FROM THE MARGINS
The future is Agriculture 4.0. Slowly but surely, the breakthroughs in technology that have transformed other industries is changing agriculture. Connectivity, mobile adoption, artificial intelligence, and other emerging technologies are transforming the whole agricultural value chain.
Last Nov. 22, I attended the INDX 2.0 Summit organized by FINTECH Alliance.ph, the largest association of financial technology players which collectively generates 90 percent of digital-initiated transactions volume in the country. The summit brought together more than 250 participants for in-depth discussions on the digital transformation of our key economic sectors: agriculture, education, health, energy, transportation, and finance, among others. I was honored to be invited as a panelist on the digitalization of the agricultural sector.
Digital roadmap
There is a lot of potential for our agricultural sector to improve. The economy as measured by gross domestic product (GDP) — the total value of goods and services produced in a specific period — grew by 7.6 percent in the 3rd quarter of this year. But the main contributors to GDP growth came from the services and industry sectors. Agriculture contributed 8.5 percent, much lower compared to its 9.6 percent contribution to the GDP in 2021.
Digitalization offers the potential to address the productivity, sustainability and resilience challenges in the agricultural sector. Developing a Digital Roadmap for Agriculture could help the government promote and integrate precision agriculture and digital technology in local farming practices. This Roadmap should incentivize public-private partnerships to help small farmers in the poorest provinces, and support digital monitoring of the agricultural value chain and supply chain, both at the regional and the farmers’ level.
Giving small farmers access to technology-enhanced farming practices, information on market prices of commodities, fertilizers, pesticides, machineries, and other farm inputs would greatly increase their productivity and resilience. This type of information should be made available to the direct tillers of the land, not just agribusiness firms and those with large farmholdings.
Inclusive digitalization
Financial exclusion is prevalent in agriculture, so pursuing BSP’s National Strategy for Financial Inclusion is important. To ensure that poor farmers will not be left behind, these barriers to digitalization need to be addressed:
a) There is limited access to agricultural financing, which also limits digitalization. The banking system generated a total of ₱6.5 trillion loanable funds in 2020, but only six percent went to agriculture, according to the Agricultural Credit Policy Council. The banks’ overall compliance to the Agri-Agra Law was only 10 percent, which is 15 percent short of the mandated credit quota. With compliance declining over the past 10 years, we need to develop appropriate lending and incentives framework to encourage banks and financial institutions to lend to the agriculture sector.
b) Access to technology is also limited, with ICT systems and devices hardly affordable to farmers, their families and cooperatives.
c) Problems related to our internet infrastructure affect the delivery of financial services, especially in places with little or no connectivity. The government must deliver its promise of providing free Wi-Fi to help our farmers.
d) We need to train farmers on the use of technology. The 2016-2017 Rice-Based Farm Household Survey (RBFHS) notes that while ICT access of farmers is high at 93 percent, only 31 percent used ICT tools in their rice cultivation. The low turnout was due to the farmers’ discomfort in using technologies and clearly needs to be addressed.
Some recommendations
The private sector could support inclusive digitalization in the agriculture value chain by providing capital investment (e.g., investing in agriculture and agri-enterprises, R&D in agriculture technology and partnering with banks/MFIs/cooperatives that provide credit to farmers) and supporting efforts to develop data analytics in agriculture. This is needed to promote platforms that monitor natural disasters like typhoon, floods, earthquake and other calamities. To ensure efficiency and increase production, farming data like soil analysis, crop-area suitability, irrigation management, farming best practices, among others, also need to be shared. There should be no monopoly of this data. Data analytics should be accessible to all stakeholders, especially small farmers, who should have access to data upon payment of reasonable fees, if needed.
To address the RBFHS findings, DA-Phil Rice launched the Infomediary (information mediation volunteers) Campaign and tapped students from rice-farming communities to help access information for farmers. It resulted in close to 20,000 inquiries sent by text nationwide, proving that farmers are willing to adopt and use technologies with a little help. We can emulate and expand the campaign to tap NGOs, MFIs, LGUs and other private agribusiness companies as infomediaries.
A Big Brother-Small Brother Approach can also be adopted, where small farmers are helped by big agribusiness firms via joint ventures. In Indonesia, for instance, one commercial agribusiness company is 65 percent farmer-owned and 35 percent agribusiness-owned; the company provided the technological/material requirements, while the farmers provided labor and management. We could look at this and similar models, like compact farming that have been done in the past.
While digitalization is not a panacea, we could explore ways to modernize our agriculture sector. What Thomas Jefferson once wrote to George Washington remains relevant today: “Agriculture is our wisest pursuit because it will in the end contribute most to real wealth, good morals and happiness.”
(Dr. Jaime Aristotle B. Alip is a poverty eradication advocate. He is the founder of the Center for Agriculture and Rural Development Mutually-Reinforcing Institutions (CARD MRI), a group of 23 organizations that provide social development services to eight million economically-disadvantaged Filipinos and insure more than 27 million nationwide.)