Fintech and its impact on the agricultural sector
The agriculture industry has radically transformed over the past 50 years.
Farming equipment has increased in scale, speed, and productivity, leading to more efficient cultivation of larger land. Irrigation and fertilizers have also vastly improved, helping farmers increase yields.
The world’s population is on track to reach 9.7 billion by 2050, requiring a corresponding 70% increase in calories available for consumption, even as the cost of the inputs needed to generate those calories is rising, according to the UN. By 2030, it predicts we will fall 40% short of meeting global water supply needs, and rising energy, labour, and nutrient costs are already pressuring profit margins.
Agricultural development is key to fighting poverty around the world. Take India, for example. The country exported $38.54 billion in 2019 and 70% of its rural households depend on agriculture.
Post-pandemic, agriculture is in the early days of yet another revolution – the revolution of technology. Artificial intelligence, analytics, connected sensors, and other emerging technologies could further increase yields, improve water efficiency and other inputs, and build sustainability and resilience across crop cultivation and animal husbandry.
Fintechs are at the heart of this revolution and it’s their services and products that will connect farmers with finance and enhance the power of financial inclusion. According to recent research, if connectivity is implemented successfully in agriculture, the industry could add $500 billion in value to the global gross domestic product by 2030.
So how is the fintech sector contributing to the agricultural sector’s revolution?
Two fintechs in particular have grabbed my attention.
The first is BPC, which in December 2019 launched Safal Fasal (which translates as ‘successful harvest’ in Hindi), the first agritech marketplace in India. It is built on a vision of using technology to serve farmers and solve their challenges in getting access to input, financing, insurance, or advisory services.
The platform has generously onboarded 500,000 farmers mentored by multiple institutions, including Reliance Foundation, PWC, Tanager, Dr Reddy’s Foundation, and JSW Foundation. It also matches them with buyers and other partners such as Bayers, Fino Payments Bank, and ICICI Bank, among many others.
The pilot phase, which lasted for three months, has successfully boosted the industry, starting in the Gujarat and Andhra Pradesh regions. Farmers sell their produce online to FMCG or wholesalers at a better price and get greater exposure than they could ever imagine.
As the marketplace closed its pilot phase in March 2020, the unexpected Covid-19 pandemic came to challenge its model with very little time to act. The model evolved into an online marketplace coupled with on-field meetings to drive better education and reach.
Nadia Benaissa, global marketing director at BPC, says: “This achievement would not have been possible without implementing the right communications strategy. Together with our network of partners, we had to establish community-based, language, and gender-specific communication lines to ensure we gain trust from farmers and create value for all stakeholders in this ecosystem.”
The second firm I want to mention is Ant Group, which is part of Alibaba. The group has been working with MYBank to create a new product called ‘Tomtit’. This product allows farmers to use a smartphone app to locate their farmland via satellite imaging and then have the AI technology identify the type of crops planted in the associated area so that the bank can identify this and offer the farmers corresponding loans for their planting and harvesting financing needs.
Technological advancements have evolved the social and economic landscape, evident from the emergence of industries like fintech. By properly leveraging modern technology’s financial and communication applications, agriculture, the oldest industry of human civilization, can experience rapid growth and sustainability. Companies like BPC and Ant Group have realised communication’s role in driving initiatives that promote sustainability. Without proper communication, getting farmers and stakeholders to onboard the projects would have been difficult.
Let’s hope that other fintech companies will follow suit and contribute to the evolution of the agriculture sector.
About the author
Gihan Hyde is the award-winning communication specialist and founder of CommUnique, an ESG communication start-up.
She has been implementing ESG campaigns in eight sectors, across six countries over the past 20 years.
Her campaigns have positively impacted over 150,000 employees and 200,000 customers and have closed over £300m in investment deals. Some of the clients she has advised include The World Health Organisation (WHO), HSBC, Barclays, M&S, SUEZ, Grundfos, Philip Morris, USAID, and the Saudi Government.
Get in touch with Gihan through LinkedIn or Twitter @gehanam.