Harvesting: Coming to Aid Farmers Near You
In the entire agri-ecosystem involved with bringing food to our tables, the source or the farmer continues to be at the bottom of the pyramid- facing serious challenges. In most emerging markets, farmers often remain marginalized. Scouting for finance for seeds, crops, capital, management, and production is a central issue plaguing the industry. And this is where Harvesting comes to facilitate finance closer to small farm holders. Here is how!
Identifying the cause
Farmers in developing markets are afflicted with a lack of access to loans to fund their projects. This is due to weak or no credit history, an inefficient land record system susceptible to fraud, and high costs associated with surveying farmland- all acting as deterrents for financial institutions to restrict the credit flow.
According to the World Bank, of the 1.2 billion people living in Africa, only 12% of those living in low-middle income countries have a valid credit history, and the few that qualify for a loan from a Microfinance Institution receive interest rates of 30% on average. The high-interest rates reflect high-risk investments. In the case of agricultural loans, the 30% average interest rate takes into account changing weather patterns, changing capital costs, the possibility of a misuse of funds, and the possibility of fraud involving multiple loans taken out on one property.
The key to reducing interest rates and increasing the frequency of loans given to smallholder farmers, as Senior Advisor Dr. Michael Marx of AFOS Foundation-Germany has explained in Experts Seek Reduction In Lending Rates for Agribusinesses, is to create interventions “leading to a sustainable reduction of operating costs.” Harvesting is doing just that with the use of a credit risk solution, land record monitoring, and farmland monitoring.
Leveraging on Geo-Spatial Paradigm
Today the technological landscape has changed dramatically. Harvesting is taking advantage of advanced, refined, and faster spatial data to help those that need it the most. Just 10 years ago, downloading and monitoring satellite data for research purposes took an excessive amount of time, not to mention the high costs involved with such a task. As a result of progress in the geospatial field, better access to data and advancements in machine learning, thousands of real-time images can now be downloaded and monitored in mere minutes.
Creating Solutions
Harvesting’s Mobile Loan Appraisal application allows lenders to collect traditional data about the loan seeking farmers, along with new data points such as co-ordinates of the farm. This allows is very efficient when it come to collecting data in a seamless way and create ‘True Credit Profile’ of the farmers.
Harvesting’s Credit Risk System provides bankers a data-rich, easy to use interface with the flexibility of customizing multiple variables to determine the creditworthiness of an applicant at an affordable cost and faster. The CRS also enables monitoring of post loan repayment activity.
Harvesting’s Loan Approval dashboard allows lenders to have a comprehensive look at all the loan applications, credit scores of farmers who have applied for loan, individual loan requirements, history etc enabling lenders to qui
Harvesting’s Loan Monitoring & Collection dashboard empowers financial institutions to use satellite data to view the progress of farm development throughout the loan cycle. This helps them track if funds are being used for their intended purposes. It also creates a two-way communication and alert system that assesses any potential risks- be it lack of irrigation or soil/crop damage. Banks can both alert farmers to take corrective actions and recognize the possibility of repayment issues that may arise due to these obstructions.
Lastly, Harvesting’s Land Record Monitoring takes a step further to plug loopholes and probabilities of default. Land records are collected and continuously monitored by Harvesting to streamline the process of pulling records associated with applicants to check ownership and also to ensure multiple loans are not taken out from different banks on the same plot of land. Harvesting also integrates spatial data and on the ground resources that are uploaded to the cloud to mark farmland boundaries. All at the ease of a loan officer’s desk.
Using modular, scalable, comprehensive and insightful platforms, Harvesting creates a multidimensional approach to reducing costs of loan assessment and disbursement to small farm holders by MFI and banks, but more importantly Harvesting enables data backed decision making.
The Harvesting Roadmap
Increased transparency will induce trust between these economic actors and foster growth in emerging economies across the globe. The question now becomes when will Harvesting reach banks near you. We are working on expanding our international efforts every day with the help of the World Bank CGAP (Consultative Group to Assist the Poor). Active operations in collaboration with MFIs and government entities are underway in India, Uganda, Nigeria and other emerging markets. A subsidiary office has opened up in Chandigarh, India and we have visibility in Mumbai and Bangalore. Find an extension near you soon!
Resources:
https://www.nature.com/articles/d41586-018-05268-w
https://guardian.ng/business-services/experts-seek-reduction-in-lending-rates-for-agribusinesses/
https://data.worldbank.org/indicator/IC.CRD.PUBL.ZS?locations=XO
