Online ag marketplaces: An entry point for farmers into the tech ecosystem

May 4, 2021

Editor’s note: Dmytro Lennyi is agritech practice leader at Intellias, a software engineering and consulting firm based in Lviv, Ukraine. This guest article reflects the views of the author and not necessarily those of AFN.

As internet connections spread further into rural areas and smart devices penetrate the world’s largest agricultural markets, more opportunities to use technology for the benefit of farmers are being unlocked. According to BlueWeave Consulting, the total value of the global digital farming market is expected to reach $10.2 billion by 2025.

With the right combination of solutions, farmers can optimize their daily operations and increase yields more or less hands-free. But are they ready to accept and use these technologies?

Most farmers aren’t aware of the benefits of these types of technologies – so the challenge for agritech companies is not only improvement of existing solutions, but helping farmers learn how to use them. After visiting one of the world’s leading trade fairs for agricultural innovations, Agritechnica, I got an idea for how the agritech industry could change.

Barriers to digital transformation in agriculture

Although lack of a stable internet connection and high costs of adoption are common obstacles to adoption, these are far from the only ones.

Many available solutions are complicated. They often provide scattered and overwhelming data rather than what farmers are actually looking for, like predictions of return on investment per field.

The real problem is that there’s a massive disconnect between the experience of farmers, the ambitions of digital agriculture entrepreneurs, and the expectations of investors.

Some areas lack proper infrastructure

One of the biggest issues with adopting technology in agriculture is a lack of enabling infrastructure and limited internet coverage and connectivity. While developed countries are getting ready to welcome 5G, many developing regions – especially agricultural ones – don’t even have wired internet connections. So, first and foremost, there’s a need for more submarine and land-based cables to ensure adequate speed and low latency.

Besides physical transmission lines, there are also hardware and software systems, database servers, and many other additional services without which the internet simply cannot work. Moreover, around half of households globally don’t own a computer.

Let’s take a look at the internet penetration rates in the world’s largest ag markets. In Brazil, 67% of the population has internet access; while 50% of India’s population is online. In China, 46.2% of rural households have an internet connection. As long as there isn’t adequate infrastructure, it’s going to be extremely difficult to implement digital technology – not to mention to extract and utilize key datasets for soil and climate data.

Most farmers are not digital natives

Most of the global population in extreme poverty resides in the rural areas of South Asia and Sub-Saharan Africa. A whopping 78% rely on agriculture for their livelihoods.

This means that the adoption of agricultural technology in those regions is somewhere between extremely desirable and absolutely necessary. But there’s a serious issue that stands in the way of progress.

Half of the farmers I’ve been speaking to don’t even use smartphones, but call their friends on simpler devices to pick up goods and find out where to sell them. Most farmers in developing regions weren’t born ‘connected.’ For many of them, using a smartphone app is not intuitive, but complicated and time-consuming. As a result, they find it hard to see how digital technology can be useful – which brings us to the next significant barrier to implementation.

Farmers don’t see value in adopting more technology

When a farmer adopts one technology, they soon get offers from other agribusinesses presenting them with more tools to implement. But sorting through tons of data collected across completely different platforms, with eye-burning interfaces and too many options, becomes too a hassle. Unsurprisingly, farmers refuse to take up these offers.

This made me wonder: How can we make technology an opportunity and a relief for farmers, rather than another strain? How do we motivate and assure farmers that the benefits of these technologies are immense? How do we make digital transformation easier for them?

Farmers need a way to get familiar with all the benefits of the farming tech ecosystem ‒ a clear and valuable entry point. Online ag marketplaces can become that entry point.

How does an agriculture trading platform become the first technology for farmers?

An agribusiness marketplace (this is the term AFN and its parent company AgFunder uses to refer to these businesses; they’re also variously known as online ag marketplaces, agriculture trading platforms, or digital farmer marketplaces, among others) is basically a website or an app that connects farmers with suppliers or buyers (for our purposes, we’re focussing on the latter.) By creating an account on such a platform, a farmer gains access not only to an actual marketplace, but also to other software tools. And as they get more familiar with the platform, they can study other agritech solutions and adopt them.

Similar to cryptocurrency exchanges, digital farmer marketplaces provide insights on grain trading and other markets. On one end are farmers that use such platforms to study demand, connect with buyers, arrange delivery, and finalize transactions. On the other end are traders that see offers from farmers. If other industries can adopt such platforms, it’s fair to assume that agribusiness can make it too.

Online ag marketplaces are multifunctional. Farmers get free access to trading and a few other services. Gradually, as they get acquainted with more functionality, they can apply for additional integrated technologies. These can be AI engines for automation and predictions, smart irrigation and monitoring technologies, farm management systems synchronized with different toolsets and data sources, and so on.

A farm marketplace platform lives off of advertising and paid services for traders – such as access to premium accounts to see farmers’ produce slightly earlier than regular accounts.

Overall, this business model is extremely profitable for farmers, as they get to solve two problems at once. They can easily find buyers for their products and get more familiar with the latest agricultural technology, simplifying adoption. Platform developers benefit too, as they get more interested and better-informed customers who are open to implementing new technologies in their farming operations.

An agriculture trading platform is a great way to ease farmers’ way into a broader agriculture technology ecosystem without marketing effort. Through reaping its benefits, farmers will develop trust in a platform. They may become inclined to adopt more functionality, add additional services, and eventually build an ecosystem around it. This is the first step towards creating global farm monitoring solutions.

Agri Marketplace

There are quite a few ag marketplace platforms already available, and their number is only growing. For example, Portugal-based Agri Marketplace is a digital B2B solution that connects farmers and industrial buyers and is one of the biggest players on the market. This all-encompassing solution operates through the entire agricultural supply chain. It’s also one of the most popular online ag marketplaces globally.

Maano Virtual Farmers Market

Another example is the Maano Virtual Farmers Market, an app-based e-commerce platform that connects smallholder farmers with buyers and other traders. The project is funded by the UN’s World Food Programme to help farmers in Africa sell their produce. Following its successful launch within Zambia, it is being continually developed and tested in other countries.

The unknown is scary, but adopting technologies on a grand scale could revolutionize the agricultural industry. Agritech solutions ensure smarter use of resources and better planning, increase efficiency through location-based services, improve yields, enhance product quality, and give more transparency across the entire supply chain.

How to build an online ag marketplace and make it succeed

Agricultural transformation is multidimensional. In order to see visible results, markets that are going to implement digital technology must first meet three essential conditions:

  • Readiness for change at the government level
  • Availability of an effective national agricultural strategy
  • Availability of delivery mechanisms to make that strategy work

Achieving these three preconditions is probably one of the biggest obstacles for implementation. Unless a country supports and enables digital transformation in the agricultural sector, there’s no way a farmer-centric ag marketplace platform will succeed. But let’s imagine the support is there, and the country is interested in developing an ag marketplace platform for farmers. Which stand a chance of being adopted?

Those with sufficient funding

The software design and development phase for an ag marketplace platform is often long and expensive. It requires ongoing consultation with end users, continuous system upgrades, and multiple rounds of redesign. The whole process could easily take five years and requires a lot of investment.

Those that are user-friendly

Digital literacy among end users can become a massive factor when it comes to platform scalability and agricultural sustainability. Farmers will resist adopting new technology if it’s too difficult to use. The simpler the interface, the higher the potential of the ag marketplace.

Those that are deployed in the right regions

Factors like unpredictable climate conditions, product quality issues, lack of warehouses for aggregation, and even government bureaucracy are going to be huge influences on the success or failure of any platform. The wrong choice of region can jeopardize the entire project.

All in all, online ag marketplaces have huge potential for getting more farmers to tap into modern technology. It’s not going to be easy. But with a fair amount of research and concentrated efforts, it’s possible to achieve impressive results and address the biggest problems in global agriculture. At the end of the day, the risk of not pushing forward a wider scope of agricultural technologies – starting with trading platforms – is greater than the risk of giving them a try.

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