an agile technology environment. In response to the COVID-19 pandemic, the Central Bank of Sri Lanka responded quickly by increasing the mobile money account limits to encourage fewer cash transactions. This type of rapid decision making is really important for removing barriers to uptake of such services and allows innovators to test, iterate and improve services much more rapidly, which can only be a good thing for the end-consumer.
Srinath concludes, “We are still finding our way with the various stakeholders and it is a real balancing act to be able to design and deploy farmer-centric digital services, that can provide meaningful value to farmers without creating an insurmountable barrier of understanding which prevents uptake. While COVID-19 continues to impact lives here in Sri Lanka and globally, we shall continue our efforts to improve smallholders’ financial inclusion and climate resilience through digital solutions”.
GSMA are supporting Dialog with their last mile agriculture digitisation activities through user experience research and product iteration to identify opportunities where digitisation can add real value whilst being sensitive to traditional beliefs and behaviours. Working across seven grantee countries enables us to leverage insights and lessons from other markets into the Sri Lankan context. We will be exploring these insights in future blogs.
In 2019, the GSMA AgriTech programme launched The GSMA Innovation Fund for Digitisation of Agricultural Value Chains, which aims to scale digital solutions for the agricultural last mile and improve smallholders’ financial inclusion, livelihood and climate resilience. The Innovation Fund prioritises digital enterprise services targeted at organisations, like agribusinesses and cooperatives, procuring from smallholders living on less than $2 (USD) per day. It emerges from the success of the 3-year mNutrition Initiative that tested and scaled digital advisory services for smallholder farmers in six markets across Africa and Asia. This Fund is the latest step in the programme’s evolution to unlock the impact of a wider range of digital agricultural use cases.
You can read more about it in the first blog in the series here.
THIS INITIATIVE IS CURRENTLY FUNDED BY THE UK FOREIGN, COMMONWEALTH & DEVELOPMENT OFFICE (FCDO), AND SUPPORTED BY THE GSMA AND ITS MEMBERS.