Agribusiness: How Technology Is Transforming Supply Chains
Photo Credit: spore.cta.int
Technology is bringing innovation to food supply chains across the developing world, especially in Africa.
In 2013, the Montpellier Panel published a report that made sober reading. At the current rate of production, the authors claimed, Africa would be able to meet just 13% of its food needs by the second half of this century. Amid population growth, rapid urbanisation and climate change vulnerability, the conclusion gave real cause for concern. But what if innovative supply chain technologies could go some way to closing the gap?
“Throughout Africa, technology-led transformation of the agriculture sector is already underway, from farm to fork,” writes Simon Ehui, director of the World Bank’s Food and Agriculture Global Practice, in a blog. “And as technology improves and becomes more widely available, disruption in agriculture promises to accelerate.”
Innovation is rife at all levels of the supply chain in the developing world, from seed, inputs and machinery to access to information, processing and packaging. The impact of digital technologies has been all too clear in recent years – not least the advent of mobile phones and uptake of this technology in agriculture in the past few decades.
A hotbed of innovation
The internet, and especially mobile internet, can have a transformative effect on food supply chains in developing countries. In a 2013 report, the McKinsey Global Institute posited that internet technology could drive up to US$300 billion (€250 billion) in annual productivity gains by 2025. And on a similar note, a recent study by Deloitte found that, by 2020, Africa will have “more than 660 million smartphone users – a penetration rate of 55% – and around half a billion people with internet-enabled smartphones.” This is good news given that some countries are still lagging behind. In South Africa, 84% of people have access to a mobile phone. In Ethiopia, meanwhile, that figure stands at just 18%. Similarly, while 34% of South Africa’s population is online, a mere 3% of people in Ethiopia are connected to the internet.
Despite late mobile phone and internet penetration compared to other regions, Africa’s digital development is now accelerating and the continent is a hotbed of innovation. CTA’s apps4ag platform lists mobile phone apps geared towards agriculture – many developed by African start-ups and designed to address specific issues facing the sector on the continent.
One example is M-Farm, an online platform where Kenyan farmers can reach out to potential buyers and get market prices by text message to inform production planning. In a similar vein, the Togo-based platform, e-Agribusiness, connects people and organisations across the sector, especially smallholder farmers who would otherwise struggle to find an outlet for their produce. The developers behind the app set out to tackle these challenges head-on and come up with solutions for African agriculture. “Most of our users are smallholder farmers,” explains Edeh Dona Etchri, one of the developers of e-Agribusiness, which also offers a text-message weather information service. “They tend not to have large stocks. Some of them are organised, but many aren’t. That’s why it’s so hard for buyers to find a large amount of stock in one place.” Both platforms provide a one-stop shop for market information and connect buyers with farmers, helping to overcome these logistics barriers and doing away with the need for the many intermediaries who profit from the fact that smallholder farmers are disconnected from the market.
iProcure is one of the biggest agricultural supply chain platforms in Africa. The Kenyan firm provides ‘last mile’ delivery solutions, as well as a stock data management service that gives an overview of product movements, availability and destinations. The platform’s customers can locate buyers and track market trends and price variations in real time – vital information that saves them time and helps cut logistics costs. South African technology firm AfriSoft has developed AGRIS, a detailed stock and sales management and quality and production tracking software program for agribusiness companies.
Also See: Farm To Fork: Innovations Reshaping Smallholders’ Market Access
Closing the knowledge gap
Innovative technologies are helping to break down one of the biggest barriers to progress in agriculture – access to information. Smallholder farmers are using ICTs in the field to learn more about their soil (see Spore article: Soil science: new apps close the gap in farmer knowledge), adopt new techniques, use inputs differently, and obtain improved yields. Away from the field, technology means farmers are finding it easier to access the market directly, while buyers have a steady supply of high-quality, traceable produce. Although ACP countries are only beginning to experiment with blockchain, the technology could revolutionise payments by reducing – or even eliminating – buyers’ and sellers’ reliance on intermediaries such as banks and other financial service providers (see Spore article: Digital innovation: blockchain’s disruptive potential in ACP value chains).
A World Bank report supports the idea that digital technologies could overcome many of the structural issues facing Africa’s agriculture sector, where underdeveloped infrastructure such as roads, railway or telecommunications remain major barriers to progress. The Zambia National Farmers’ Union, for example, has launched a new system that sends out raw material prices by text message to traders and informs transporters when and where their load will be delivered, and whether there are any empty trucks for hire between the village and the market and vice versa.
“With mobile technologies, remote sensing technologies, the cloud, and innovative partnerships between different companies and their technologies, data becomes available in formats that can be analysed and used for the benefit of the smallholder farmer,” explains CTA’s team leader for ICTs for Agriculture, Benjamin Addom. Farmers are increasingly able to access a wealth of data with just a click, making it much easier for them to produce, transport and sell food. “Smallholders are benefiting from big data analytics that allow financial institutions and other input dealers to know them better and to provide services with reduced risks,” Addom adds.
But technology is not a panacea. In its report, the World Bank also lists a series of challenges that will need to be overcome. Workers, including farmers, will not feel the benefits of technologies unless they are trained in how to use them. Governments will have little incentive to roll out technologies that empower citizens and improve service quality unless institutions are accountable to the public. And economic growth and development will not be possible without reforms to business regulations, public-sector governance and competency development systems, both at the national level and continent-wide.
Credit: CTA Spore
