Farmer 3.0 Africa: Block Commodities integrating small-scale farming into the global market
In Africa, building a more sustainable and equal society means empowering smallholder farmers, who make up 70% of the continent’s labour force. For this to happen, a new system is essential, and technology is here to lead the way.
Agriculture is the principal economic activity in Africa, employing 70% of the continent’s population Smallholder farming is the backbone of African agriculture, since 90% of farming output comes from small-scale producers.
However, we can’t take these figures at face value. Africa is actually a net food importer, with its annual bill of $35billion estimated to reach as much as $110 billion by 2025. In a continent of more than 30 million square km, land availability is not the problem. The hindrances to economic growth lie in poor management of land resources, along with inefficient banking practices bound in red tape, leaving most of the farming population on the margins of financial inclusion.
With interest rates going as high as 40%, most smallholder farmers are unable to afford the fertilisers, seeds and equipment they need to scale up production. On top of that, many farmers are out of physical reach of financial services: in rural areas of sub-Saharan Africa, institutions such as banks and insurers cover only 14% of the population.
Lack of information, poor transparency, severely limited access to funding and financial incentives, and inefficient trading practices hold back farmers’ production by 50% of its potential.
Moreover, unnecessary bureaucracy and the cost of middlemen traders across the supply, together with inconsistent record keeping, create an inefficient system where farmers’ direct access to money and resources is limited, information on input and sources is not clear, and duplications are common.
Not only does financial exclusion hold back farmers from growing their production, it also prevents them from climbing out of poverty, since without the right tools, they cannot produce at a sufficient level for commerce.
Building a new sustainable ecosystem with innovation: New technologies are pivotal in creating the farms of the future.
The long-established agricultural system in Africa has only addressed the external needs and interests of commercial players. It is about time we developed an ecosystem which prioritises the people of Africa. To make change happen, it is crucial that smallholder farmers have access to the information, resources and tools necessary to enable them to grow production and enter the trading market.
Fortunately, emerging technologies such as blockchain and decentralised systems are able to promote financial inclusion by eliminating the need for banks and middlemen. When using cryptocurrencies, for example, interest rates can be lowered to approximately 10% and accounts can be managed from a mobile phone. Indeed, the rapid technology take-up in Africa is exemplary, with internet user in Africa increasing by 20% over the last year and mobile money being a critical alternative of payment method.
Technology allows farmers to make and receive payments with no restrictions of place or time, giving them flexibility and power over their transactions. At the same time, there is full accountability: transparency and record keeping of all transactions.
“When we look at the farming and agriculture landscape in Africa, in terms of production and economy, we see there has been great exclusion of small-scale farmers from the market. 90% of food for the continent comes from European commercial farmers. Block works to integrate smallholder farmers into the system and give them access to the markets by adding value to their practices,” says Clinton Van Eden, head of Africa operations of Block Commodities, a leading agritech company operating in sub-Saharan Africa.
Beyond finance, innovative technologies are also set to educate and bring information to farmers more rapidly and easily. As a decentralised network, blockchain allows all transactions to be recorded openly, including input and output of all products, selling prices and costs throughout the supply chain.
This transparency will be a decisive factor for a consuming market which is becoming more socially and environmentally conscious.
The intercontinental manufacturing system currently in place implies that the multi-layered supply chains surpass geographical boundaries, resulting in a lack of transparency and accountability. Consumers have limited knowledge and understanding of the manufacturing process, allowing for flaws and gaps to go unnoticed by the public eye.
“Consumers are increasingly more aware and more demanding. Blockchain will support greater ethics and social responsibility from businesses. Consumers will be able to make better informed choices and the farmers are sure to get their fair share as well,” says Bobby from Pure Grow Africa.
Quality of food means also secure provenance: origins of food and traceability in the supply chain. This has always been a problem in the food industry, creating notable scandals around the world, such as the horse meat scandal in the UK and sawdust found inside cheese in the US. Now, thanks to blockchain technology we are able to address this.
Furthermore, an open-sourced practice will ensure farmers are not ‘left at the mercy of traders’ and middlemen, bringing value to small scale farming and allowing the market to operate fairly. They will have open access to information, input and resources to help them manage their production.
Empowering women: The key to food security
This new farming model also takes women farmers into account, who have been sustaining farming but receive little or no recognition for their crucial role in feeding Africa. Despite women making up the majority of farm workers — over 50% in Sub-Saharan Africa — on average only 15% of landholders are women, and they receive less than 10% of available credit.
Discriminatory regulations and one-sided practices are depriving women of their land, rights, and livelihoods. Technologies such as blockchain and smart contracts can provide secure land registry systems and can also ensure widening access to credit without discrimination, allowing women to grow their productivity.
Having the power of access to funding in their hands, female farmers can not only purchase more seeds and fertilisers, but also scale up their production by investing in smart technologies such as machine learning, drones and predictive behavioural analytics which offer accurate results for optimised performance, as well as lessen women’s physical burden through the use of machinery.
“Technology really represents the main driver of farming’s feminisation in African countries. Women who represent the lion’s share of agricultural labour will be the main ones to benefit from agri-tech innovations,” says Stefania Barbaglio, Director at Cassiopeia Services, which is working closely with many of Block Commodities’ projects.
The revolution is just the beginning
The implementation of technology into agriculture is just the first step towards building a more sustainable and equal ecosystem, where race and gender differences will no longer prevent individuals from reaching their potential. The aim of a blockchain-powered system is to build a solid foundation that will reach other sectors in African economies which could benefit from innovation to enhance transparency, accountability and efficiency.
Technology is revolutionary for developing economies because it places individuals at the centre of the economy, building a model which no longer serves the interests of corporations and discriminatory forces, but instead allows small players to be part of the market and own their place on the global stage.
For Africa, we firmly believe that innovation can help to revolutionise the agricultural and food industry, allowing Africa to feed itself and become one of the biggest contributors to the world’s food basket.
Feed Africa to feed the world: this is what we believe in.
Watch this space for more updates on Block Commodities and blockchain projects in Africa. Subscribe to our FinancialFox YouTube channel for all the latest developments and news.