Smallholder farmers play a critical role in Asia, producing up to 80 per cent of all food consumed in the region. At the same time, they are among the most vulnerable to external factors such as climate change, crop pests and diseases, fluctuating commodity prices and most recently, the COVID-19 pandemic.

With over 70 million small family farms in Southeast Asia, it is imperative that we support them to avoid more poverty and hunger, which in turn affects the supply of the food at the source. Smallholders face a series of interconnected problems. They lack access to information, financial services, quality inputs, machines, labour, and markets.

Effect of COVID-19

The COVID-19 pandemic has worsened the farmers’ problems and disrupted the food supply chain. Restrictions in movement from one area to another have resulted in a string of issues, such as a shortage of labour to plant or harvest crops, the lack of assistance from extension workers, a shortage of input supply, the inability of buyer agents to travel to the farms, and difficulties in moving trucks through checkpoints. 

In some cases, this resulted in oversupply in production areas and short supply in urban areas. In May, tomato farmers in the Philippines dumped their produce by the roadside due to difficulties in reaching the market.

In other cases, farmers are unable to continue production as they lack guidance on how to operate with safety measures. In Indonesia, farmers’ incomes dropped due to lower prices and supply chain disruptions.

Also Read: Fertile ground for partnership: How agritech boom in SEA holds a promise for Latin America

Governments and civil society actors have moved quickly to alleviate some of these issues. However, many of the smallholders’ problems are the same as before. They have just been exacerbated by the pandemic, and this makes finding appropriate solutions even more urgent.

Solutions from smallholder agritech startups

Smallholder agritech encompasses tech startups working to create a positive impact for smallholder farmers. These startups have had to tweak their operations to support the farmers during this pandemic, but their core solutions remain unchanged, aimed at tackling farmers’ problems.

Thailand-based startup ListenField provides access to weather prediction and crop advisory. They were able to disseminate information and advice about COVID-19, thereby reducing health risks for farmers and enabling them to continue their work as much as possible.

RegoPantes (part of 8villages) from Indonesia, which connects farmers to buyers, made a switch in tactics to focus more on direct selling to consumers. This allows farmers to sell more produce at better prices to make up for reduced demand from food businesses.

Also in Indonesia, NeuraFarm uses AI to help farmers deal with pests and diseases and optimise usage of crop protection inputs, which in turn reduce pressure on the input supply chain.

Cropital in the Philippines, which provides farmers with low-interest loans, acts as a distribution channel for people who want to fund and support the farmers, because they have already set up systems to disburse funds, monitor and advise farmers.

Corporate-startup partnerships and ecosystem support

We believe large corporations can leverage the work of startups to achieve their strategic and sustainability goals. The Open Innovation approach works best when both the corporation and startup have distinct strengths and value propositions that complement one another to create a greater impact.

For example, a rice company can partner with a startup focusing on building a digital community to provide contracted farmers with a platform to connect with other farmers or post questions to experts. A crop protection company can partner with a startup that provides pest and disease diagnosis and recommendations, as a means to increase sales. A seed company can partner with a startup focusing on low-interest loans to help reduce the risk of default while ensuring that farmers receive quality seeds.

Also Read: A comprehensive guide to Indonesia’s agritech ecosystem

Some have already done so. In Thailand, Thai Wah has been piloting with Adatos AI to provide a yield prediction solution using satellite data, which will enable Thai Wah to better support farmers.

In the Philippines, Yara has piloted with Cropital to reduce credit risk and provide quality input. In Myanmar, Golden Sunland is partnering with Village Link to collect farmers’ data and provide advisory services.

Ecosystem enablers also help facilitate these corporate-startup collaborations. Grow Asia, a multi-stakeholder partnership platform focusing on smallholders, has been creating digital programmes that provide corporations with a platform to engage startups and explore potential partnerships through pilots.

IFC, the private sector arm of the World Bank Group, has also launched a programme to bring agritech startups into Vietnam to explore partnerships with local agribusinesses.

In line with many corporations’ vision of being purpose-led businesses, these outcomes are good for business whilst improving the smallholders’ livelihood, ultimately contributing to the resilience of the food supply chain.

Opportunities for investment

The pandemic presents investment opportunities by validating the problems that farmers are facing and creating urgency to shift to more innovative and digital solutions. The fact that these startup solutions are working out during the pandemic shows how fundamentally important they are.

Restrictions are making people rethink the way they work. They are encouraging farmers to use digital solutions, think of more labour-efficient methods, and sell directly to consumers. Restrictions also encourage consumers to be more aware of food issues and demand higher sustainability standards and traceability.

Investors have started taking advantage of this opportunity by investing in Indonesian digital agrifood marketplaces. Three startups in this segment, TaniHub, ChiliBeli and Kedai Sayur, account for roughly 95 per cent of all smallholder agritech fundraising in 2019-2020 in Southeast Asia. Other regions such as China and India are seeing similar trends with investment money flowing into the digital marketplaces that connect farmers to buyers.

Also Read: Why agritech startups will call for the next e-commerce revolution

That aside, we see a few areas worth exploring, such as Traceability in the Philippines, Mechanisation Platforms in Vietnam, and Digital Lending in Thailand. These country-specific gaps present opportunities for investment in new startup solutions and existing AgriTech startups that could provide an adjacent product.

The challenges faced by smallholder farmers today are fundamentally the same as their challenges pre-COVID-19. To reboot the food systems and emerge with a more resilient food supply chain, we must tackle the problems they face, and we believe supporting startups is a good way. Corporations and investors can play a role to support the startups while achieving their business and impact goals.

Supporting Smallholder AgriTech is a win for all – creating a better livelihood for smallholders, stronger agribusinesses, a more resilient food supply chain, better environmental outcomes, and safer, more nutritious food.

We at Padang & Co support UN SDG 2 – Zero Hunger. We help accelerate innovation in the Smallholder AgriTech sector through open innovation programmes such as Grow Asia Hackathons, AgTech Vietnam, and Digital ASEAN Program. We also encourage conversations through the Grow Asia Digital Learning Series.

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