This report provides an overview of the digital agriculture landscape in the ASEAN region and offers strategies for donor impact. It focuses on seven digital technologies reshaping agriculture and highlights how organizations like IFAD can invest strategically to accelerate adoption. These recommendations aim to guide donors in promoting sustainable and inclusive solutions for smallholder farmers.
Key Insights
Decade of Technology Advancement: Where Does ASEAN Stand?
The digital transformation of agriculture in ASEAN began gaining traction in the last decade, driven by increased mobile phone penetration in rural areas. This has led to the rise of two waves: Farmer Mobile Communication and Agribusiness Digitization. Despite this, ASEAN lags behind China and India in smallholder digital technology adoption.
The Next Decade: Third Wave Technologies
The report identifies five “Third Wave Technologies” with the potential to empower smallholders in ASEAN:
- Digital Payments by Farmers
- Digital Trading Platforms
- Digital Lending Platforms
- Hardware Innovations for Smallholder Farmers
- Digital Farmer Advisory Services
Digital Payments by Farmers
Digital payments are growing rapidly and users choose digital payments over cash because these are more convenient and secure and can be executed remotely. It is expected that more farmers in ASEAN begin to adopt these tools to pay for inputs and receive payments for crops. Such usage in the agriculture sector is already common on small farms in China and has a strong chance of growing in ASEAN.
Barriers and Levers for the Uptake of Digital Agriculture Technologies
Key barriers include a lack of funding for early-stage startups and limited coordination among stakeholders. A promising lever is to offer early-stage funding by supporting accelerators or providing challenge funds or prizes linked to specific outcomes for farmers. Partnership brokering and information sharing could solve both the connection and momentum problems and could drive significant growth.
Assessment of IFAD’s Potential Impact through Digital Technologies
The report assesses IFAD’s potential impact through different digital technologies, ranking Farmer Mobile Communication and Digital Lending Platforms as highly aligned with IFAD’s mission and capacity.
Key Statistics & Data
- Over 70 million smallholder farmers in Southeast Asia (FAO, 2015).
- Over 450 agritech startups in India (NASSCOM, 2019).
- Less than 4% of Cambodia’s population had a bank account in 2008 (IFC, 2008).
Methodology
The report employs a landscape analysis approach, examining the digital agriculture ecosystem in ASEAN and identifying key trends, challenges, and opportunities. Expert interviews and secondary research were also conducted to gather insights and data.
Implications and Conclusions
The report concludes that IFAD and other donors can play a significant role in promoting sustainable and inclusive digital agriculture solutions in ASEAN by strategically investing in digital lending, promoting digital communication tools, and enabling government support of digital payments and expanding rural mobile coverage. These efforts should be guided by principles of flexibility, adaptability, and collaboration.
Key Points
- Mobile phone penetration and coverage in rural Southeast Asia have enabled farmers and agribusinesses to use digital technologies, addressing challenges like small farm sizes and limited market access.
- ASEAN lags behind China and India in smallholder digital technology adoption, presenting an opportunity for donors to play a leadership role in helping governments and businesses realize the promise of digital technologies.
- Digital payments, trading platforms, lending platforms, hardware innovations, and farmer advisory services are identified as 'Third Wave Technologies' with the potential to empower smallholders in ASEAN.
- Lack of funding for early-stage startups and limited coordination among stakeholders are significant barriers to the uptake of digital agriculture technologies.
- IFAD can play a crucial role in policy advocacy and commissioning research to deepen ASEAN governments' understanding of the potential benefits of digital payments for vulnerable farmers.
- IFAD may drive the adoption of these technologies by supporting the cost of government adoption of these technologies, potentially on a trial basis.
- IFAD's support for digital agriculture should be guided by principles of flexibility, adaptability, supporting (not directing), and connected + collaborative.