World | Innovation
The main lessons learned about geodata and food security
Smallholder farmers produce 35% of the global food supply, but they are also hit disproportionally hard by climate change. Innovations like the use of geodata can present opportunities for the future: for food production, access to financing, and the use of agricultural technology innovations. A recent conference hosted by Rabo Foundation and the Netherlands Space Office gave a podium to successful business models, golden partnerships and opportunities for knowledge sharing.
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Last autumn, Rabo Foundation and the Netherlands Space Office organized the conference ‘Space for Food Security: On the Right Track’. The conference dealt with how geodata contributes to food security and inclusive financing - funding groups that currently have difficulty accessing standard loans, such as smallholder farmers. Rabo Foundation program managers Anna Ignatiadi and Anne Rappoldt were there, and they can share some of the most important insights with us.
What can smallholder farmers do with geodata themselves?
Anna: “Geodata give smallholder farmers new insights into things like expected rainfall, insect plagues or harvest forecasts. They can then use the information to decide on the best moment to irrigate their crops, for example. Or the best product to use to protect their crops from disease. That helps farmers deal with climate change, makes them more certain of bringing in a good harvest, and helps them increase their production.”
“That’s essential, because they’re responsible for around a third of the world’s food production. To realize the promise these innovations present, smallholder farmers need access to capital and other financial services, like microloans. That’s missing at the moment, but this is where geodata’s other possibility comes in.”
How can geodata help smallholder farmers get financing?
Anne: “A lot of banks think that financing smallholder farmers is too risky. They often can’t provide a financial history. But with the help of geodata, banks can see how their crops are growing and what the risk of flooding is, for example. With more insight into the risks, banks can better assess the farmers’ creditworthiness, which makes it interesting to grant them financing.”
“The use of geodata can also dramatically reduce the time needed to process and approve a loan application. For example, it’s possible to verify the status of an agricultural plot remotely using accurate, objective data. And once a loan is granted, the same geodata can be used to monitor the loan.”
What were your biggest insights from the conference?
1. Combine services
Services based on geodata that are combined with other solutions for smallholder farmers give them the freedom to select the services they need. Plus, it presents an opportunity to offer a solution for several related problems the farmers face. Apollo Agriculture, for example, combines access to financing, agriculture inputs and advice based on information obtained from geodata.
2. Choose sustainable business models
Suitable, sustainable business models for geodata-based services are still lacking, which presents some opportunities for the future. To develop a sustainable business model, you need start by understanding the farmers’ problems and needs. It’s also crucial that someone is willing to pay for the services.
And with geodata, you need to find the right balance between the added value of the data and the cost of obtaining them. High-resolution geodata are much more expensive. That information may only be relevant for banks or insurers that want to know more details about a specific lot. Farmers can often benefit from geodata that is available for free. Every service provider should weigh these costs and benefits from the very beginning.
“Anna Ignatiadi: We regularly come across solutions where it isn’t clear which problem they solve, and for whom. Or solutions that nobody wants to pay for. At Rabo Foundation, we help partners develop a sustainable business model. In the process, we focus on the service providers’ long-term strategy. That way we can improve our partners’ economic sustainability, and the continuity of their services for farmers.”
3. Convince standard banks
Technology can help standard banks identify the risks much better, which makes them more willing and able to finance smallholder farmers. Right now, geodata is mainly used in pilots or innovative projects. But adoption by standard banks is essential in order to give farmers large-scale access to financing.
“Anne Rappoldt: It takes time to convince banks and show them it’s possible. That requires enough tests, trials and tribulations to prove the reliability and effectiveness of technological innovations. And that they actually offer different ways to evaluate loan applications. We’ve seen several pilot projects with standard banks at the moment, but it’s definitely not the norm.”
4. Know the social and economic factors
Factors like education levels, literacy - financial and digital - and smartphone ownership have an influence on the successful use of new technologies by smallholder farmers, and whether farmers and banks actually have confidence in the technological solution.
5. Seek out one another
During the conference, the partners present from the agriculture, financial and technological sectors exhibited considerable energy and diversity. Every one said that they need each other desperately, whether they were a startup, an investor, an NGO, a public sector party, an educational institution or a financial player. Only together can they and the farmers tackle the challenges we face in food security.
In this context, it is also important to keep learning together about the possibilities presented by geodata. And to keep sharing that knowledge about the technology, business models and methods for scaling up.
Which role do you see for Rabo Foundation itself in this field over the next few years?
Anne: “We have to give project partners and smallholder farmers the chance to make the transition from paper to digital. A solid digital foundation would make it easier to deal with innovative technologies, both for the banks and for the farmers. It would also make it easier to scale up projects. And that would help lower the costs and the financing risks.”
Anna: “So we’ll keep working on behalf of promising agtech and fintech startups. We help them expand their businesses and bring them into contact with the farmer’s cooperatives and other partners we collaborate with. So they can reap the benefits of technological developments.”
Why did Rabo Foundation collaborate on a conference about this subject?
Anna: “Using technology and data to strengthen smallholder farmers is the core of our innovation portfolio. The collaboration between Rabo Foundation and the Netherlands Space Office started five years ago to encourage the use of geodata for inclusive financing. After the first five years, it was a good moment to share our insights, lessons learned and the latest developments with the sector, and to look back on what we’ve achieved over the past few years.”
Anne: “It was also a chance for us to bring together important players from our network. Policymakers, people from the agtech and fintech sector, bankers and researchers. One excellent result is that the Dutch Ministry of Foreign Affairs has expressed a commitment for the next phase of the Geodata for Agriculture and Water program, a public-private partnership offering consulting services for smallholder farmers based on geodata.”
Curious about how we are working to improve the lives of smallholder farmers today?