Conclusions - Pillar 1
Digital innovations
1
Most solutions have two or less product offerings.
Except for the Caribbean and Americas, the majority of the assessed digital solutions in the Commonwealth have two service offerings or less. While this finding may contradict the narrative that uptake of digital agriculture solutions increases with a wider service offering, it can be explained by varying factors across regions.
In the United Kingdom, New Zealand and Australia, farms are usually large-scale monocultures whose farming systems are highly mechanised and commercialised; the consumption of digital solutions is driven by the procurement of agricultural hardware. In such developed markets, agricultural hardware sales are usually bundled together with digital solutions that facilitate data management from sensors within the hardware.
Number of value propositions (% two or less)
Commonwealth Europe
Commonwealth Pacific
Commonwealth Asia
Commonwealth Caribbean & Americas
Commonwealth Africa
n=630 solutions
2
Across all regions, the private sector plays the most predominant role in the development of digital solutions for the agriculture sector.
The private sector accounted for at least 66 percent of solutions in all regions, and for 95 percent of solutions in Commonwealth Europe.
The government is most active in Asia and Africa while partnerships between private sector actors and development partners was most common in Africa.
Distribution of solutions, % private sector
Commonwealth Europe
Commonwealth Pacific
Commonwealth Caribbean & Americas
Commonwealth Asia
Commonwealth Africa
3
Most solutions offer crop-based pre-harvest advisory.1
Most of the mapped digital agriculture solutions have a crop-based pre-harvest advisory service offering irrespective of the region with the offering. This service offering is particularly dominant in locations with highly mechanised agriculture and large average farm sizes (New Zealand, United Kingdom, Canada and Australia). This could be explained by the fact that many agricultural machinery providers in the region (especially the large entities with considerable market share) also offer digital solutions to support the effective use of the machinery.
Africa and Asia also have many market linkage solutions. In places with large numbers of smallholder farmers, many solutions had a market linkage service offering. This could be explained by the numerous platforms providing access to agricultural inputs for farmers.
4
Mobile applications are the predominant delivery medium.2
Most of the digital agriculture solutions have mobile applications as their primary delivery medium. Websites are also common.
For locations with large broadband usage gaps like Asia and Africa, it may be counterintuitive as many potential users of these solutions are in effect left out because they have basic phones that do not run the conventional IOS and android mobile applications.
Very few solutions leverage APIs as their primary solution delivery medium. In places with large numbers of smallholder farmers, very few solutions have APIs as a primary delivery medium. The absence of Application Programming Interfaces (APIs) eliminates the important ingredient of collaboration in the development of digital solutions especially those that use similar data resources.
Conclusions - Pillar 2
Data infrastructure
1
Content data
Types of data
Soil property data
The whole African continent has soil data available with a depth of up to 250 meters provided by the Africa Soil Information Service. In the South Asian Commonwealth, except for Sri Lanka and India, none of the other Six Commonwealth member countries in the region have nationwide Government curated soil data sets.
Digital solution providers in the Pacific and Caribbean SIDS can make use of SMOS data in their product offerings. This is open-source data that is freely available in countries like Australia, New Zealand and Canada, soil property data is state-provided by Government-run entities. It is only in Canada however, where in addition to the state collected and provided data, the SMOS data is packaged as an open API to facilitate inclusion in digital solutions.3
Weather data
Each of the countries in the Commonwealth has state-run meteorological bodies that collect, communicate and store historical weather data. It should however be noted that except for South Africa, Singapore, Canada, Malaysia, and the United Kingdom, none of the other Countries provide APIs with this data. This effectively excludes this data from developed digital solutions and pushes solution developers to access this data from private entities.
Farm-level data
Smallholder farmers seldom maintain written records of farm operations. Sections of the Commonwealth like Sub-Saharan Africa, South Asia and the Caribbean with large numbers of smallholder farms predominantly lack farm-level yield data. On the other hand, farm operations on more than two hectares have a large incentive to collect farm operation data. On New Zealand livestock farms, for example, 91 per cent of farmers collected at least one type of data. Similar tends have been observed in the United Kingdom, Europe, Australia and Canada.
2
Indentity systems
Farmer identifier data
Across Sub-Saharan Africa, 69 per cent of adults have at least one primary identifier document. In South Asia, despite the success of some farm identifier schemes, like the “Aadhaar” in India, and the Pakistan computerised national identity card, data about the coverage of the national schemes remains largely unavailable. In the Caribbean, all the Commonwealth countries provide national identity cards. Despite this, these identifiers are not linked to other farm-specific data sets, for example, the national land registries and agricultural production data sets.
National farmer registries
The Food and Agriculture Organisation of the United Nations notes that African countries have by and large failed to develop structured National Agricultural Statistical Systems with well-defined objectives and clear policy directions. In Asia, despite the existence of notable national farmer registries like in India and Pakistan, the penetration of this information remains largely unclear. In the Caribbean, except for the Commonwealth Dominica, Guyana and St Kitts and Nevis, all the Commonwealth member countries in the Caribbean have national farmer registries. Largely, in Sub-Saharan Africa, Asia and the Caribbean, the various variables collected, and intersectoral relationships with other state-managed registries, however, remain largely unknown.
Conclusions - Pillar 3
Business development services
For most of the Commonwealth countries, data on the business models of digital agricultural solutions is largely unavailable. Regardless, the scale of farming operations can be used as a proxy for the analysis of business models of currently deployed digital agricultural solutions.
1
In places where there are predominantly smallholder operations, the farming operation is typically less than two hectares according to FAO. Such farming operations are often not commercial and do not have an outstanding cost reduction incentive because most of their farming operations are largely rain-fed and heavily reliant on nature.
In addition, to break even with smart farming, farm operations need to be at least two hectares in size.4 This means that for the largest part of the developing world, most digital solutions operate without getting direct payments for their value propositions from the individual smallholder farmers. The digital solutions in serving smallholder usually earn subscription fees from farmers, earn commissions from transaction payments, indirect subsidisation from both state and non-state actors.
Digital solution revenue streams when serving smallholder farmers
Subscription fees from farmers / cooperatives and farmer groups
Due to the nature of smallholder farming operations, very few digital solutions generate revenue from direct subscription fees since most smallholder farmers are unwilling to pay for digital solutions.
Provision of goods and services via the digital solutions
Some digital solutions provide goods and services to smallholder farmers. In many cases, farmers are willing to pay small charges to the solution providers in exchange for the offered services. A notable example is the hello tractor mobile application in Kenya and Nigeria.
Alternative funding avenues from governments, technology competitions and development agencies
A few solutions serving smallholder farmers usually expand their value offerings and expand into new markets using funding from government and development partner grants, technology competitions, and partnerships with various development agencies.
2
Most of the smart farming solutions in these domains are provided by business entities.
In countries like Canada, New Zealand, Australia and the European Commonwealth Countries, the farm operations are large scale and performed by formally registered entities. The scale of operations creates an incentive for the use of smart farming methods. The incentive to reduce cost is the main driver of uptake of digital agriculture solutions among larger commercial farmers.
It should be noted that due to the informal tenure arrangements and undocumented use rights, most smallholder farmers lack collateral in the traditional sense of the word. There are some cases of smallholder farmers receiving the credit from digital solution providers that use alternative means of credit scoring and not reliance of asset-based collateral. A notable example here is the Kenyan agri-tech startup Farm Drive.
Digital solution revenue streams when serving commercial-scale farmers
Direct payments for sold digital solutions from farmers
Due to the scale of the farming operations, digital solutions usually have cost reduction potential for many large-scale farmers. Farmers operating at such large scales are in many cases willing to make direct payments for digital agriculture solutions.
Payments for agricultural machinery bundled together with the digital offerings
With the rise of the phenomena of bundled sales of digital solutions and agricultural machinery, revenue from the sale of agricultural machinery is used to provide and maintain digital solutions.
Conclusions - The Base
Enabling environment
1
Education levels of the changing farmer demographic.
The World Development Indicators database (2016) estimates that the average literacy rate of the adult population in Sub-Saharan Africa (SSA) was 60 per cent in 2011. The South Asian region is still home to a huge number (more than 68 per cent) of the world’s illiterate adults. In the Caribbean, despite exceptionally high literacy rates, there is a profound digital skill gap in the region according to GSMA. The absence of digital literacy in effect reduces the farmer capacity to consume digital solutions.
2
Cost of mobile (primary access media).
In Sub-Saharan Africa, for example, taxes on mobile ownership alone constitute up to 7 per cent of income for the bottom 20 per cent of the earners.5 Furthermore, by 2019, the average final cost of an entry-level smartphone was about 34 per cent of the population’s monthly income for most of Sub-Saharan African and South Asia.6 This effectively means that the population at the bottom 20 per cent of the income bracket is effectively locked out of the region’s thriving internet economy by taxes. High taxes cause the cost of acquisition of mobile devices to become prohibitive.
Mobile cellular subscriptions per 100 people and percentage of the population using the Internet by continent.7
Most of the countries in the Commonwealth8 have more than 100 mobile cellular subscribers per 100 people. A lot of the African Commonwealth countries despite having more than 100 mobile cellular subscriptions have less than half their populations using the internet. This underpins the need for digital agricultural solutions that are USSD and IVR based. These would cater to the significant number of mobile cellular subscribers than can consume digital agricultural solutions in the region but have no affordable mobile broadband connections.
ln Africa and Asia, the transformative power of the internet and digital agricultural solutions on smallholder agriculture can primarily be experienced using mobile devices. While several barriers such as the high cost of mobile devices and the prohibitively high cost of mobile broadband subscriptions exist, cellular devices predominantly influence and will continue to affect the consumption of digital agricultural solutions in the region.
3
Government investment in technology and non-technology enablers of the digitalisation of agriculture in Commonwealth countries.
In Sub-Saharan Africa, Asia and the Caribbean, Governments have made notable investments in the roll-out of infrastructure of digital solutions. A case in point is the construction of terrestrial connection cable networks in several African and Asian Commonwealth countries. However, sizable gaps to this effect are still existent. In the Commonwealth countries with higher gross national incomes per capital. However, the Government investment in this regard has made the coverage gaps almost non-existent and the usage gaps minimal due to increased affordability.
4
Characteristics of cropping systems.
A technical limiter to the implementation of many digital agricultural solutions, especially those that rely on aerial imagery, are the inbuilt natural complexities of the heterogeneous farming systems. In most parts of Sub-Saharan Africa, Asia, and the Caribbean, the farming operations are on less than two acres per farm on average and are largely intercropped, and heterogeneous. These limit the creation of crop yield databases and complicates the roll-out of various imagery-based smart farming methods.
5
Electricity grid limitations.
The World Bank estimates that less than 35 per cent of rural Sub-Saharan Africa is connected to national electricity grids. This effectively means that mobile broadband operators have high operating expenditure in maintaining the much-needed mobile broadband networks that facilitates farmer access to mobile internet. South Asia electricity grid coverage is an estimated 95 per cent according to the World Bank.
6
Affordability of broadband connections.9
While most of the countries in the Commonwealth10 have their internet priced at less than 5 USD per gigabyte, a few countries in the Africa and several island countries have their internet priced above 8 USD per gigabyte. For the Small Island Developing countries, this may be explained by the remoteness factor that causes an increase in the cost of establishing broadband connections and consequently leading to increments in prices of digital solutions in these country. In addition, the relatively small populations on these islands reduce the attractiveness of these markets to various mobile network operators. This leads to Internet Service Provider (ISP) duopolies and monopolies that in turn causes the prices of the internet connections in these countries to be greatly increased.
The African countries of Namibia and Malawi that have expensive broadband connections can be best explained by high licensing fees and taxes charged by regulators on mobile network operators.
In Malawi, for example, excise tax and value-added tax make up 26 per cent of the data cost. The high taxes are ultimately passed on to the consumers in the form of extraordinarily high prices of broadband connections. These high prices become an inhibitor to the consumption of digital agricultural solutions in the region by keeping rural households out of the digital solutions consumption pool.
Most African Commonwealth countries have less than half of their populations using the internet.
The European and some of the countries in the Pacific like New Zealand and Australia on the other hand have almost all their populations using the internet with the cost per gigabyte of internet less than 1 USD per gigabyte.
The GMSA Mobile Connectivity Index.11
The GSMA mobile connectivity index is used to compare the enabling environment for digitalisation of agriculture in the various regions of the Commonwealth.12 The GSMA Mobile Connectivity Index is an input index that measures the enablers of mobile internet connectivity. The index assesses four main dimensions of the enabling environment for digitalisation: infrastructure, affordability, consumer readiness and content and services. The infrastructure component assesses the availability of high-performance mobile internet network coverage. The affordability component assesses the affordability of mobile services and devices at price points that reflect the level of income across a national population. The consumer readiness component assesses whether country inhabitants have the awareness and skills needed to value and use the internet. The availability component assesses the presence of secure online content and services accessible and relevant to the local population.
The Index reveals that many of the Africa and Pacific Island countries have GSMA mobile connectivity indices of less than 50.
This finding is remarkably similar to the finding regarding the cost per gigabyte in the African and Pacific Island Countries, hence highlighting the importance of affordability of broadband connections in enabling the consumption of digital agricultural solutions.
Footnotes
1 In this graph, the categorisation of The Caribbean and Americas merges assessed solutions from Canada and those from the Caribbean Island Commonwealth countries. In addition, the chart also merges solutions from the Australia and New Zealand with those from the Pacific islands.
2 In this graph, the categorisation of The Caribbean and Americas merges assessed solutions from Canada and those from the Caribbean Island Commonwealth countries. In addition, the chart also merges solutions from the Australia and New Zealand with those from the Pacific islands.
3 https://earth.esa.int/eogateway/missions/smos/data (accessed on July 14, 2021).
4 Mehrabi Z., M.J. McDowell, and V. Ricciardi (2021). The global divide in data-driven farming. https://www.nature.com/articles/s41893-020-00631-0
5 Global System for Mobile Communications (2020). The mobile Economy Sub-Saharan Africa 2020. https://www.gsma.com/mobileeconomy/wp-content/uploads/2020/09/GSMA_MobileEconomy2020_SSA_Eng.pdf
6. Global System for Mobile Communications (2020). The State Of Mobile Internet Connectivity Report 2020. https://www.gsma.com/r/wp-content/uploads/2020/09/GSMA-State-of-Mobile-Internet-Connectivity-Report-2020.pdf
7 The World Bank, World Bank indicator database. Data retrieved on August 8, 2021. Retrieved from https://data.worldbank.org/indicator/IT.CEL.SETS.P2
8 Note – The categorisation of The Caribbean and Americas merges assessed solutions from Canada and those from the Caribbean Island Commonwealth countries. In addition, the chart also merges solutions from the Australia and New Zealand with those other the Pacific islands.
9 The World Bank, World Bank indicator database. Data retrieved on August 8, 2021. Retrieved from https://data.worldbank.org/indicator/IT.CEL.SETS.P2
10 Note – The categorisation of The Caribbean and Americas merges assessed solutions from Canada and those from the Caribbean Island Commonwealth countries. In addition, the chart also merges solutions from the Australia and New Zealand with those other the Pacific islands.
11 The Global System for Mobile Communications, GSMA mobile connectivity index data. Data retrieved on August 8, 2021. Retrieved from https://www.mobileconnectivityindex.com/
12 Note – The categorisation of The Caribbean and Americas merges assessed solutions from Canada and those from the Caribbean Island Commonwealth countries. In addition, the chart also merges solutions from the Australia and New Zealand with those from the Pacific islands.
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