Digital for agriculture (D4ag) solutions are here to stay, and for good reasons.
With over 1,400 D4ag solutions now serving farmers and agribusinesses in low- and middle-income countries (LMICs), and more than half of these emerging in the last five years, the sector is ripe for investment. In 2021 alone, these innovative solutions attracted US$13 billion in funding.
This surge of interest from investors underscores the potential of D4ag. It is projected to generate up to US$500 billion each year for LMIC agriculture, all while making farming more sustainable and delivering grassroots change.
Given the dynamism in this space, it is not so surprising that global platforms like the World Economic Forum gave centre stage to themes such as digital agriculture, data and artificial intelligence for agriculture.
For farmers, digital solutions promise optimised productivity, reduced cost of cultivation, better sales outcomes per unit, and increased resilience.
Agribusinesses stand to gain from improved procurement practices and overall operations, cost reductions, and identifying opportunities for increased commercial viability for their inclusive business models.
So, what can we expect in 2024? We at IDH are watching 5 D4ag trends in the smallholder-inclusive business space and share what these trends could mean for you and the wider sector:
#1. Traceability takes centre stage
The demand for ethical sourcing and new regulations like the European Union Deforestation-Free Regulation (EUDR) are fuelling a surge in digital traceability solutions. These developments will see solution providers lacking traceability solutions within their offerings either innovate or partner with complementary players to integrate them into their core services. Besides providing D4ag traceability solutions for existing and upcoming regulatory compliances, digital solutions that enable mapping of scope 3 emissions will also increase.
Maximising the potential of these technologies will require stakeholders to work collaboratively to address three key issues: a) reducing costs for farm-level data collection and reporting, b) identifying how traceability costs will be distributed across the supply chains, and c) unlocking new ways to use the data collected via traceability solutions to offset the costs associated with serving smallholder farmers.
#2. Embedding climate action into value propositions
Beyond the economic benefits of D4ag to smallholder farmers, we will witness an increased focus on climate action. Digital service providers will innovate and market D4ag climate solutions within their core value proposition.
This trend will see a rise in digital agriculture solutions like greenhouse gas accounting software, precision agriculture tools, digital insurance, and carbon trading platforms etc., aimed primarily at corporations and suppliers working with smallholder farmers. From a non-profit perspective, investments in digital extension services for climate-resilient farming will grow massively.
As D4Ag solutions for climate action increase, the emphasis will shift to combining these solutions with other digital services to offer a comprehensive package, rather than providing them in isolation.
#3. Leveraging generative AI for extension services
Some recurrent questions on the use of digital extension services in the smallholder context relate to their commercial viability. With AI bursting into the scene, governments and development funders are likely going to support generative AI.
Generative AI will enhance the commercial viability of agribusinesses that used to invest in extension as an ancillary offering, as now these businesses will leverage complementary open-access solutions.
A critical step to scaling generative AI will be establishing partnerships between tech developers and civil society organisations that work with a large pool of farmers to generate strong feedback loops and improve predictive capabilities.
#4. Government-led digital public infrastructure
Learning from successes in other sectors, plus facing the increasing costs for agricultural data collection, storage, and analysis, governments will be inspired to step up efforts in developing digital and data infrastructure for smallholder agriculture.
Governments will likely set up data infrastructure that is open access, actively digitise and orchestrate what they already have. Key areas of digitalisation likely to gain momentum include farmer profiles, land records and crop registries.
Achieving long-term success with this type of infrastructure necessitates careful planning around data standards, security, and governance.
For the private sector, these proactive steps from governments will streamline data management and significantly lower their costs of servicing smallholder farmers.
#5. Continued digitalisation of farmer organisations
Despite facing challenges, the digitisation of farmer-producer organisations will continue, which will enhance their role in data stewardship and service delivery.
Service providers in the D4ag ecosystem will increasingly look at the potential role of farmer organisations as intermediaries for service delivery and scale their outreach.
Customised support is essential for these organisations to overcome issues such as limited digital literacy and the long gestation time between digitalisation and the actualisation of the benefits.
For the entire ecosystem to benefit from the digitalisation of farmer organisations, it is crucial to invest in them. This investment will facilitate the delivery of tailored digitalisation and capacity-building support to meet the needs of organisations across various segments, instead of using a cookie-cutter approach.
Do these trends resonate with you and your work? Please contact us to discuss how digital agriculture can further revolutionise smallholder agriculture and impact your work.
Authors:
Shreejit Borthakur, Technology Lead at IDH
Sharon Barasa, Senior Communications Officer, IDH Intelligence