Leveraging Information and Communication Technology for the Base of the Pyramid: Innovative business models in agriculture services

The following is a guest blog by Lucie Klarsfeld from Hystra.

In 2011, Hystra, a consulting firm specializing in hybrid (social and business) strategies, and its non-profit partner Ashoka, reviewed more than 280 initiatives globally that used Information and Communication Technology (ICT) to provide education, healthcare, agro-services or financial services to the Base of the Pyramid (BoP).[1]

Their study found that people living in rural areas – with poor access to goods and services – have the most to gain from ICT, which suddenly makes a whole new world available. The 5 agro projects studied in the report, some already reaching millions of farmers, are interestingly converging toward similar integrated services, combining weather, crop and price information, tailored advice from remote experts, and in most advanced models, purchase of inputs and sales of products for farmers.

The business models managed to tap into various sources of revenues, corresponding to the social and economic value they create all along the agro-value chain:

  • Farmers can better manage their culture thanks to weather and best practice information; save days of work by knowing demand in advance; lower input costs by placing grouped orders; and get better price for their product by comparing market prices. In project eKutir farmers pay a membership fee to ICT kiosks, and then service-specific fees. In RML or Esoko farmers buy a subscription to receive SMS information.
  • Buyers of agro products and sellers of agro inputs similarly benefit from a more efficient supply chain. eChoupal was launched by the agro-division of a large Indian conglomerate (ITC), who bore all the technology and training cost to set up ICT kiosks for farmers, an investment that paid off in sourcing savings and new sales for ITC.
  • Researchers can source information directly from farmers and exchange with them regularly. CKW performs smartphone-based survey for institutional programs like the Food Aid Organization, that pay for the information gathered from farmers.
  • Other companies can test rural market and leverage existing players’ infrastructure to distribute their own products and services, against a fee.

The main challenge in this area is finding a way to create local information that reliably answers local needs, i.e. giving the right information at the right time in the right place, and making it reliable and trustworthy for farmers to use it. RML does in-person reporting at local markets and partners with meteorological stations. To gain trust, eChoupal offers both the hardware and the service for free, and its local representatives take a public oath to use technology for the public good, while eKutir designed the services with farmer communities (including deciding on pricing!).

New opportunities lie in developing ICT-optimized logistics or ICT-based insurance, two services rarely provided to date in remote areas. Such offerings will require collaboration to fill the needs of farmers in a holistic way, which seems feasible given the range of players with vested interest in supporting rural development. They could fuel the potential market of ICT for agriculture rather than let the BoP alone pay for it – and the BoP as well as these players would then gain significantly from this new ICT-based world of opportunities.

The study was sponsored by AFD, Ericsson, France Telecom-Orange, ICCO and TNO. The full report is available for free on www.hystra.com

[1] I.e. the billions of people living with less than a few dollars per day in particular in developing and emerging countries.

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