Digitisation set to transform the agricultural value chain in Africa

Along with many business processes in organisations, value chains are undergoing a digital transformation. In Africa, the digitisation of agricultural value chains is expected to make the greatest impact in the area of financial services, making these more accessible to farmers, especially small-scale and rural farmers. It will also help to connect buyers and sellers more efficiently.

To give you some background, generally agriculture value chains consist of the following players, although these can vary depending on the type of crops being produced, as well as the location:

  • Input providers supplying raw materials such as seeds, fertilizer and pesticides
  • Farmers who manage the production of the agricultural product
  • Associations and cooperatives who organise many individual small-scale farmers into groups to negotiate better prices with buyers and provide extension services
  • Buyers who purchase the agriculture product and sometimes undertake the processing, packaging and marketing of the final products
  • Customers who ultimately consume the products

In reality, agricultural value chains are often quite multifaceted, and perhaps more so in Africa where role-players often perform more than one role. For example, buyers can also be input providers when the farmers they work with don’t have a reliable supply of inputs. In many cases, buyers also supply loans for these inputs. Middlemen can also confuse the issues by buying directly from individual small-scale farmers and then selling in bulk to more established companies.

However, the focus of this article is on how digitisation will assist small-scale and rural farmers who currently find it difficult to get access to financial services. There are several successful examples of this throughout Africa: for example, Colombia Coffee Growers Federation in Ghana issued ATM cards to 82% of its outgrowers (farmers who are contracted to produce for a specific buyer), helping it reduce disbursement costs by up to 79% compared to cash, a saving of $15.5 million.

In Tanzania, Multiflower, a seed and cuttings exporter, embarked on pilot programme in 2013 where they issued loans totaling $6,000 to 200 farmers and paid $67,000 to 300 farmers via M-Pesa. Apart from affording each farmer an additional and simple method for accessing credit, the switch from cash to digital payment resulted in an average saving of $10.75 in transport costs and 8 hours per payment per farmer. Over the duration of the pilot, participating farmers saved a total of approximately 6,000 hours because they didn’t have to travel to collect their payments.

Another group who stand to benefit from digitised value chains are buyers of agricultural products. This will considerably lower the costs of withdrawing, transporting, and distributing payments – either to farmers directly or via associations or cooperatives. This is particularly true in Africa, where agriculture value chains are often characterised by a small number of buyers paying many farmers spread out over a vast geographic are working through a complex network of middlemen and traders.

Here an example is MasterCard which worked with its partners to develop and implement a range of financial tools to digitise the agricultural value chain in East Africa: 2KUZE in Kenya, and eKilimo in Tanzania. 2KUZE, which means ‘let’s grow together’ in Swahili, is effectively a digital agricultural marketplace targeting Africa’s small-scale farmers, agents, large-scale buyers and financial service providers; eKilimo means ‘eAgriculture’ in Swahili and serves the same function in Tanzania.

Streamlining the value chain in the agricultural sector will undoubtedly impact not just the industry, but the entire economy meaningfully – ultimately enabling small-scale farmers to access formal financial services that they previously may have been excluded from. This will go a long way towards driving financial inclusion and food security.

A value chain is the range of steps and related actors necessary for an agriculture product to move from the farm to the final customers. Value-chain finance includes any or all the financial services that flow to and/or through the chain to address the needs and constraints of its participants in accessing finance or procuring products.

For more information on innovation in agriculture, contact AFGRI Technology Services on ats@34.255.249.49.

Agtech to bring about the second “Green Revolution”

As the issue of food security takes grip around the world, agricultural technology (Agtech) is set to become one of the most impactful uses of modern technology, in that it is changing how we grow food. Fundamentally, it has introduced the second “Green Revolution”, putting to use real-time data and innovative technology to ensure effective farming practices and improved yields.

The post-war transformation of agriculture, known as the first “Green Revolution”, was led by American agronomist Norman Borlaug, who developed high-yielding varieties of cereal grains and the distribution of hybridised seeds, synthetic fertilisers, and pesticides to farmers. Borlaug’s contributions, as well as the widespread buildout of irrigation infrastructure and the adoption of modern management techniques, greatly increased yields without requiring an expansion in agricultural land, saving more than a billion people from starvation. Now, a second revolution, built largely on technologies that comprise precision agriculture, promises to make the farm of the future more productive and efficient.

With precision agriculture, farmers and soils work better, not harder. Think about precision agriculture as being ‘site-specific’ and ‘information-specific’, as in the most precise way of informing farming decisions. That is, farmers can take large fields and manage them as if they are a group of small fields through gathering information from the fields in real-time by observation and measurement, then responding to inter and intra-field variability in crops. This reduces the misapplication of inputs and increases crop and farm efficiency.

 Why is this so important? In South Africa alone, we face a massive challenge to feed our population. In 2009, the population was 49 million and is expected to grow to 82 million in 26 years. Food production must intensify and more than double to feed the expanding population using the same or fewer natural resources. The result, there is shifting trend towards intensified agriculture, which can only be brought about using Agtech. This is a global phenomenon as each country looks at innovative ways to deal with the problem – not only in production, but across the value chain.

Agtech innovations include satellite mapping, drones, Internet of Things (IoT) and robotics. In 2014 alone, investment in agricultural technology surpassed investment in Fintech; $2.36 billion and $2.1 billion respectively. The growth potential is monumental particularly because Agtech will seek to find solutions to mitigate against climate change, increasing population growth and land scarcity. An example of this level of investment is with John Deere – the company has recently made an acquisition of an agtech startup, Blue River for $305 million. Reason being that Blue River’s has created technology that uses computer vision and machine learning to help growers reduce the use of herbicides; while conducting analysis on each plant to determine if it is a weed.

The eight main categories of Agtech include:

  • Farm management software;
  • Precision agriculture and predictive data analytics;
  • Sensors that help farmers to collect data and to monitor crop health, weather and soil quality;
  • Animal data – software and hardware specifically aimed at better understanding livestock, from breeding patterns to genomics;
  • Robotics and drones;
  • Smart irrigation;
  • Next gen farms, where technology is used to provide alternative farming methods to enable farming in locations and settings that previously couldn’t support traditional farming; and marketplaces (technological platforms that connect farmers directly to suppliers or consumers without any middlemen).

Some of the most significant technological advances that are already revolutionising the agricultural sector in Africa include:

  • Water-saving sensors comprising networks of wireless sensors and smart water management systems;
  • Precision drones used for crop spraying in unmanned helicopters, precise aerial photography, soil and water surveys and spraying and watering assistance;
  • Chemical-free pest control – including systems that can trap, count and monitor pests, systems that trigger the release of EPA-approved pheromones that disrupt pests’ mating cycles, and real-time field monitoring and targeted, automated responses; and
  • Farming automation and management systems including interconnected machinery, machines that can inject fertiliser at precise depths, automated seed-spacing based on soil fertility and machines that measure harvest data in real-time.

Technology that increases the efficiency of farms has come a long way since the days when tractors and ploughs were the most important agricultural machines. More importantly though, it’s about food security and feeding the world’s burgeoning population. It’s also about sustaining profitable production – producers need to use the latest technology available, from seed to chemicals and mechanisation to training, including precision agriculture. It’s a case of maintaining a competitive advantage in a competitive global agricultural market; it’s not just a ‘nice-to-have’. And finally, it’s about reducing our impact on the environment too.

For more information on innovation in agriculture, contact AFGRI Technology Services on ats@34.255.249.49.

Sources:

https://en.wikipedia.org/wiki/Precision_agriculture

http://www.engineeringnews.co.za/article/iot-could-help-increase-agri-productivity-by-70-says-deloitte-report-2016-05-03

http://www.precisionag.com

https://www.afgri.co.za/geoagro/ 

http://www.planet.com

https://techcrunch-com.cdn.ampproject.org/c/s/techcrunch.com/2017/09/06/after-scraping-monsanto-deal-deere-agrees-to-buy-precision-farming-startup-blue-river-for-305m/amp/

Eastern Cape Relief – AFGRI Says Thank You

A month has passed since devastating wildfires caused havoc in the Southern and Eastern Cape regions, claiming lives and leaving many displaced. Apart from homes and businesses affected, the destructive fires also swept through numerous farms in the Thornhill district, destroying pastures, killing livestock and leaving the farming community in dire need of aid.

Several farmers in the Free State and KZN Midlands region, as far as Bothaville, Koppies, Danielsrus and Tweeling, have generously donated animal feeds to the farms in need. AFGRI partnered with these farmers to facilitate a structured and transparent platform and process through which large-scale hay donations could be sent to farms in the Thornhill district. The feeds donation, comprising hay bales and maize rests, amounted to more than a 1000 round bales. AFGRI Grain Producers further donated maize for trading, using proceeds to fund this project.

South Africa’s agricultural community is known for its generosity, resourcefulness and genuine support of fellow farmers in need. During 2015/16, when the Free State lay stricken with severe droughts and the province declared a disaster area, Cape farmers liberally assisted inland farms. Now, as the Eastern Cape faced the trail of damage left by the blaze, Free State and Midlands farmers were returning the favour by offering their support and bringing relief through these donations to farms in distress.

AFGRI is proud to be associated with the South African farming community and wishes to extend a heartfelt thank you to all the farmers that made this generous contribution possible.

Nevertheless, the cost of transporting the bales proved the biggest hurdle to overcome. Taking the task upon themselves, AFGRI ensured the transport costs were covered by involving several industry partners and formally sourcing additional financial contributions from our suppliers and business affiliates.

The response was astounding. AFGRI Animal Feeds MD, Anina Hunter, wishes to acknowledge the following institutions for their financial contributions towards transportation: AFGRI Grain Management, AFGRI Grain Producers, AFGRI Animal Feeds, AFGRI Unigro, VD Commodities, Seaboard, Lynn Phillips Consult, Central Edible Oil, TICSA Feeds, VS Soya CC, Farmwise Grains, KWS Carriers and SCP Polycloth Manufacturers.

Feed donations from various farmers continue to come in, and we would like to fulfil the process by delivering all of the donations to the affected farms. To date, only 85% of the transportation costs have been covered. Should you wish to get involved by contributing financially, please email Phillippus Oosthuizen (Logistics Manager for AFGRI Animal Feeds): phillippus.oosthuizen@34.255.249.49.

As partner to the agricultural community, AFGRI is honoured to be involved in initiatives of this kind.

 

Enhancement to AFGRI’s online transaction platform frees up time for farmers

AFGRI’s innovative e-Accounts online transaction platform has evolved into a powerful, dynamic digital channel that will soon span services and products across the AFGRI suite with further enhancements aimed to free up time for farmers

UNIGRO, the financial services division of AFGRI, became the first South African agricultural lending provider (excluding the tier one banks) to provide internet transaction services to its customers with the launch of its online offering in 2014.

Named e-Accounts, the transactional online system has evolved into a powerful, dynamic digital channel that will soon span offerings across AFGRI.

“e-Accounts evolved from a relatively simple transaction portal into a sophisticated digital channel that is changing the way AFGRI’s customers are doing business,” says Tinus Prinsloo, Chief Executive Officer, AFGRI Agri Services. “The platform lets farmers manage their entire business, finance and planning on one user-friendly platform that’s secure, instant, convenient and accessible from a variety of devices. In addition, farmers get end-to-end transaction capability at lower rates than those charged by banks.”

Four years after the portal was developed by specialist software provider Synthesis for UNIGRO, e-Accounts have been leveraged by most AFGRI divisions and expanded into a powerful, dynamic platform. Additional enhancements will further revolutionise the way farmers manage their AFGRI accounts.

Johann Barnard, Chief Operations Officer, UNIGRO Financial Services and e-Accounts project owner, says the platform is a resounding success. “AFGRI e-Accounts enables farmers to manage their entire operation online – from loans, forex and payments to grain trading and equipment purchases. It offers a secure, easy-to-use transaction and management platform for customers. Instead of having to call or email AFGRI, customers can now access their accounts from multiple devices, simply and intuitively, 24 hours a day.”

Following the initial success of the platform, AFGRI saw the opportunity of adding further agri-related functions that would enable farmers to administer and manage their entire farming operations, says Barnard. Several additional features, including payment scheduling, viewing and authorisation of foreign exchange transactions as well as payroll capabilities, were added for GroCapital, another AFGRI financial division.

As features to the platform are added on demand, the popular grain management tool was added in June 2016. Using e-Accounts, farmers can view the amount of grain they have in stock at the silo, as well as the amount they still need to deliver on their contracts. They can keep an eye on live grain prices, estimating how they will affect them, and trade their grain with brokers, who are able to immediately transfer money from their UNIGR0 facilities to the farmers, says Prinsloo.

With this feature, clients can see everything from tonnage, date of delivery and Rand per ton, through to the processing of loans and payment. They have insight into the entire value chain, via a graphical dashboard, adds Barnard. “e-Accounts also enables farmers to tender for offcuts (called chaff and siftings) from the grain processing which can be used for cattle feed.”

AFGRI’s insurance division will be next to benefit, followed by retail.  And later this year, farmers will have access to e-Credit, where they can apply for new lending facilities through e-Accounts.

“Within five years, we want to create a ‘bartering’ system so that, for example, when our client delivers his grain he can drive away in his new tractor!” says Barnard.

For AFGRI, e-Accounts delivers a major competitive advantage. AFGRI is benefitting from greater customer satisfaction, increased revenue as a result of up-selling and cross-selling, better efficiency, increased employee satisfaction and reduced risk. The platform has been a major differentiator for AFGRI, which is now viewed as a leading technology innovator.

AFGRI e-Accounts now has approximately 1000 active users, with more than 30 000 logins since the first project went live. The largest single payment so far was more than R60 million. “We’re seeing a dramatic trend upwards,” says Barnard. “Within the first 12 months, R1,2 billion in payments went through the system.  During the second year, this value has tripled, shooting up to more than R4 billion.”

“We see e-Accounts as one of most important sticky factors for the agricultural sector going forward,” Barnard concludes. “We’re not aware of any other company – in South African or the rest of the world – that enables its customers to have this wealth of information at their fingertips and which enables  them to run their entire farming operations.”

Join AFGRI at VAL Farmers Day on 5 July 2017

Remember to join AFGRI at the VAL Farmers Day on Wednesday 5 July 2017.

BUSINESS DAY: Silos ready for record maize harvest

As farmers in SA get down to harvesting a record maize crop, operators of grain storage facilities say there is enough space to accommodate the bumper haul.

President of the Grain Handling Organisation Annatjie Loio said there was adequate capacity for the local crop, most of which would be stored in silos. Additional silos were being built while some of the crop had already been booked for exports.

According to the Crop Estimates Committee, the maize crop output was expected to be 101% more than in 2016. The expected commercial maize crop has been set at 15.631-million tonnes.

Earlier in 2017, Brazilian farmers had to resort to storage bags as a quick-fix solution to stockpile their bumper crops of soybeans and maize, while in 2016, US farmers also faced the prospect of running out of storage supplies for maize, soybeans, and wheat.

Afgri Grain Management operations manager Jan De Sousa said Afgri operated silos across SA’s main maize-planting regions. The company frequently received its own crop estimates from farmers within the regions, which helped with effective storage management processes.

“In the event that additional storage is needed, we look at instructions for dispatching the grain,” he said.

Afgri’s silos are located in the Free State, KwaZulu-Natal, Gauteng, Mpumalanga and parts of Limpopo. Farmers deliver their crop to the silos shortly after harvest to avoid risks such as fire, theft and contamination.

On arrival at the storage facilities, the crops are graded, weighed and put it into the silos. Storage bins keep between 22,000 tonnes and 160,000 tonnes of the crop, which can be stored for up to seven years. Clients — who may be farmers, traders and cooperatives — have the option of daily storage, short-term or longer-term storage, with equivalent payment variations.

The head of economic and agribusiness research at the Agricultural Business Chamber, Wandile Sihlobo, said while there were facilities to accommodate the surplus crop, demand for white maize outside SA’s borders was weak and could lead to prices remaining at low levels.

He said that SA exported about 80% of its white maize to neighbouring countries such as Zimbabwe, Zambia and Malawi, which were also expecting a bumper maize harvest.

“White maize prices are down because we can’t find export markets.”

On Thursday, the spot price of white maize was R1,728 a tonne form R3,704 a tonne in January, while the spot price for yellow maize was R1,865 a tonne from R3,365 a tonne.

Absa agricultural economist Conce Moraba said that in addition to the expected adequate storage capacity, the transportation of grain to export markets by road and rail was also expected to go smoothly, through the Durban and the East London Port Terminals.

Agriculture offers exciting career opportunities

The agricultural sector offers young people exciting career opportunities to leverage new innovative ways of farming to care for the food security of future generations.

The agricultural sector is an exciting and challenging global industry that offers young people far more job opportunities than planting seeds and rendering animals.

“The industry needs young people in that young people are key players in increasing farmer visibility and continue to rapidly leverage on current and developing innovative technology as well as collaborate with traditional farmers to produce and position farming as the future solution towards ensuring food security,” says Prudence Motseo, ‎HR Systems and Admin Manager at AFGRI Operations.

Furthermore, this also applies to careers in our sector, as education in agriculture has evolved and is aligned with developed trends and innovative ways of farming; enabling the development of diverse players, such as small and large scale farmers facing economic challenges locally and globally.

“A career at AFGRI is broad in nature and offers endless range of opportunities in career choices within the agricultural sector,” says Motseo. “Within Agri Services, our subsidiaries, Grain Management, Equipment, Unigro Financial and Insurance Service and Harvest Time Investments, jobs range from farm workers, crop scientists, researchers, financial analysts, agronomists and product developers, including support functions such as Finance, Human Resources, Legal and Marketing to name but a few.”

There are also new developing trends in career opportunities in the sector. Motseo says skills that will be needed in future include that of technical advisors, qualified artisans, strategists, business development managers, innovation specialists, hydrologist, lab technicians and entomology product specialists.

Qualifications needed to further a career in agriculture will vary according to the path that you intend to pursue. For instance, a career in grain management may require a qualification in agricultural crop science, grain grading and management; at Equipment and Unigro job opportunities vary between artisans and Relationship managers as scarce critical skills.

AFGRI also offers opportunities in Africa. We currently operate at Zambia, Zimbabwe, Uganda, Ghana, Botswana, Congo, Mozambique and Australia. We envisage growth of our business, which may create opportunities in more countries.

Motseo says a career in agriculture will suit individuals with passion and dedication for agriculture, driven by innovation and possess an attitude of selflessness in caring for future generation’s food security.

– end –

The table below shows possible options in a career in agriculture. Qualifications will vary accordingly.

https://careers.afgri.co.za/ contains additional information.

Ensuring a sustainable agricultural sector

Farmers face many complex decisions in order to ensure the sustainability of their enterprises and the food security of the nation.

In a panel discussion as part of the Nation in Conversation series at Nampo Harvest Day, Johan Geel, Group CFO of AFGRI, said to ensure the long-term financial sustainability of the agricultural sector farmers need to diversify and adapt to advanced technology to improve their crops.

“To succeed in an increasingly complex sector, farmers need sound financial planning as the sector is capital intensive, return on investments are generally low and it takes between 7 to 9 months for most crops to deliver an income,” says Geel. Added to that, modern technologically advanced equipment requires an adequately trained labour.

Consensus amongst the panellists is that the current debt ratio of farmers at 35% is acceptable, even though the debt burden is on a record high at R145 billion. Geel says the expected bumper crop in the current season will help farmers to pay back their debt quickly. “However, careful financial planning is needed given the economic and political uncertainties. The recent sovereign downgrades by ratings agencies will have a negative impact on the farming sector as the downgrades will result in higher interest rates, which in turn means that less capital will be available. A weaker South African currency will also mean a significant increase in the price of imported goods such as equipment, diesel, insecticides and fertiliser.”

Geel says the current political uncertainty is not factored into financing decisions. “Companies like AFGRI need to discount the political noise in favour of expertise and the ability of the farmer and the land to produce a positive return when evaluating financing to farmers. We have to stick to the facts.”

Diversification of products will also ensure the long-term sustainability of a farming enterprise as well as the agricultural sector, says Geel. “Farmers with healthy balance sheets are those who have successfully diversified their operations. Diversification presents its own challenges, but in AFGRI’s experience established businesses that can add land cost effectively can be successful.”

The agricultural sector can play a very important role in job creation, but what is needed is better training as more and more, workers are expected to operate high-tech equipment. This adoption of high-tech equipment assists in diversification and efficiencies.

A sustainable agricultural sector will go a long way to trigger economic growth and in creating employment. “Some agricultural sectors are very labour intensive and the development and progress of the small towns are directly link to the well-being of the agriculture sector,” says Geel.

Innovative technology contributes to increased food production

Mechanisation and technological advances are crucial in the agricultural sector to improve crop yields through better efficiency and accuracy to feed the ever-growing population. Patrick Roux, MD of AFGRI Equipment, discusses the latest advances in equipment and highlights areas where technological innovation is already making a difference in the sector.

Mechanisation and technological advances in agriculture create new opportunities to improve food security by ensuring greater efficiency and accuracy in farming techniques to feed the ever-growing population.

Patrick Roux, Managing Director of AFGRI Equipment, the largest John Deere dealership network in Southern Africa and Western Australia, says implementing innovative technology and artificial intelligence will greatly improve the world’s agricultural production.

“From machinery that can inject fertiliser at precise depths, smart water management systems to precision drones, the use of technology will greatly impact the availability and affordability of food.”

Across the world, agribusinesses are developing new technologies for the agricultural sector and the growth in the market for agricultural machinery is predicted at 7% per annum over the next three years.

Areas where technological innovation is already taking place – and making a difference – are higher crop productivity, decreased use of water, fertiliser and pesticides, which also contribute to lower food prices.

Modern farm machinery allows farmers to control his entire operation through the cloud through telematics that send information about how machines are being used and crop information to smart phones.

Roux predicts that further developments in artificial intelligence farming and precision farming techniques to ensure increased production to meet the demands of the growing population.

“With mounting pressure on food systems and environmental concerns, the agricultural sector will lead the way in implementing technology to ensure food security for a rapidly growing world population, which by 2050 is predicted to reach 9,7 billion.”

“In 2015, research by the Population Reference Bureau included only one African country, Nigeria, in its top ten most populous countries. The Bureau predicts that by 2050, Nigeria, DRC and Ethiopia will feature in the top ten list. This rapid population growth is due to improved life expectancy as economic growth rates increase,” concludes Roux.