Market size and opportunity for agricultural value-added services
Agri VAS has been developed to overcome the ‘information gap’ faced by farmers in developing countries as well as connect farmers with other key players in the agriculture value-chain. Farming still accounts for 47% of the workforce on average across emerging markets compared to 5% in developed ones, making it a key sector economically and socially. Unfortunately, the productivity levels of farmers in these regions is stymied by a variety of factors, including poor access to relevant market and weather information, the continued use of inefficient farming techniques, and inefficiency in distribution and storage systems.
Mobile has emerged as an important channel and platform for overcoming these challenges. This is borne out in numbers: the number of mobile Agri VAS in developing countries has increased considerably in recent years, with 98 live deployments across Africa, Asia, Latin America and the Middle East at the time of writing. Looking ahead, we forecast the potential number of Agri VAS users in South Asia and Sub-Saharan Africa (which account for the vast majority of users worldwide) to reach 80 million by 2020, from 35 million in 2014.
However, for existing and new Agri VAS services to reach their commercial and developmental potential, they must overcome what has to date been their biggest stumbling block: sustainable business models to drive scale. We present an in-depth analysis of the business models in the market today, with a view to articulating the influencing factors for selecting one vs. another – an important decision given the array of participants in this diverse market and the need for VCs and donors to have transparency in the route to sustainability before placing capital and mentorship behind budding services. Mobile operators are central to the provision of Agri VAS services and as rural network coverage rollout is stepped up, there is a strong case to leverage their network assets and brands to take advantage of opportunities in the Agri VAS space.
The methodology for the market sizing exercise is also available: