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How Small-Scale Agribusinesses in Africa Can Scale By Adopting Digital Tools

by Agritech Digest
Digital tools in Agribusinesses in Africa. Agritech Digest

One of the keys to remaining competitive in the agribusiness sector is to identify appropriate, cost-effective, and affordable digital tools that can help solve identified challenges.

By Oyewole Okewole

Agribusiness in Africa has moved beyond farm operations and production alone to operating as a business enterprise. The basic objectives of agribusiness enterprises include activities to produce and sell agricultural goods and services that proffer solutions for a profit. The transition can be simply put as from ‘farm’ to ‘firm.’ 

Agricultural practices in itself must be integrated with entrepreneurship to produce the needed innovative solutions through strategies premised on market-driven forces. Agribusiness, according to Investopedia, combines the words, ‘agriculture’ and ‘business.’ It represents all the steps required to send agricultural goods to the market.

Agribusiness is entirely based on the foundation of solving identifiable challenges across the supply and value chains. These include operations in the production, storage, distribution, processing, handling, marketing, retailing, and all their allied activities along the chains up to the final consumer. Agribusiness activities outside of farming account for 78% of total value added in all agricultural chains globally but this figure, sadly, falls to approximately 38% in Africa.  Nevertheless, this deficit presents latent opportunities for agribusiness operations in Africa, an opinion shared by many financial institutions, including the African Development Bank. 

The agribusiness industry in Africa is generally faced with many challenges that have hindered businesses, particularly small-scale agribusinesses that find it difficult to scale. This is particularly true of small-scale agribusinesses poised to many risks militating against their survival, with challenges that range from management to technical and operational issues.

[Read also: Why Mechanisation Is Focal in Transforming Africa’s Agricultural Landscape (Part One)]

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According to the African Investment Forum, the future of agribusiness is predicted to reach US $1 trillion by 2030 and small-scale agribusinesses will play a critical part in this. Small-scale agribusinesses are drivers of the agricultural industrial frameworks in Africa and therefore play significant roles.  A deep insight and understanding into the general nature of agriculture and agribusiness therefore leads to proper and continuous planning strategies and the identification of the gaps depending on what area of the value chain the business enterprise is domiciled. Summarily, production challenges include low-quality inputs, weak extension services, climate change, poor access to credits and market information, management issues, market vulnerabilities, inadequate storage and distribution infrastructure, and many more. Processing activities suffer sustainable raw materials supplies, high operating costs, low purchasing power of consumers, management issues, equipment breakdown, increased downtime and many more. Distribution and supply chains experience unnecessary long transition bottlenecks and infrastructural deficits, product management, marketing issues and many others. Some of the challenges can be addressed using digital technology 

It has been discovered that many of the challenges faced by the management of small-scale agribusiness in Africa can be solved by applying appropriate and affordable digital technologies for more effective, efficient, scalable and sustainable operations. This is premised on identifying challenges in the operations of the enterprise. The tools are therefore adopted to solve challenges like poor efficient operations, high and unsustainable operating costs, poor management operations, weak enterprise development, etc.

One of the keys to remaining competitive in the agribusiness sector is to identify appropriate, cost-effective, and affordable digital tools that can help solve identified challenges.

Photo credit: Communications of the ACM

Consider the poultry sector as a case study. One of the prominent sectors where simple digital tools can help produce more efficient, profitable enterprises across the poultry value chains. Poultry production is a major agricultural enterprise on the African continent that embraces various forms of technology innovations. Africa’s chicken meat market is projected to grow to 11 million tonnes by 2030. The current valuation of the poultry industry is estimated at US$25bn with small-scale poultry agribusiness accounting for more than 60 percent. In spite of this, there exist some underlying challenges within the sector, particularly for small-scale poultry enterprises. However, digital tools can be relevant in addressing these challenges.

For example, consider the high cost of raw materials used in feed production, particularly occasioned by the scarcity of maize and soybeans, two major ingredients for compounding poultry feed. Digital markets and information platforms where buyers can directly link up with producers, and authenticate high-quality input from suppliers can be created.  For information dissemination, the use of digital tools to offer extension services that propagate good agronomy practices to increase yield per production area, provision of digital technology tools for storage infrastructures through precise monitoring of storage conditions like moisture content, humidity, temperature, etc. for increased shelf life, reduce post-harvest losses and enhanced quality product. These digital platforms enable local farmers to be globally competitive. Examples of these startups are Omniolytics, ePoultry, Docpol.com and many others.

Data Collection can also be integrated into simple digital tools to enable farmers to have interactive monitoring tools for their flock’s health and behaviour. For example, temperature monitoring tools can reduce heat stress in poultry birds. This will largely reduce the rate of disease and pest outbreaks on poultry farms. Researchers in Indonesia have experimented with and studied an automatic temperature control system using the Proportional Integral Derivative (PID) method which adapts a smart poultry farm system for temperature control.

Digital sensor tools that can monitor egg drops in a cage system can be integrated into the egg-laying chambers. This will enable the principal to know exactly what number of eggs lay per day. With this, theft and pilfering of farm produce are mitigated. Sensors can be attached to poultry and feed process equipment for monitoring the time of operation, quantities produced and perhaps fuel consumed for those operating in internal combustion engines. Furthermore, with project/agribusiness development,  a  digital platform where detailed surveillance of agribusinesses established within a particular perimeter radius can be determined. This is required to adequately plan and understand the competitiveness within that locality, especially for a newly intended agribusiness to be established within that locality. 

Similar systems can be adopted in other livestock and micro livestock production and management on the continent, such as cattle, pigs, aquatic animals, snails, rabbits, grass cutters, and others. While the initial cost of acquiring these digital tools may seem high to the operational cost, in the long run, the cost becomes marginal in comparison to the overall benefits that will be derived from their application. 

(Read also: Will Nanotechnology Change the Narrative for Agriculture and Food Systems?)

Another example is the creation of digital platforms for access to finance. Access to credits has been a major bottleneck for small-scale agribusinesses in Africa. These digital platforms produce new opportunities for agribusiness. Digital platforms today facilitate various forms of services. They include payment systems, credit scoring, content and education servicing, and promoting data profiles. They also provide more information like farming advice, market linkages and other extension services.

These digital platforms are relevant as they generally solve the bottlenecks of access to credits needed by the entrepreneur which will, in turn, allow them to get high-quality input and to overcome the marginal profit experienced in most cases by small-scale agribusiness. Examples are Safaricom’s Digifarm and KCB Bank’s Mobigrow both in Kenya.

Digital tools are also being used to revolutionise access to mechanisation by small-scale farmers. Uber for tractors is one of the digital methods this is achieved. It allows farmers to access tractor services through hiring in similar ways to the Uber service for ride-hailing. In most cases, small-scale farms that are contiguous and produce similar products are required to form clusters to access these services. Customers can remotely view their tractors’ location while operating and monitoring their tractor mileage from their comfort zones with the use of Global Positioning System devices attached to the tractor. One of the examples of the provision of this service is Hello Tractor in Nigeria.

Apart from direct active areas of the value chains like production, processing, distribution, marketing, retailing, etc. where these tools can directly enhance efficiency and sustainability, the value chain of agro-allied operations within a particular sector can also be examined.

For example, in the manufacture, production, and fabrication of equipment across the value chains, there are essentially many challenges that hinder quality control and standardisation in this sector. Digital platforms can be integrated into equipment production and manufacture in the continent by standardising equipment outputs using the acceptable quality and required procedures by regulatory agencies. This can be achieved by monitoring production, fabrication, servicing, and replacement and ultimately building an inclusive value chain for the agro-industry.

Other areas include utilising enterprise management digital applications that can build organisational efficiency, personnel management, planning, and overall improved effectiveness for many small-scale agribusinesses in Africa. This is unique to the business and also requires specific forms of ingenuities to the operations of the enterprise. In all, this article is a wake-up call to technology entrepreneurs to produce appropriate, adaptable and affordable technological solutions for small-scale agribusinesses in Africa.

Cover photo credit: Adele Payman on Unsplash

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