Farmer Journey
- Ashu Sikri (Unlicensed)
This post aims to address the question of how the Farmer Data Network benefits farmers by thinking about a specific use case that we hope to execute in India starting early next year with a few partners.
Today
Purnima is a woman farmer in Bagalkot district of Karnataka who used to grow sugarcane for many years but switched to pulses two years ago after a series of droughts and on the recommendation of members in a local SHG (reference). Purnima’s husband is a laborer in Mumbai and she manages all aspects of the farm and bringing up their two young children.
Purnmia grows pigeon pea (tur) during the kharif season; she sows in June and harvests in late November / December. It is a rainfed farm of one acre and Purnima does not have access to irrigation. Her first year was challenging as due to a delay in rain and uncertainty about planting, her yield was only 2 quintals or 200 kg (reference) but last year she grew 4.5 quintals through a combination of more timely rain and a better sense of seed spacing and depth.
While her yield last year was OK, Purnima only received 4500 rupees per kg from a local trader. This trader extended credit to Purnima so she could purchase seeds and fertilizers and while she has heard that there is technically a minimum government support price (MSP) of 60 per kg (reference), the trader didn’t offer this price and claimed that her product quality was poor because the pods were broken and small in size. Purnima doesn’t know any other local traders or how quality is assessed by buyers and was not able to push back. Also, she doesn’t have easy access to transportation to head to a local mandi herself or storage to keep the pigeon pea for some time so she could look for alternatives.
A few members of Purnima’s SHG recently launched a Producer Group that is linked up with a Farmer Producer Company that focuses on trading pulses. They have ambitious plans including setting up their own pulse milling and packaging operation and selling directly to retailers whose customers pay over 110 rupees per kilo in fancy city shops and online.
Purnima will also be able to buy inputs at a discounted rate from the FPO but they are not yet in a position to give her credit; she will need to look for other sources of money bc if she works with the FPO, she won’t be able to work with the local trader she has known for years. While his money is not cheap and he’s tight on price, he has reliably been buying from her family for years.
In Two Years
Purnima has a smartphone where she records entries about her own farm and also four neighboring farmers. She has been trained on how to use an app where she can simply record voice notes about critical information like what crop is bring grown, over what area and dates for some critical activities like sowing dates and irrigation dates and amount of fertilizer applied.
The FPO hosts a meeting just before kharif sowing to share the total acreage of tur that will be planted across all the member farmers. The FPO also shares what quantity it expects to procure and an indicative price which may move by 5% in either direction. This is made possible by Waycool, an agribusiness that supplies retail shops and HORECA clients in Bangalore, Chennai, and Mumbai. Waycool has a data driven demand forecasting model which enables it to predict how much supply it needs a few months out and make a high conviction estimate of its purchase volume (though not a formal commitment) well in advance of harvest time. Right now Waycool is purchasing about 60% of the total capacity of the FPO and the remaining offtake happens through local traders. Waycool also hosts learning sessions through the season to explain how quality is assessed and what price they are willing to pay for different quality grades.
A different app uses the data that Purnima records to provide her with a target yield and recommended actions she should take to achieve that potential. The advisories are in the form of short videos which Purnima watches alone and usually shared one-on-one with her four neighboring farmers. This year, Purnima implemented early sowing, a practice she recently learned about and her expected yield for this season has gone up to 8 quintals. She sees that on average, other farmers who are FPO members are realizing 7 quintals per acre and the district average from the past few years is 6 quintals.
She is also signed up to a Whatsapp message group that sends out a fortnightly message that include a weather forecast and photos with signs of pest infestations and other things of concern to look out for the upcoming two weeks along with recommended bio-pesticides that can be applied. If something concerning comes through on the Whatsapp group, Purnima can send a message and someone will respond within a day.
Purnima spent 10% less on her seeds and fertilizer this season compared to last year as the FPO was able to negotiate a discount by placing a bulk order. Also, this season’s inputs all seem to be of high quality and came in official looking bags and packages with phone numbers of local dealers to contact in case of questions as opposed to the unmarked bags she used to receive previously. Purnima did need to borrow from the local SHG as the FPO could not provide inputs on credit but the terms of the loan were OK.
In Five Years
Purnima purchases inputs high quality inputs from the FPO at rates that are about 20% lower than local dealers. The FPO is able to drive down prices through pooled purchasing and paying seed companies cash up front as they receive working capital financing from Samunnati who has observed the stability of the FPOs business with Waycool for the past few years and gained confidence in the FPO ability to meet reliably meet buyer demand.
FPO processing and packaging facility is setup which means the FPO is selling a a portion of its offtake as a finished product for 75 rupees per kg rather than the 55 rupees it used to get for selling raw, unprocessed pulses. Before the facility was setup, all the FPO members joined a presentation by the FPO leadership which described the business case for making this investment and all members had an opportunity to vote on the proposal. Also, all the members agreed to top-up their share capital in the FPO by 500 rupees each which unlocked an a loan from an agri-infrastructure fund administered by a local bank.
Rain is becoming increasingly erratic (long delays during sowing season and unexpected rain towards year end) but the farmers are able to manage as some irrigation facilities are in place (this was done through the local NREGA facility which is increasingly focused on natural resource management activities with a climate resilience angle, link) and farmers have moved away from water intensive crops. The FPO is evaluating a parametric weather insurance product which will pay its members in cases of extreme weather events which sounds promising and is getting connected with adaptation financing programs.
20% of total acreage managed by FPO members no longer uses chemical pesticides and these farmers keep detailed records about their production practices which enables them to realize an extra 5 rupees per kg by selling to Safe Harvest.
These detailed farmer records are anonymized and represented as an “NFT” which Safe Harvest and its end customers can access to realize traceability (example). The NFT is something that can be built upon by other third parties, say auditors or remote sensing companies that can make some additional representation about that farm and commodity batch.
Purnima is now on the Board of Directors of the FPO. The total FPO membership strength is 3,000 comprised of ~200 smaller producer groups. 60% of the members are female and remainder are male farmers. 90% of members participate in input procurement from the FPO and a similar % sell at least some portion of their output through the FPO.
The FPO is part of a federation of farmer groups that manage their own data in a decentralized way but agree to pool it for the purposes of monetization and discovering insights. This Farmer Data Network recently sold an aggregated data product on yield trends to a large financial services company that focuses on ag lending for a $1mn annual license and so each of the ~300 contributing FPOs are receiving an average dividend payment of ~$3,000 this year (this includes a 10% take for the service providers who keep the network running). The FDN is orchestrated via tokens and smart contracts so the amount that each FPO gets is based on # of contributing members and money is automatically deposited in each FPOs bank as soon as the FDN receives money from the client.
What role will Digital Green and the Farmer Data Network play in making this happen?
There is a whole host of information / products / services that farmers and farmer groups need access to in order to thrive: access to credit, quality inputs, market linkages, farm equipment, irrigation, timely and tailored agronomic advice. In coming years, these products will be increasingly data driven and thereby become more tailored and relevant for farmers.
While DG, or any other single organization for that matter, cannot develop all these products and services, we can equip farmers to get the most from them by building their human capital and providing them the technical infrastructure to exercise agency and control over their data as they navigate this shifting landscape.
A few specific elements of the Farmer Data Network that will enable the vision above to come true:
Capacity building and digital literacy for farmer group leadership and farmer members like Purnima on how use smartphones to record information and access / utilize third party digital services.
Another important element is sensitizing farmers to importance of data and thinking about it as a strategic asset. Purnima is aware of what data assets she has and that this information is valuable to various actors and she should grant permissions for her data to be shared with only with a clear understanding of how that information will be used to her benefit (eg, to signup with an advisory service).
Data sharing between actors in the ecosystem in a way that preserves their competitive edge via the Farmstack protocol.
Practically, starting next season in Maharashtra and Karnataka, FS will be enabling data sharing between Cropin (which does remote sensing based yield estimates) and Waycool (which buys in bulk and wants to streamline its procurement). Reliable yield estimates will help Waycool give FPOs indications of interest on their purchase volumes and price which helps with planning.
Another data sharing opportunity is between the FPO, Waycool and Samunnati to unlock access to capital. Samuannti is able to verify that the FPO’s sales records which shows Waycool as a buyer are legitimate in an automated way which reduces loan processing times.
Promoting an ecosystem of value add product/service companies who can accelerate their time to market and reduce their distribution costs by making services available through the FDN
These might be companies producing physical inputs like seeds, biologicals, pest management products, etc. or providers of digital services like crop planning, decision support, etc
This value creation happens in a manner that respects farmer agency and puts farmer groups in a position to actually benefit economically from the takeoff of such services as the service providers will need to pay to access data or the farmer groups will be co-owners in the services (which is a good trade for the companies who otherwise would not have a viable model for user acquisition)