- Reasons for the negative growth of Agricultural Productivity in India is said to be dearth of physical infrastructure, deficiency in the availability of agricultural inputs and lack of, or uneven access to information. Small & marginal farmers are often unable to gain access to reliable information that could help them increase their farm yield and get better price for their crops.
- Indian agriculture is characterized by a predominance of small and marginal landholdings. More than 70 percent of India’s farmers own less than 2 ha of land. Their holding will be only 33 percent of the total farm land and they produce around 40 percent of India’s food grains.
Rural Smallholders & their problems
In earning their livelihood, small farmers face innumerable hurdles such as:
small acreages meaning low yields & low profit margins,
having less access to irrigation,
being susceptible to problems like crop diseases,
being scattered Geographically, finding difficulty in pooling resources and accessing the latest information on growing techniques and the market.,
lacking access to credit to buy inputs; having to borrow at exorbitant interest rates (50% to 60%) and being forced to buy inputs at high costs & of poor quality from the money lenders’ shops.
exposed to high risk; not being aware of agricultural insurance
facing shortage & high cost of labor
lack of facilities to store their crops,
disorganised market; no efficient procurement system for their crops; compelled to sell their crops to brokers
Measures for solving the problems :
- Should enable them to form groups such as self-help groups, farmers clubs,
As a cooperative, farmers can access credit, knowledge of farming techniques, procure inputs as well market their goods directly to customers or commodity exchanges. They should be provided with an effective supply chain management.
- Looking at the needs of the rural smallholders for fulfillment and also looking at the quantum of requirement, the MNO and the Agri partner are motivated to take up a number of m-services via mobile networks such as:
Financial Services such as mobile payment & banking, financial literacy.
Health services including health education clinical care, health worker training etc.
Mobile-based learning and education
Market information services including farmer information services & help-lines, market pricing information & transportation.
Business case for serving rural smallholders :
- The bottom of the pyramid in the developing world is large with needs which may not be fully supported by affordability at present. With upward mobilty and suitable low cost products, a business case exists. The Governments are keen in promoting Inclusive development which also translates into newer opportunities. As in the case of IKSL, a model which can be a win-win for MNO and the stake holders can be exploited by leveraging synergies in all developing countries.
- Initiatives for Good Governance suffer from the limitation of reachability to intended beneficairies. Mobile enabling such governance applications can facilitate governments reach the beneficiaries better. Reduction in transaction costs can evolve an acceptable case for revenue generation for the service providers
Could we clarify the term 'business case' ? i'm quite often seeing a misunderstanding, or at least different focus between those who are talking about commercial services (services targeted at making $$) and services developed by social entreprises or social entrepreneurs (where the focus is improving people lives in a way that does not rely on donor funding).
I think it makes a difference.
I tend to think that this is often the tension between an agri partner, focusing usually on the social impact, and the mno, focusing on the commercial aspect.
For MNO's, the business case is straightforward -- does serving the rural poor increase market share and revenues in the short or longer run? Of course this case has to be compared to other opportunities, such as selling ringtones or launching mobile money services.
For social enterprises, the business case is more complicated for it usually includes some measure of the public good.
For mobile AG services to be sustainable and scalable, MNO's themselves need to see the business case. It may be strengthened if social enterprises -- or donors -- are willing to help out with up-front investments needed. Defining and honing these investments is critical. The mFarmer Initiative is focusing on doing this with its Challenge Fund as well as its learning component and technical assistance. Will it work? I hope so!
The commercial viability and social impact of a service are often closely related. We found that customer satisfaction and whether the farmer used the service and acted on the information received, was a long-term driver of repeat usage. Ultimately all partners whether it be MNOs, agri partners or any other service provider, want satisfied long-term and active customers.
For MNOs, scale is critical to reach commercial viability. Whether it be through direct revenue from charging per customer, or through indirect revenue benefits from acquiring and/or keeping customers loyal and active on their network.
As Collins (from the MNO Tigo) refers to in the second question – the MNO need to be aware there are untapped opportunities that needs to be explored.
I fully agree with Judy that MNOs want to know whether serving the rural poor will increase market share and net margin for the company. However, in our experience, MNOs have two distinctly different views on how serving the rural poor will increase market share. Some MNOs view mAgri services as a stand-alone business that should generate revenue for the company. Others, however, seem to view these services as loss leaders that are intended to boost revenue in the company's core business...that is, selling SIM cards and air time.
We would argue that the latter perspective is not sustainable. As soon as another strategy comes along to boost SIM sales, the MNOs will abandon mAgri. TechnoServe's preference is to work with MNOs that view mAgri as a potentially profitable suite of services. The chances that these MNOs will support these services properly (via marketing, sales and distribution) - and that the services will still be around in 5 years - is much higher.
Hillary is perfectly right on the two different approaches and views that different mnos have.
I believe we are back to the discussion wether mnos should use content as differentiator or not. What mnos should or should not do is surely not something we have to care, but it is really essential for the future of mAgri services (and other services) to see where we are going. I'm convinced that, either through market or through regulation, mnos will (have to) drop the content activities based on what we have seen in developed countries, and also based on current issues that one can witness in many developing countries. ICT is a strategic sector for many government. It is a huge opportunity for employment and to improve public services and implement MDGs. The fact that mnos are not playing a fair game with potential service providers is killing the market, and mimiting the development of individual entrepreneurs. This is a problem that lots of government are currently trying to address.
So i tend ot believe that in any case the future for mnos is *not* on the model of magri commercial service. So some mnos, more visionaire, understand that, some see a transient period where they can still make lots of money or want at least to fight as long as they can for their walled garden, mno specific vas services. Just as a reminder, lots of organization have developed partnership with mnos on content at the time of WAP portal in Europe, and none of these services were alive 5 years later, just because mnos switched their approach and dropped the content side. If we see such a switch happening in the developing world, then, be sure that agri services will not be supported further.
Then, I'm not sure why the second model would not be sustainable? i believe all strategy to sell airtime, sms, or in the future data service are developed together, and are not mutually exclusive. Selling resources to the BOP is definitly a strategy that will no stop imho. Pushing them to consume more through the availability of new innovative services is also a long term strategy. This is the model all over the developed world imho. Back to my differentiation social entreprise/commercial service, i personnaly tend to think that there are more chances that a service become sustainable if there is not someone in the delivery chain that wants to make big profits for the service itself.
In developing these guiding questions with the subject experts, it was intended by “business case” to refer to service models that meet specific needs (that of the customer/user) and are ultimately financially viable.
There is not an intention to differentiate between a for-profit commercial enterprise and a social enterprise, which while not dispersing profits, is expected to be self-sustaining. Neither is it intended to indicate the two are the same, but rather not to exclude either, since both could have relevance to this discussion. (We are, however, differentiating these from a pure development model, something that requires external support in order to continue.)
If anyone feels that it is necessary to distinguish between a commercial enterprise and social enterprise, please do so in the discussion. The differentiation could be most enlightening.
Many thanks to all for their contributions to date.
As Stéphane mentioned under question 2, the cost of technology does not have to be so high (e.g. IVR) and progress in IT will drive costs down.
Today, there is a business case for only a few mobile solutions serving farmers as it is not easy to reach the right income>costs balance and achieve service self-sustainability. Scaling up or replicating a mobile service elsewhere also introduces further challenges.
Therefore, I think that practitioners in the M4D area should advocate for more R&D in ICTs in order to develop services that are cheaper to set-up and maintain. This should increase chances for easy-to-set-up info service for farmers from developing economies.
In this context, the mFarmer initiative is certainly welcome.
Another thing which is needed is a dynamic repository for initiatives. A sort of ITU stocktaking platform (http://groups.itu.int/stocktaking/) dedicated to solutions for farmers, enabling good practices to be presented simply and shared around the world. Such a platform would need to be as "neutral" as possible (and rather simple to edit) in order for everyone concerned to be willing to contribute.
I cannot agree more with Raphael on the need for more R&D in technology. I'm hearing very often that: technology is here, it is just its use that is problematic. It is definetly not the case.
Adaptation of technologies (mobile, ivr, etc) to the developing countries context, or more specifically to the rural areas context is critical for the future: scalability, sustainability inclusiveness cannot be resolved without further investigation.
Almost all donors (government, private, development agencies etc.) have now a similar position which is: stop pilot and work on scaling-up. It is essential to make a difference between pilots that are just setup for deployment/replication of a similar case, and real R&D initiative that looks at adapting, complementing or developing furthers existing technologies for the specific rural context.
Some people and some organizations are not starting to realize this. For instance, for the first time in history, the EU commission has launched this year, through their research program (FP7 framework), three projects not on excellence in research, but on R&D in ICTD.
There are lots of research, driven by academics, on social aspect, or on innovative approaches (understand application), but not on improving underlying technologies.
Serving rural poor and rural small holders often is left on the Government to come up with certain schemes and programs. The private service provider will not venture into rural areas which do not have economy of scale. However, governments have limited resources and priorities, and its a challenge to address other needs, when other basic needs are yet to be fulfilled. If MNO looks primarily from a financial viability alone, there would not be any bussiness case in providing services to such stakeholders.
However, when a business case is look from a holistic view, like "value proposition"; then the whole paradigm of business case changes.
Government today are looking at alternate models like BOO, BOOT, PPP, Outsourcing of non sovereign functions etc. The bottom of the pyramid model is something that is driving economic growth in rural areas, and Bangladesh is a case in point.
The partnership eco-system is also another dimension that needs to be looked into and nurtured and this is where Government and MNO can work together to deliver value to customers in rural areas.
The bottom line is that there is a compelling business case today for MNO and Governments to work together to jump start the process and explore alternative business models which can be sustainable in the long run. As ARPU of mobile operators are declining and the stiff and fierce competition reducing the profitability of mobile operators, I think there is a need to find out solutions to address the needs of rural stakeholders to raise their income and economic livelihoods through effective and efficient use of information, knowledge and services.
- Reasons for the negative growth of Agricultural Productivity in India is said to be dearth of physical infrastructure, deficiency in the availability of agricultural inputs and lack of, or uneven access to information. Small & marginal farmers are often unable to gain access to reliable information that could help them increase their farm yield and get better price for their crops.
- Indian agriculture is characterized by a predominance of small and marginal landholdings. More than 70 percent of India’s farmers own less than 2 ha of land. Their holding will be only 33 percent of the total farm land and they produce around 40 percent of India’s food grains.
Rural Smallholders & their problems
Measures for solving the problems :
- Should enable them to form groups such as self-help groups, farmers clubs,
As a cooperative, farmers can access credit, knowledge of farming techniques, procure inputs as well market their goods directly to customers or commodity exchanges. They should be provided with an effective supply chain management.
- Looking at the needs of the rural smallholders for fulfillment and also looking at the quantum of requirement, the MNO and the Agri partner are motivated to take up a number of m-services via mobile networks such as:
Business case for serving rural smallholders :
- The bottom of the pyramid in the developing world is large with needs which may not be fully supported by affordability at present. With upward mobilty and suitable low cost products, a business case exists. The Governments are keen in promoting Inclusive development which also translates into newer opportunities. As in the case of IKSL, a model which can be a win-win for MNO and the stake holders can be exploited by leveraging synergies in all developing countries.
- Initiatives for Good Governance suffer from the limitation of reachability to intended beneficairies. Mobile enabling such governance applications can facilitate governments reach the beneficiaries better. Reduction in transaction costs can evolve an acceptable case for revenue generation for the service providers
Could we clarify the term 'business case' ? i'm quite often seeing a misunderstanding, or at least different focus between those who are talking about commercial services (services targeted at making $$) and services developed by social entreprises or social entrepreneurs (where the focus is improving people lives in a way that does not rely on donor funding).
I think it makes a difference.
I tend to think that this is often the tension between an agri partner, focusing usually on the social impact, and the mno, focusing on the commercial aspect.
steph
For MNO's, the business case is straightforward -- does serving the rural poor increase market share and revenues in the short or longer run? Of course this case has to be compared to other opportunities, such as selling ringtones or launching mobile money services.
For social enterprises, the business case is more complicated for it usually includes some measure of the public good.
For mobile AG services to be sustainable and scalable, MNO's themselves need to see the business case. It may be strengthened if social enterprises -- or donors -- are willing to help out with up-front investments needed. Defining and honing these investments is critical. The mFarmer Initiative is focusing on doing this with its Challenge Fund as well as its learning component and technical assistance. Will it work? I hope so!
Judy
PS to all Americans: Happy Thanksgiving!
I fully agree with Judy that MNOs want to know whether serving the rural poor will increase market share and net margin for the company. However, in our experience, MNOs have two distinctly different views on how serving the rural poor will increase market share. Some MNOs view mAgri services as a stand-alone business that should generate revenue for the company. Others, however, seem to view these services as loss leaders that are intended to boost revenue in the company's core business...that is, selling SIM cards and air time.
We would argue that the latter perspective is not sustainable. As soon as another strategy comes along to boost SIM sales, the MNOs will abandon mAgri. TechnoServe's preference is to work with MNOs that view mAgri as a potentially profitable suite of services. The chances that these MNOs will support these services properly (via marketing, sales and distribution) - and that the services will still be around in 5 years - is much higher.
Hillary
Hillary is perfectly right on the two different approaches and views that different mnos have.
I believe we are back to the discussion wether mnos should use content as differentiator or not. What mnos should or should not do is surely not something we have to care, but it is really essential for the future of mAgri services (and other services) to see where we are going. I'm convinced that, either through market or through regulation, mnos will (have to) drop the content activities based on what we have seen in developed countries, and also based on current issues that one can witness in many developing countries. ICT is a strategic sector for many government. It is a huge opportunity for employment and to improve public services and implement MDGs. The fact that mnos are not playing a fair game with potential service providers is killing the market, and mimiting the development of individual entrepreneurs. This is a problem that lots of government are currently trying to address.
So i tend ot believe that in any case the future for mnos is *not* on the model of magri commercial service. So some mnos, more visionaire, understand that, some see a transient period where they can still make lots of money or want at least to fight as long as they can for their walled garden, mno specific vas services. Just as a reminder, lots of organization have developed partnership with mnos on content at the time of WAP portal in Europe, and none of these services were alive 5 years later, just because mnos switched their approach and dropped the content side. If we see such a switch happening in the developing world, then, be sure that agri services will not be supported further.
Then, I'm not sure why the second model would not be sustainable? i believe all strategy to sell airtime, sms, or in the future data service are developed together, and are not mutually exclusive. Selling resources to the BOP is definitly a strategy that will no stop imho. Pushing them to consume more through the availability of new innovative services is also a long term strategy. This is the model all over the developed world imho. Back to my differentiation social entreprise/commercial service, i personnaly tend to think that there are more chances that a service become sustainable if there is not someone in the delivery chain that wants to make big profits for the service itself.
Steph
Dear Stephane,
In developing these guiding questions with the subject experts, it was intended by “business case” to refer to service models that meet specific needs (that of the customer/user) and are ultimately financially viable.
There is not an intention to differentiate between a for-profit commercial enterprise and a social enterprise, which while not dispersing profits, is expected to be self-sustaining. Neither is it intended to indicate the two are the same, but rather not to exclude either, since both could have relevance to this discussion. (We are, however, differentiating these from a pure development model, something that requires external support in order to continue.)
If anyone feels that it is necessary to distinguish between a commercial enterprise and social enterprise, please do so in the discussion. The differentiation could be most enlightening.
Many thanks to all for their contributions to date.
As Stéphane mentioned under question 2, the cost of technology does not have to be so high (e.g. IVR) and progress in IT will drive costs down.
Today, there is a business case for only a few mobile solutions serving farmers as it is not easy to reach the right income>costs balance and achieve service self-sustainability. Scaling up or replicating a mobile service elsewhere also introduces further challenges.
Therefore, I think that practitioners in the M4D area should advocate for more R&D in ICTs in order to develop services that are cheaper to set-up and maintain. This should increase chances for easy-to-set-up info service for farmers from developing economies.
In this context, the mFarmer initiative is certainly welcome.
Another thing which is needed is a dynamic repository for initiatives. A sort of ITU stocktaking platform (http://groups.itu.int/stocktaking/) dedicated to solutions for farmers, enabling good practices to be presented simply and shared around the world. Such a platform would need to be as "neutral" as possible (and rather simple to edit) in order for everyone concerned to be willing to contribute.
I cannot agree more with Raphael on the need for more R&D in technology. I'm hearing very often that: technology is here, it is just its use that is problematic. It is definetly not the case.
Adaptation of technologies (mobile, ivr, etc) to the developing countries context, or more specifically to the rural areas context is critical for the future: scalability, sustainability inclusiveness cannot be resolved without further investigation.
Almost all donors (government, private, development agencies etc.) have now a similar position which is: stop pilot and work on scaling-up. It is essential to make a difference between pilots that are just setup for deployment/replication of a similar case, and real R&D initiative that looks at adapting, complementing or developing furthers existing technologies for the specific rural context.
Some people and some organizations are not starting to realize this. For instance, for the first time in history, the EU commission has launched this year, through their research program (FP7 framework), three projects not on excellence in research, but on R&D in ICTD.
There are lots of research, driven by academics, on social aspect, or on innovative approaches (understand application), but not on improving underlying technologies.
I really hope that this will change in the future
Steph
Serving rural poor and rural small holders often is left on the Government to come up with certain schemes and programs. The private service provider will not venture into rural areas which do not have economy of scale. However, governments have limited resources and priorities, and its a challenge to address other needs, when other basic needs are yet to be fulfilled. If MNO looks primarily from a financial viability alone, there would not be any bussiness case in providing services to such stakeholders.
However, when a business case is look from a holistic view, like "value proposition"; then the whole paradigm of business case changes.
Government today are looking at alternate models like BOO, BOOT, PPP, Outsourcing of non sovereign functions etc. The bottom of the pyramid model is something that is driving economic growth in rural areas, and Bangladesh is a case in point.
The partnership eco-system is also another dimension that needs to be looked into and nurtured and this is where Government and MNO can work together to deliver value to customers in rural areas.
The bottom line is that there is a compelling business case today for MNO and Governments to work together to jump start the process and explore alternative business models which can be sustainable in the long run. As ARPU of mobile operators are declining and the stiff and fierce competition reducing the profitability of mobile operators, I think there is a need to find out solutions to address the needs of rural stakeholders to raise their income and economic livelihoods through effective and efficient use of information, knowledge and services.