The Digital Agriculture Platform Blueprints developed by GIZ and Mercy Corps AgriFin
Can Agribusinesses Successfully Pivot to Digital Agricultural Platforms?
D4Ag by Make-IT in Africa has recognized Digital Agriculture Platforms (DAP) as a viable path for AgTech Start-Ups to improve market access, drive financial sustainability and increase impact. Against this backdrop, D4Ag and Mercy Corps AgriFin in collaboration with Dalberg initiated the Digital Platforms for Agriculture (DAP) programme, a six-months initiative to work with platform partners and young technology innovators in Kenya and Nigeria exploring sustainable pathways to scale. As part of this engagement, D4Ag and AgriFin have produced a series of learning materials capturing insights and lessons learned associated with digital platforms for agriculture.
Written by Sieka Gatabaki and Dolapo Olusanmokun
Digital Agriculture Platforms (DAPs) are emerging as a scale vehicle for technology innovators across agriculture ecosystems to tie together the wide array of actors needed to drive sustainable productivity and inclusion for the world’s smallholders at the end of the last mile. While there are different types of platforms, GIZ and Mercy Corps AgriFin present four types of common DAPs characterized by the type of organization leading the platform, including agribusinesses, TELCOS, banks, and government institutions.
Agribusiness contributes about 25 percent of Africa’s GDP and a staggering 70 percent of its employment. It goes without saying that the potential for digital platform development by agribusinesses is a no brainer as they seek to secure their supply chains. Recent examples such as Twiga Foods and Olam portend positive movement towards increased digitization in the agribusiness space and the formation of nascent digital platforms that not only provide the agribusinesses with increased ‘contact’ with farmers but also bringing them closer to actors in the value chain, forming symbiotic relationships with a number of win-win propositions.
However, similar to observed phenomena in the transport and retail verticals, it has been noted that agribusinesses have been slower to the ball in executing large scale platforms that encompass multiple actors in the value chain. Instead, technology companies such as the e-commerce giants Alibaba and Amazon and Mobile Network Operators are beginning to shape the agenda of digital agricultural platforms.
Our recent study on agribusiness operated platforms can shed some light as to why they have not yet emerged as the leading pathway to digitization of agricultural value chains. Below are some of the main takeaways.
- Agribusinesses, in most cases especially the significantly large corporations, have been in the business of off-taking and providing inputs for long periods of time, cementing cultures that are resistant to change or adoption of new transformational technologies and business models. In a sense, their success in the current business model has led to a lethargy in pursuing new ways of working. This is not unique to agribusinesses, with similar observations being made in the retail business, where large retail chains have been unable to successfully pivot to platform models and are now facing increasing competition from digital-first incumbents.
- Due to the heavy investments made in the traditional models of off-taking and input provision, large agribusinesses that have directly invested in a number of value-added services find it difficult to partner with new Agtech start-ups that provide similar services at a more affordable cost due to efficiencies brought about by technology and agile models.
- Agribusinesses often deploy heavy capital outlay to continue to produce, manufacture, and provide services to their customers, leaving little funds for innovation and technological transformation.The opportunity cost in availing working capital to off-take from farmers vis-à-vis purchasing the state of the art technology platform often is unquestionable. In addition to acquiring the technology, the requisite people to manage digital platform design, development and coherent and consistent user experience for the farmers and other stakeholders is equally critical and often lacking. Hiring a technology team with members that go beyond the conventional IT department roles and understand how technology can be leveraged to better engage smallholder farmers is usually not a top priority as there are more competing roles to be filled such as agriculture experts, commercial planning, sales, and other business-related roles.
- Competitive pressures in the demand and supply side of the current business lines to meet operational and strategic goals also takes resources away from transformational activities.In some cases, this may be the motive to move towards a digital platform approach; however, in the above context, the agribusinesses are reluctant to commit resources to this endeavor.
There is a number of other factors that have led to a lower adoption of platform models by large agribusinesses; however, many of these obstacles can be overcome. The early successes we have observed in the space include agribusinesses that are open to partnerships with value chain actors and innovators and actively seek close relationships with platform technology companies, making the investment in hiring forward-thinking technology-oriented staff with the prerequisite authority to drive change initiatives.
Please access the Digital Agriculture Platform Blueprint documents here:
To access previous publications on this topic, please see here:
- Launch of Digital Agriculture Platform Blueprint developed by GIZ and Mercy Corps AgriFin
- Digital Platforms for Agriculture in SSA & Matchmaking for Transformation
Stay tuned for the release of additional materials accompanying the Digital Agriculture Platform Blueprint over the coming weeks!
Read more on D4Ag here: Digital for Agriculture – D4Ag – Make-IT in Africa (make-it-initiative.org)
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