Digitalizing Agricultural Value Chains in Africa

65% of all the uncultivated arable land left in the world lies in the continent yet Africa spends $35 billion in foreign currency annually importing food, a figure that is set to rise to over $100 billion per year by 2030. Surprising, right? According to the World Bank, agriculture and agri-business will be a $1 trillion industry by 2030 in Sub-Saharan Africa. Agriculture and agribusiness currently contributes 32% of the GDP of Africa, and employ over 65% of the population.

So, what’s wrong with Africa’s agriculture industry?

The African agricultural value chain is deeply fragmented. Africa has an estimated 33 million smallholder farms and many of these farmers lack access to fair markets, inputs and modern machinery as well as agri-related information about prices, financial services, weather forecasts, pest, market demand, etc, which lowers their yields and eats into their profit margin.

Just like manufacturing and other sectors, Africa needs to treat agriculture as a business. Digitalization of agricultural value chains holds the key to accelerated growth, diversification and job creation for African economies. This is already happening on the continent but there is room for more!

There are several startups in the region that are using mobile technology to address the following challenges in the value chain:

• Farmers lack agri-related information such as weather forecasts, market demand, pest-related information, etc. There are several startups that are addressing this problem using messaging apps (Forget apps, USSD apps are the real deal) to reach this much-needed information to the farmers.

Techno Brain has partnered with Microsoft Corporation to launch a Digital Agriculture Platform in Africa to help farmers improve crop yields and increase income. The platform collates data; farm location using Global Positioning System (GPS) coordinates, expected rainfall and weather patterns, land type and soil nutrition, and processes the information on intelligent cloud to create insights that help farmers make better farming decisions.

WeFarm is a free peer-to-peer service that enables farmers to share information via SMS, without the internet and without having to leave their farm. Farmers can ask questions on farming and receive crowd-sourced answers from other farmers around the world in just minutes. It uses machine learning and the cloud to source content and knowledge from a network of over 660,000 farmers.

Addressing the lack of adequate skills and financial support, Digifarm is a Safaricom platform that offers smallholding farmers access to a suite of information and financial services, including discounted products, customised information on farming best practices, and access to credit and other financial facilities. In addition, mobile applications like Esoko, or Tigo Kilimo in Tanzania, are taking the guesswork out of planting and maintaining crops by providing up-to-date weather information and agronomic tips.

• Farmers lack access to fair, trusted and modern markets. There are a small number of buyers and many dispersed, small producers, especially without current information about market conditions, which means that the buyer has the advantage. Given this landscape, middlemen end up exploiting farmers by buying their produce at a low price.There is a growing debate on the importance of middlemen where the argument is that instead of completely eliminating them out, they should be incorporated in the agricultural value chain.

M-Farm matches farmers with local buyers across Kenya. It also offers important information using provided price trends to know the best time to plant your crops. Once the produce is ready M-Farm connects the farmer with thousands of ready buyers for the most ideal price.

Twiga Foods, for example, addresses this issue by linking farmers and vendors to fair, trusted, modern markets. Its mobile platform brings together food producers, pack houses and vehicles to supply and deliver produce directly from farmers to urban retailers. Twiga Foods partnered with IBM Research to extend access to microloans to food stall retailers across Kenya using a blockchain-based financing system.

• Given the high cost, farmers lack access to inputs and modern machinery. This reduced the farm productivity, decreasing the yields and as a result the farmers’ earnings.

Most of the smallholder farmers cannot afford expensive equipment and modern machinery to improve productivity. Hello Tractor, is an Uber-like tractor service that allows farmers to conveniently request, schedule, and prepay for tractor services from nearby smart tractor owners, through text messaging and mobile money. The system helps to reduce tractor costs, increasing yields by 200%, raising farm productivity up to 40 times and generates additional income.

As you can see, technology (big data, IoT, blockchain technology, USSD, apps, websites, etc) is addressing challenges in Africa’s agricultural value chain. With food production expected to increase to 70 percent by 2050 due to rising demand, Africa has an even greater opportunity to step up on its agriculture industry. Large scale implementation of digital solutions to the agricultural value chain in Africa will make the business of farming less labour intensive, producing higher yields and in turn more profit for farmers.

*I’m currently working on an ecosystem mapping of tech startups in the African agricultural value chain. This will provide insights on gaps and opportunities in the space.