Smallholder farmers could help fix global food systems with the right technology. Here’s how

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Tara Nathan, Executive Vice-President, Humanitarian and Development, Mastercard, Ranveer Chandra, Managing Director, Research for Industry; Chief Technology Officer, Agri-Food, Microsoft

• Innovations in agriculture can help towards food security, global equity and climate goals.
• Tech-first companies working with the agri-food industry, governments and farmers, are finding solutions.
• Initiatives, like the Food Innovations Hub, are making food systems more sustainable, resilient and efficient.

Smallholder farmers are the heart of the global food system, producingoverone-third of the food we eat. Yet for many of the world’s 600 million smallholder farmers, farming is no longer a sustainable livelihood. Farmers are leaving their communities to pursue alternative livelihoods, adding to the weight of challenges already facing our food systems, like geopolitical conflicts, after-effects of the pandemic, and worsening climate shocks, putting food security at risk. Already, nearly 10% of the world’s population suffers from hunger, and that figure is on the rise.

We need to transform our global food systems to be more equitable to smallholder farmers. Farmers lack access to sufficient credit to sustain and grow their business. Technology can provide farmers with access to credit and other financial services, as well as reliable marketplaces and input providers, advisory services, and information.

Yet insufficient digital infrastructure in rural communities hinders smallholder farmers from accessing these technologies. Internet and power is often unreliable and expensive, many farmers lack a digital identity, and access to data and artificial intelligence (AI) solutions is expensive.

As technology-driven companies, Mastercard and Microsoft have developed innovative solutions to support farmers and strengthen global food systems. For example, Farm Pass digitizes agricultural value chains to enable access to credit and create a bigger pool of buyers. Together with local agriculture technology companies and financial institutions, Farm Pass has helped over 2 million smallholder farmers in Africa and India get paid more and faster.

• In India, less than half of farmers have access to formal credit, and instead borrow from informal money lenders at interest rates of 35-60%. Many farmers struggle with cash flow, and without access to fair loans, are forced to sell personal possessions to buy seeds at the start of the crop cycle. Farm Pass provides farmers with a digital identity and transaction record, and it connects them to financial institutions for loans at fairer rates when they are most needed.

Microsoft previously developed the Azure FarmBeats platform and has since expanded this work with the recently open-sourced FarmVibes.AI, a set of AI tools to help farmers adopt sustainable agriculture practices. These technologies enable data-driven agriculture with the use of sensors, solar-powered whitespace-based internet connectivity, AI, and other tools to support farm productivity, income, and resource optimization. Microsoft also created a chatbot to facilitate communication for smallholder farmers in sub-Saharan Africa.

Global food systems account for over a quarter of global GHG emissions and half of the world’s habitable land is used for agriculture, so harnessing technology to support smallholder farmers can also help safeguard nature and advance climate action. For example, data-driven solutions can help farmers grow food with optimal resources including water, fertilizers, and other essential inputs with minimal waste in the supply chains.

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Agriculture is a complex ecosystem, and digitisation requires ecosystem-oriented technology solutions and platforms. If successful, digitisation of agricultural value chains has the potential to solve multiple challenges faced by smallholder farmers, from right price realization to access to quality inputs and more affordable credit.”— Himanshu Bansal, Mastercard.

We believe that data, coupled with the farmer’s knowledge and intuition about his or her farm, can help increase farm productivity and also help reduce costs. The goal is to enable data-driven farming and democratize AI for sustainable agriculture. This is precisely what FarmBeats is working towards. Andrew Nelson, a farmer currently testing the FarmBeats portfolio of services, suggests that collectively, these technologies are making a big impact both in his fields and his bank account. For example, the first year Nelson used data to guide his spraying, the amount he saved was exactly the amount he earned.

Unlocking finance and enabling environments for scale

These are just a few examples of how private sector organizations are innovating to bring smallholder farmers into the digital economy, improve their livelihoods, and support food security. Still, financing is needed to de-risk early-stage investment in developing and scaling new solutions. For example, to build capacity at the last mile, financing for digital literacy training and agent network development is needed. The right solutions need to crowd in funding from private, public, and philanthropic sectors.

To unlock investment, robust enabling environments that allow for continuous innovation are needed. Business models should be co-designed by a diverse group of stakeholders to ensure viability. While technologies can originate off-farm, the farmers and on-farm applicability need to be at the centre to avoid market failure. While financing from governments, public institutions and philanthropy can enable early stage ecosystem development, co-investment from the private sector can complement the efforts and eventually focus on financing sustainable and commercially viable solutions.

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What is the World Economic Forum doing to help ensure global food security?

Two billion people in the world currently suffer from malnutrition and according to some estimates, we need 60% more food to feed the global population by 2050. Yet the agricultural sector is ill-equipped to meet this demand: 700 million of its workers currently live in poverty, and it is already responsible for 70% of the world’s water consumption and 30% of global greenhouse gas emissions.

New technologies could help our food systems become more sustainable and efficient, but unfortunately the agricultural sector has fallen behind other sectors in terms of technology adoption.

Launched in 2018, the Forum’s Innovation with a Purpose Platform is a large-scale partnership that facilitates the adoption of new technologies and other innovations to transform the way we produce, distribute and consume our food.

With research, increasing investments in new agriculture technologies and the integration of local and regional initiatives aimed at enhancing food security, the platform is working with over 50 partner institutions and 1,000 leaders around the world to leverage emerging technologies to make our food systems more sustainable, inclusive and efficient.

Learn more about Innovation with a Purpose’s impact and contact us to see how you can get involved.

Several innovative financing models are under development, however, solving for scale for technology adoption can only be achieved through cooperation. This is why we have been involved in designing and developing the Food Innovation Hubs Global Initiative with several public, private, and civil society stakeholders. Together, we aim to drive low-cost and inclusive innovations that could have a scalable impact in meeting the needs of stakeholders in the food system regionally and globally.

• In Colombia, the Food Innovation Hub is helping to strengthen food systems by offering a solution to the economic, environmental, and rural development challenges of the country. The hub is a co-investment platform and a partnership between farmers, research institutes, innovators, private sector and government to develop tech-enabler centres of excellence that can incentivize sustainable and regenerative agricultural practices while supporting farmers (especially smallholders) to profitably produce and market a basket of crops year-round. Microsoft’s role eventually is to provide the digitization and tools to support data-driven agriculture. However, working in collaboration with other stakeholders and designing the hub has allowed to de-risk the investment and scale digital solutions as well as work with local entrepreneurs and innovators that can support the farming sector in Colombia.

Hope for the future

Food systems need a technology revolution. Over the next year, we’re advancing initiatives to connect more smallholder farmers to fair marketplaces, the formal financial sector, sustainable agriculture practices, and the internet. This work will require broad and intentional collaboration to move the needle on food security and empower the farmers that feed the world.