Smallholder farmers play a critical role in Southeast Asia. They produce a significant amount of food, with some sources indicating their yield accounting for up to 80% of all food consumed in the region. At the same time, they are among the people who are most vulnerable to external factors such as climate change, crop pests and diseases, fluctuating commodity prices, and now the COVID-19 pandemic. With over 70 million small family farms in Southeast Asia, it is imperative that we support them, to keep them out of poverty and hunger, and in turn ensure a robust supply of the food from the source.
Smallholders face a series of interconnected problems. They lack access to information, financial services, quality input, machines, labor, and markets.
Lockdown woes
The COVID-19 pandemic has worsened farmers’ problems and disrupted food supplies. Restrictions in movement from one area to another have resulted in a string of issues, such as a shortage of labor to plant or harvest crops, the lack of assistance from extension workers, a shortage of input supply, the inability of buyers to travel to farms, and difficulties in moving trucks through checkpoints.
In some cases, this resulted in oversupply in production areas and shortages in urban areas. In May, tomato farmers in the Philippines dumped their produce on the roadside because they simply couldn’t be shipped to markets. 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.
Governments and civil society actors have moved quickly to remedy some of these issues. However, many of the smallholders’ problems existed before the pandemic hit. They have just been exacerbated this year. It’s more urgent than ever to develop the appropriate solutions.
Solutions from smallholder agritech startups
Smallholder agritech encompasses startups working to create a positive impact for small-scale farmers. These startups have had to tweak their operations to support farmers during this pandemic, but their core solutions remain unchanged.
Thailand-based startup ListenField provides access to weather prediction and crop advisory tools. They were able to disseminate information and advice about COVID-19, reducing health risks for farmers and enabling them to continue their work as much as possible.
Indonesia’s RegoPantes, which is part of 8villages, connects farmers with buyers. The company switched tactics to focus more on selling directly to consumers. This allows farmers to offload 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 optimize the usage of crop protection inputs, which in turn reduces pressure on the input supply chain.
Cropital in the Philippines provides farmers with low-interest loans, and also acts as a distribution channel for people who want to fund and support the farmers, utilizing their existing systems to disburse funds, as well as 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 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, which connects with other farmers or poses questions to experts. A crop protection company can link up with a startup that provides pest and disease diagnosis and recommendations, and in turn increase sales. A seed company can partner with a startup focusing on low-interest loans to reduce the risk of defaults, while ensuring that farmers receive quality seeds.
Some have already executed these or similar ideas. In Thailand, Thai Wah has a pilot program with Adatos AI to provide a yield prediction solution using satellite data, which will enable Thai Wah to support farmers more effectively. In the Philippines, Bayer and Yara is working 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 facilitate these corporate-startup collaborations. Grow Asia, a multi-stakeholder partnership platform focusing on smallholders, creates digital programs that provide corporations with a platform to engage startups and explore potential partnerships through pilot projects. IFC, the private sector arm of the World Bank Group, has also launched a program 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 and improve smallholders’ livelihoods, ultimately formulating a resilient food supply chain.
A need for innovative, digital solutions
The pandemic has brought forth the problems that farmers face and creating urgency to shift to more innovative, digital solutions. 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 are now investing in Indonesian digital agrifood marketplaces. Three startups in this segment—TaniHub, ChiliBeli, and Kedai Sayur—accounted for roughly 95% of all smallholder agritech fundraising from 2019 to 2020 in Southeast Asia. Other regions, such as China and India, are seeing similar trends with investment money flowing into digital marketplaces that connect farmers with buyers.
That aside, we see a few areas worth exploring, such as traceability in the Philippines, mechanization platforms in Vietnam, and digital lending in Thailand. These country-specific gaps present opportunities for investments in new startup solutions and existing agritech startups that could provide an adjacent product.
Conclusion
The challenges faced by smallholder farmers today are fundamentally the same challenges that existed before COVID-19 hit Southeast Asia. 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 to do this. Corporations and investors can play a role to support the startups while achieving their business and impact goals.
The story of Padang & Co starts with Singapore’s first major public hackathon, UP Singapore, in 2012. Since then, the organization has been bringing people and organizations together to solve problems, as well as develop ideas and new solutions. Their aim is to foster the environment for creativity and innovation to emerge and flourish. Get in touch with Christina Ho at [email protected] to share your thoughts.
Disclaimer: This article was written by Wong Jin Quan, program manager at Padang & Co. All content is written by and reflects the personal perspective of the writer.