Challenges
Data sharing
We focussed on the following four key areas where ecosystem actors connect and deliver services and value to the smallholder farmers: (Refer to the chart on the right.)
Many companies, including technology startups offering SaaS solutions, are addressing the issue of “traceability” to help Buyers trace back to a known catchment area around a mill. They are collecting and recording data, and are analysing the immediate area around a mill, for example, to reveal useful information regarding the plantations, the farmers, and the middlemen (agents and traders).
The opportunity exists for ecosystem actors to form partnerships to create new solutions that benefit the smallholders, if they can better appreciate the value of complementary data and have the incentive to share their data.
CHALLENGE
How might we design a data application or platform and an appropriate business model, for example to share or use the provenance or traceability data, for the mutual benefit of the ecosystem actors as well as the smallholders?
Productivity
Low productivity is a key factor leading to smallholders growing larger areas of under-productive oil palm rather than intensifying production. Independent smallholders perform 40% below good agricultural scenarios for smallholders and 116% below company plantation scenarios. Thus, improving productivity is also key to improving their livelihoods.
Training and technical assistance in crop protection, fertilisers, quality seedlings, etc. are essential for sustainable improvement for the long term. Together with access to information (like weather) that is up-to-date and locally relevant, training will increase smallholder productivity and efficiency. However, there have been challenges in training, because of access and literacy.
CHALLENGE
How might we provide the right information and training to smallholders, so they become more productive and efficient, which in turn aid the sustainable intensification of their plantations?
Financing
Smallholders are often too small for commercial banks and too large for micro-finance schemes. Almost half of them don’t have a bank account. They do not have credit history, cannot supply reliable management information, or present a formal land title which could be used as collateral to access finance.
They are only able to access informal credit – with high interest terms and short tenure, but comes with high convenience and flexibility – from their direct buyer (agent or trader), most to manage their day-to-day living needs.
CHALLENGE
How might we devise a new credit scoring mechanism for banks (such as MUFG) or commodity buyers (such as Unilever) to extend credit to smallholder farmers based on data on their crops or on-farm behaviours / investments?
Logistics
Fresh fruit bunches (FFB) must be delivered to a mill and processed within 48 hours after harvest before significant yield loss. Smallholders who do not have their own means of transport rely on local traders or the closest mill. Thus, in some regions, there is only one logistically feasible direct buyer (agent, trader, or mill).
Trucks can pick up the FFB whilst delivering agriculture inputs, such as crop protection products (from Bayer, for example) and fertilisers, to the individual smallholders. But the volume of the cargo to and from each smallholder is small. There is scope for improved efficiency in coordination and movement, which could reduce logistics costs and improved access to essential inputs.
Poor road conditions (sometimes made worse by seasonal weather) and long waiting lines at the mills (often coupled with a lack of visibility of waiting times) have big impacts on transport time and FFB quality at the mill gate.
CHALLENGE
How might we improve the timeliness of price and other information, so smallholders can make informed decisions on when and who (agent or trader) to sell their FFB?
CHALLENGE
How might we enable transport providers to be more efficient in organising and coordinating deliveries of agriculture inputs and FFB in any given local area?