Recently, a journalist from a prominent international newspaper asked me whether “traditional sectors such as agriculture” could benefit from the Internet of Things (IoT). I found this to be a very interesting perspective. For those of us who live in concrete jungles and are conditioned to conceive of GDP as consisting of producing “stuff” and services alongside, agriculture is easily forgotten. When remembered, it is assumed to be too old-fashioned for the internet. It is, of course, an assumption that is as erroneous as it is easy to make. For centuries, today’s most advanced economies have exploited bleeding edge technology to extract huge agricultural productivity gains, enabling their economies to free up millions of labourers to focus on producing new types of goods and services that rocketed their societies beyond the existence of subsistence, the beginning of what sociologist Thorstein Veblen famously coined as “conspicuous consumption.” The productivity gains in agriculture that resulted in the Industrial Revolution came from the application of successive waves of new tech: Ranging from seed and crop science, to irrigation and water pumping, to mechanisation of sowing and harvesting, and this technology often was proven in agriculture before it was scaled into manufacturing.
It’s worth thinking more about how much today’s new wave of internet-based technology can contribute to agriculture in developing countries, for perhaps three reasons:
1. Agriculture in developing countries is big: According to the World Bank, 98 percent of the world’s agriculture labour force is in developing countries comprising 1.8 billion people and contributing $2.5 trillion of output annually. Developed countries’ agriculture output is only 20 percent that of developing countries.
2. Agriculture in developing countries lags in productivity: While the labour to capital mix in agriculture is understandably different between Europe and Africa or Asia (due to divergent input costs), what is less clear is why the productivity per hectare of land should still be so inferior in developing countries: Average output is 4.8 tonnes per hectare in developed countries, compared to only 3.3 tonnes in developing.
3. Farmers are, by and large, business people, and they look for realisable value from the services they procure. Their behaviour in buying technology will be driven by seeking business benefit, which means that the services provided to them can be monetised immediately if they provide value at reasonable prices.
Reimagining the journalist’s question, what more can be done in developing countries to increase agricultural productivity and value, particularly through the uptake of easily implemented and high impact internet-based technology? If we are to see revolutions in the cities and factories of the emerging economies of Asia and Africa, we certainly need it to continue in the fields too.
Technology provides new options, and in the form of the Internet of Things, the solutions are coming thick and fast, affordable and accessible. We are seeing the early signs of emergence of “Agri IoT” in a number of countries, where new services are cropping up which directly address specific market and farmer challenges. According to a report by the GSMA in 2015, there are already some 40 agricultural sector value added services in Asia, addressing issues such as:
- Poor knowledge of agricultural practices (eg crop information), addressed through information services delivered to handhelds
- Inability to real-time monitor field equipment (such as irrigation pump activity), being addressed through machine-to-machine (M2M) devices which provide read outs to farmers through apps onto their phone
- Gaps in supply to demand for produce, being closed through real-time trading platforms which are mobile-accessible
- Supply chain inefficiencies, being addressed through smart logistics such as monitoring trucking movements using GPS and carton location through RFID tagging or M2M Non-availability of insurance for farmers, now being addressed through services that enable micro-insurance and mobile money solutions
According to a PwC study in 2013, the food output of Africa that could be saved (about a third) from rotting through smart transportation solutions could feed the population of Kenya. The GSMA report referred to above predicts that 50 million farmers could be using such services by 2020, spending some $480 million, double what it was in 2014. Given the size of the agricultural economy, and the speed of smartphone uptake and data usage, I am given to think (and hope) that this is an under-prediction.
I assert this bullish view because the farmer’s concept of service value is highly time and location-specific because the value of their output can change by the minute when it comes to timing the interventions they need to make. If you think about it, the farmer’s world is almost ready-made for mobile services which can be used outdoors and on the move, and for real-time data analytics that provides instant price, crop and livestock intelligence.
We still don’t see the emergence of widespread, agricultural IoT solutions that offer a compelling enough service for millions of farmers to adopt, across many markets. We need services that go beyond the gimmickry of crop pricing services that rely on a single source of information from one market, whereas farmers have several such markets to choose from in their area. One suspects that technology is not the constraint here, but the design and specificity of the business model, with more involvement and innovation coming from the farmers and fishermen themselves – they know the problems they need addressing better than most.
I am about to get a taste for what might be the real potential. Next week, at the Islamic Development Bank’s Annual Shareholder Meetings to be held this year in Jakarta, I will be facilitating a room full of Indonesia’s best young technology entrepreneurs at a Youth Development Seminar to see how many agricultural solutions we can come up with – payments, insurance, data, information, and anything else they care to think of (www.isdb-yds.org). If the findings are interesting, I will report back soon!