Family farms produce up to 80 per cent of the food supply in Asia, and the global smallholder agribusiness market is estimated to be worth more than US$400 billion. But while breaking into the smallholder market might be an enormous opportunity, technology startups are finding this is no easy feat.
Rocky Thooi grows durian, passionfruit and long beans among other fruits and vegetables on his farm near the city of Bentong, about 70 kilometres outside Kuala Lumpur, Malaysia. The 57-year-old was one of the many smallholder farmers in the region who, for a 64-day-long coronavirus lockdown earlier this year, was unable to travel more than 10 kilometres from their homes.
It was a devastating scenario for both farmers and their local communities. As Thooi explained, “Most farms are located [out of] town, and much of the produce is sold locally.” If a farmer can’t get their crop to people in town who will buy the produce, the crop will go bad and the people will go hungry.
In the first few weeks of lockdown, the Malay government “sent a team to assist the elderly in rural areas with funding and groceries,” said Thooi. But to be able to maintain his farm, the monthly government subsidy was not going to be enough.
So Thooi turned to social media. In particular, to a national Facebook group which disseminates government information about subsidies and assistance programmes. “It was through the information and step-by-step instructions posted on Facebook by the younger generation, that I was able to apply for extra funding online.”
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Smallholder farmers are a big deal
Rocky Thooi’s farm is one of more than 550 million in the world that can be considered family farms — those run by an individual or a family and rely primarily on family labour. Estimates by the United Nations’ Food and Agriculture Organisation suggest that family farms produce up to 80 per cent of the food (or four out of every five plates of food eaten) in Asia.
Though these smallholder farmers remain some of the world’s poorest people due to reasons that were present long before the COVID-19 pandemic, the global smallholder agribusiness market is estimated to be worth more than US$400 billion.
If that’s the estimate now, what would the market look like if rural, smallholder farmers across Asia could harness digital technology to tap into the solutions and opportunities that are currently out of their reach?
Furthermore, if a technology company could tap into the smallholder market, they wouldn’t just be holding a huge slice of global food production, they would be presented with the opportunity to help lift a lot of people out of poverty.
It’s a “save the world and make a lot of money doing it” scenario — one that should be encouraging smallholder-focused agricultural technology startups to burst onto the scene.
But startups are focussing elsewhere
Most of the startups on Malaysia’s agritech scene are in the business of online retail, selling direct to consumers. SupplyBunny, for instance, raised US$300,000 seed funding in 2016 to start an online B2B marketplace of grocery and supplies for restaurants and retailers. TheAqiqah is an online marketplace for goats, and Fresh@Heart is a US$275,000-funding-backed online retailer of meat and seafood.
If they’re not in that space, startups such as CityFarm Malaysia, plantOS and Poptani Asia are providing hydroponic farming inputs, infrastructure and systems for vertical farming enterprises.
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And of course, there is the world of large-scale plantations. Malaysia is one of the top 10 coconut-producing countries in the world, and the world’s second-largest producer of palm oil after Indonesia, producing around 25 per cent of the global supply. These industries have attracted the likes of Lintrmax Sdn Bhd, a supplier of palm plantation management software, and Agritix, which helps agricultural plantations collect and analyse data satellite imagery to make informed decisions.
Global players are focussing elsewhere too. Wefarm— the company that lays claim to being the world’s largest farmer-to-farmer digital network, with two million farmer members using its platform to share more than 40,000 questions and answers every day — is settling into the African market and has no plans to bring its services to Asia.
For many smallholders, the search for information stops at social media
Breaking into the global smallholder agribusiness market might be an enormous opportunity, but it is not an easy feat.
The challenge is not often a lack of funding for agricultural startups or a surge in competition. Rather, one of the biggest challenges, according to Adrian Soe Myint, CEO of Myanmar-based startup Village Link, is getting smallholders like Rocky Thooi interested in technologies outside of social media, such as farming-specific apps and other digital platforms. For most smallholders, said Myint, Facebook is the internet and “people rarely leave [that] ecosystem”.
Village Link is behind Htwet Toe, a mobile application that serves as an information centre and a digital community — connecting local farmers with agricultural experts and agribusinesses services. The platform is integrated with remote sensing capabilities, which means it can deliver personalised precision farming advice to individual smallholders.
Farmers can also access the Village Link Satellite Services, a platform that aggregates agriculture-related satellite data and transforms this into insights and information that farmers can use to make operational decisions.
The company’s platforms serve about 600,000 farmers in Asia, mostly in Myanmar (about 98 per cent), but also Malaysia (one per cent) and Thailand (one per cent). Adrian puts this spread down to the fact that the app is only available in Burmese and English, although the plan is to expand services to more countries in the region, starting with neighbours like Thailand, Malaysia and Vietnam.
Village Link has received around US$640,000 seed funding. It’s a business. To survive, Myint knows that the company will need to make money. But although he has plans to charge in the future, perhaps after integrating additional features into the app, Village Link’s services are currently free.
Gaining members and users is the task at hand, not chasing profit. It is not just an obvious strategy, but perhaps the only strategy, when you are trying to pitch a product or service to people who are happy using social media channels such as Facebook or who cannot afford to invest in new technology. Usually, it’s both.
Money doesn’t grow on trees, at least not yet
Digital tools and innovations have the potential to make farming and agricultural supply chains more efficient and improve farmers’ prosperity. Which means farmers will have more money to invest in technology. Which means technology companies will be able to grow and create new products and solutions.
So, if a technology company could succeed at cutting through to smallholders, to provide them with the types of solutions that would help them gain more control of their farms, this relationship could yield exponential and unlimited growth.
It’s a nice bedtime story. But at the moment, startups have a lot of work to do and a lot more to prove before they can begin to reap a sweet harvest from the smallholder agribusiness market.
This is because Durian-grower Rocky Thooi is the rule, not the exception when it comes to farmers in Asia. Presently, only about 2.5 per cent of farmers in ASEAN are active users of digital technologies, according to Grow Asia. They are largely older farmers who make enough from their crops and livestock to survive and carry on, quite happily.
Although Rocky was able to find the information he needed with the help of younger people on Facebook, he is not sitting around waiting for new innovations or tech-savvy millennials to parachute into the agricultural industry to save the day.
“I’m excited to see and know more about technologies available for farmers,” said Rocky. “But I enjoy working on the farm manually so I’m fine not having too much help from technology.”
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