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Facilitating change in agricultural value chains with app services

Richard Duncombe

Investment in mobile agricultural services is likely to be most effective where the technology is integrated into specific systems and organisational routines that are developed by new or established local innovators. They are the drivers for developing new processes and new networks on the ground that promote scale efficiencies along the value chain.

There is a paradox between rapid advances in the technologies of mobile phone services for agriculture (also known as M4Agric) and the relatively slow growth of agricultural productivity – defined as the discrepancy between measures of investment in ICT and measures of output at the sector level. This can occur for two main reasons.

First, (mis)management of ICT which can result in both additional costs and un-realised gains. ICT involves complexity in design, maintenance and management systems. M4Agric projects, in common with most ICT4Development projects, experience cost overruns, delays in implementation, rapid obsolescence of hardware and software, and other problems of compatibility and security. Many of these constraints are magnified in the rural areas of developing countries. 

Second, the significant time-lags between investment in new technologies and productivity/output improvements. During these time lags, it is necessary to make sufficient complementary investments in other, more critical, factors of production – electricity and roads, sufficient financial investment to upgrade agricultural production technologies, and the ability to access markets large enough to warrant the increase in production.

To conclude, extracting productivity benefits from ICT requires many complementary investments. It also requires changes in complementary processes and structures (i.e. just changing the technology is insufficient). And change takes several years.

Transformation of Agriculture?

A transformational trajectory is generally defined by a number of pre-determined stages. At the inception stage, ICT innovations are likely to be localised and isolated within the produce value chain, causing minimal changes to key processes, focusing on the provision of information and faster communication. The second stage provides greater integration of different applications along the value chain – digitising key processes – such as the ability to access investment capital, procuring material inputs, identifying markets and conducting transactions. The third stage – process redesign – signals a step change to the way in which key processes are organised, addressing more fundamental problems associated with a broader set of process-related factors, such as relationships with customers, production, volumes and decision making concerning what to produce and other inputs. 

The next stage – network redesign – is the first truly transformational phase. At this stage, there is a particular focus in using ICT to enable organisations to see themselves as part of a knowledge network that cuts across organisational boundaries as well as extending along the produce value chain. The final stage – transformation – re-defines the scope of the organisation.  Whereas stage four still focuses on what the organisation traditionally does, stage five moves beyond this, to rethink organisational objectives. 

As academics Ian Mckeown and George Philip wrote in the International Journal of Information Management in 2003: “(T)he benefits of IT deployment are marginal if only superimposed on existing organisational conditions. Thus, benefits accrue in those cases where investment in IT functionality accompany corresponding change in organisational characteristics (strategy, structure, processes, culture).”

This model can be used to track the evolution of a case study – in this case mFarm in Kenya (see table 1). Rather than ‘pushing information’ directly to mass populations of farmers, initiatives such as mFarm facilitate organisational and systemic change. This emphasises the importance of qualitative use of data and the criticality of information quality over the technological means to communicate, recognising that farmers have limitations in assessing digital information, and difficulties experienced in applying information effectively, in the absence of required complementary resources.

Table 1: m-Farm transitions (2010-2015)

  2010-2015
Degree of Transformation Inception Integration Process re-Design Network re-Design
Key Change identified according to the model Initial application development for improved service Further development of a mobile platform to integrate multiple services Changing the way the production process is organised Changing the way the transaction process is organised along the value chain and re-defining the business model
m-Farm Innovation SMS service introduced to provide farmers with up-to-date market prices Mobile payment and other agricultural information services added to the platform Group selling tool introduced that allows farmers to collaborate and sell larger quantities Agronomist-grader model introduced that allowed farmers to integrate further into the m-Farm supply chain m-Farm redefines it role as a knowledge broker and financial intermediary

 

Transformation strategy

Structural transformation provides potential to move from a market of ‘middlemen’ buyers and farmers who are individualised sellers, towards collaborative forms of collective action. Collective action provides the means to fundamentally change farming from a fragmented and disorganised subsistence form to a more organised market-orientated approach, which can provide the basis for the scaling of production, and potentially, step changes in agricultural productivity. This structural transformation goes hand-in-hand with the requirement for new forms of ‘re-intermediation’ such as employed by mFarm, such as through the empowerment of community-based agronomists (who are usually farmers themselves) to act as information intermediaries (info-mediaries).

Process change can take place in relation to both the purchasing of input materials (aided by a group buying tool) and the selling of produce output through collaborative re-design of produce marketing aided with web- and text-based tools for completing transactions. Over four years since inception, m-Farm progressed from being purely a provider of information to becoming a trusted ‘digital intermediary’ that plays a central role in coordinating the value chain and completing transactions. Thus, farmers who subscribe to m-Farm tend to move into produce sectors (e.g. organic primarily for export) that are conducive to technology application, and is already developing the type of process re-design that is necessary for transformational change to take place.

Within the typical agricultural setting in East Africa, culture plays an important role for change. Small-scale subsistence farmers may lack the incentives to collaborate or to grow because they remain embedded into a particular physical and institutional context, a context that mAgric initiatives may find difficult to transform. This problem of embeddedness means that an initial investment in m4Agric is unlikely to show demonstrable benefits for productivity without contributory changes in organisation and systems, and investment in the necessary complementary resources. 

Implications

Interventions based on new technologies are coming to substitute for both the top-down role of the state (by providing an alternative to the traditional government extension services), and the bottom-up role of farmer collective action (local farmers’ cooperatives).

Understanding the characteristics of the produce sector market and how it operates is critical for successful ICT application. Interventions should build upon the specific characteristics of local demand, or the ability to identify specific farmers’ or more importantly farmer groups’ needs. Local enablers of innovation processes are crucial in this respect, and the evidence suggests that achievement of scale through collective action is an effective and productive way to transform pre-existing farming systems when combined with the enabling power of new mobile technologies.

Related link

Website of the Centre for Development Informatics

 

Copyright © 2016, CTA. Technical Centre for Rural and Agricultural Cooperation

CTA is a joint international institution of the African, Caribbean and Pacific (ACP) Group of States and the European Union (EU). CTA operates under the framework of the Cotonou Agreement and is funded by the EU.