Smallholder farmers in Tanzania will soon have access to a unique digital saving plan for inputs, coupled with timely, tailored farming advice, that will help to solve several major problems confronting farmers in poor areas: access to finance, to inputs, and to agricultual training.
The programme to deliver this plan was launched today by the Alliance for a Green Revolution in Africa (AGRA), Positive International Limited (PIL), and Grameen Foundation at an event attended by government officials, farmers’ associations, financial institutions, seed companies, agro-dealers, and agribusinesses.
The digital toolkit will allow farmers to gradually pre-pay for the inputs they need via mobile money, at discounted prices. It will also provide them with a customized inputs package based on their crop and production goals, and deliver mobile-phone based farming advice to ensure the best use of those inputs.
“One of the greatest challenges faced by farmers is that they rarely have cash at the beginning of the planting season, forcing them to seek credit to buy inputs which increases their risks,” said Ms. Hedwig Siewertsen, the Smallholder Financial Inclusion Lead at AGRA. “The Digital Inputs Financing Toolkit is a first-of-its kind solution. It will build farmers’ resilience by enabling them to put aside cash through their mobile wallets, so they can buy quality inputs in time, with discounts up to 30%.”
In Tanzania, smallholder farmers produce nearly 70 percent of the country’s food, but roughly half of them grow enough to sell. They lack access to modern farming technologies, are unable to afford improved inputs, and are out of reach of public extension services for quality technical support and training. Instead, they mostly rely on rain-fed production, low mechanization and recycled seeds whose potency diminishes with each season.
Farmers that seek to invest in modern farming technologies can rarely borrow from formal financial institutions, as only 6 percent of total bank credit goes toward agriculture. They bet their meager savings on farm supplies available through opportunistic peddlers–with no quality guarantees.
At the same time, reputable private sector agri-input dealers have seen little profit opportunity in delivering quality services in rural areas due to the high costs of doing business, limited farmer ability to pay, and insufficient economies of scale.
As a result, average productivity per hectare of most crops is just 1.7 tons per hectare—a fraction of that in other parts of the world, and yields of key staple crops such as maize are stagnating or declining due to soil degradation and extreme climate.
How to: bringing digital to the farm
The digital toolkit will consist of a crop plan that provides farmers with a customized inputs package based on their production goals. It will also offer mobile phone based customized extension services via Short Message Service (SMS) to guide farmers’ input use.
AGRA, an alliance led by Africans with roots in smallholder farming communities across the continent, is financing the development of the toolkit through a grant from the MasterCard Foundation. The Grameen Foundation, a global nonprofit that uses digital technology to solve the problems of poverty, is leading its development. The toolkit and its services will be delivered by the agro-input company Positive International, that trades the popular Snow Brand in Tanzania which has worked to be a solution for farmers to access high quality inputs at an affordable rate, through its network of agro-dealers. The inputs layaway product will take advantage of Tanzania’s fast-evolving mobile money services.
The project will span eighteen months, including a six-month research and development stage, and a twelve-month pilot stage to test the Toolkit with 15 Positive International dealers and 15,000 smallholders in Arusha and Mbeya regions. It will mainly focus on maize and beans, which are by far the most important crops in the local area. For example, in Arusha – one of the project sites, the two crops cover about 150,000 hectares but with yield gaps of 213 percent for maize and 152 percent for beans. Increased uptake of quality inputs alone could, potentially, boost yields by 150 percent with a significant impact on household food security and income.
The potential market for the Digital Inputs Financing Toolkit in Tanzania numbers in the millions, said Karan Kapoor, the Managing director of Positive International. “Millions of smallholder farmers in Tanzania need access to affordable and high quality inputs. We are piloting the product with 15 dealers in the next 18 months, targeting 15,000 farmers to prove its uptake and sustainability. From there, we plan to expand it to our full network of 500 dealers in Tanzania, without the need of creating any new infrastructure.”
“Some 19 million people in Tanzania make a living off their small farms, but fewer than one in 25 have electricity, and fewer still have piped water in their homes,” said Raphael Wolf, Project Manager for Grameen Foundation. “This toolkit will bring the digital revolution to the farm. For the first time, many farmers will be able to obtain the resources they need to increase their productivity and their incomes.”
As farmers gain access to vital inputs like fertilizers, and increase their yields, AGRA will take advantage of its existing partnerships and investments in Tanzania to link those farmers to markets, including through cooperation with large multinational buyers, trade facilitators, and NGOs working on market access.
Once proven in Tanzania, the partners intend to utilize their shared capacity to introduce the concept and the toolkit to other African countries, including through Positive International’s agro-dealer networks in Malawi, Mozambique, Zambia and other parts of the continent.