Farming 2.0: Digitization in the Agriculture Value Chain

Farming 2.0: Digitization in the Agriculture Value Chain

The ongoing COVID-19 pandemic and the consequent lockdown of economic activities and mobility has affected almost every sector in the country. However, smallholder farmers, most of who already remain at the bottom of the income pyramid, are also the most vulnerable and have borne the brunt of the ongoing pandemic. On one hand, farmers are facing further constraints for accessing the agri-inputs and finance required to start the new planting season, while, on the other hand, most of them are struggling to get market or reasonable prices for their produce.

Amid the pandemic, Gham Power has been conducting market research, surveying over 1,000 farmers and local aggregators all over the country, to study the effect of the pandemic on their farming practice, and to better understand the changing needs and the support required for the farmers. This article summarises the understanding from the survey, the core of which highlights the necessity of vertical integration of new services that provide better access to the market (agri-inputs, technology, finance, etc.) and better linkages across the agri-value chain, helping farmers receive the best possible rates for their farm produce.

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Fig 1: End-customer of Gham Power selling his produce locally during lockdown

Beyond Pandemic: Threats on Survival

There are obvious and tangible problems seen in the market-value chain of agricultural products in Nepal. Most of the remote producers either do not get quality seeds, fertilizers, irrigation, or ideas on profitable farming, or sometimes, neither of them. Because of the poor access to obtain these basic prerequisites for farming, farmers neither can produce utmost of their capacity nor progress through subsistence farming.

Though the farmers make some seasonal produce despite these problems, they are not able to sell their produce to the market on time at the anticipated price. It is often blamed that farmers cannot deal directly with buyers and need to rely on a multi-layered system of middlemen that is in turn driving prices down for them and up for consumers. The products can’t be held for a certain period of time because they either do not have a proper provision of cold storage or enough knowledge to process their products by themselves. It is quite hard to compete with the subsidized agri-products flushed through India. The supply chain in Nepal is not in the realm of key stakeholders associated with agribusiness because of which farmers are struggling through duo crises of poor production and a non-accessible market.

The recent coronavirus crisis has articulated the vulnerability of far-flung farmers; they are neither getting easy access to procure agri-inputs nor their products have been collected from their field and as a result, their produce is piling up and rotting in their farm.

Difficult Market

Fig 2: Status of agriculture items imported in Nepal (2019)

The distributors of agriculture products in Nepal are also believed to be struggling through the lengthened supply chain due to layers of middlemen and cartels. It has also been difficult for them to sell domestic production competing with the imported agriculture items in terms of quantity and price. There are many cases of being dependent upon the hierarchical middlemen to procure agricultural commodities where they are raking in profits by forcefully erecting barriers to market entry, by artificially jacking up prices and controlling supply, and by distorting incentives. In addition to these, there are easy transportation and accessible cold storage logistics problems that are necessary to maintain the quality of agro-products up to the kitchen table.

Due to the lockdown and safety issues during this global pandemic, distributors are not able to get agriculture products on time as well as transport the procured products. Though the government has allowed smooth transportation for agro-commodities, the local bumper harvest is rotting in farmers’ fields but trucks laden with vegetables from India cross the border every day and reach our kitchen.

Digitization: Blessing in Disguise

Fig 3: Digital tool (Off Grid Bazaar) of Gham Power for solving farm problems

During this unprecedented time, we reached out to almost all our end-customers through phone calls to know about their production status and problems they are struggling with because of the corona crisis. While reaching out to potential distributors to manage a better marketplace to collect the piled products in the fields of our end-customers, we sought the great promise in digital solutions to connect key stakeholders of agribusiness in order to find better solutions to address their problems.

The virtual digital tool updates the farmer on agricultural knowledge, connects them with agri-input suppliers and technical experts, and enables them to be updated on the current market rates, demands in the market, and produce accordingly. This will help farmers to mitigate the risk and help them to maximize their benefits by selling their products at the right time.

On the other side, the digital solution will be a boon to the suppliers and distributors for quantifying and anticipating the consumer demand about the type, time, and quantity along with prior information on price. They do not have to depend upon the hierarchical chains of middlemen to get the agri-products and suffer from price manipulation. This will connect them indirectly with producers as well as help them to plan efficient logistics and manage payments.

Gham Power is already using digitization to help rural farmers adopt modern technology, make payments, and manage their farm better. We are moving ahead with our working partners to understand the market side of the agri-value chain better with the motive to create a platform to connect aggregators and consumers directly to the buyers. This will be a great move in reducing the inefficiencies of the fragmented market to provide logistic and coherent solutions to solve the key stakeholders underlying problems.

The Future

The disruption in work and the lockdown, especially for some of the farmers, have been life-threatening. Through constant communication and market research during this period, we have been able to understand the trajectories, and the support required for the farmers a little better. Moving forward, this has enabled us to understand the deficiencies in the agri-value chain, and explore how digitization can help reduce many deficiencies and gaps in the current market. We are committed to further continue the market research and the extension of our digital platform for possible integration of new verticals in our service offering. And, while doing that, we will continue to put farmers at the forefront of any new initiative or service that we may offer as a result.

Credit: ghampower.com