The use of m-payment systems such as M-Pesa is spreading rapidly in many developing countries.
Photo: ©Heike Baumüller

16.06.2017

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It is a well-known fact that most of the farming operations in developing countries are small. This situation is unlikely to change anytime soon. How are such small farms going to benefit from digital technologies? Our author takes a look at various agricultural services in the mobilephone branch – from weather and price information through credit schemes to supply chain management – and shows which systems have the biggest prospects of success and why others are doomed to failure.

So far, the focus of digitally-based solutions offered to smallholder farmers has been on services through their mobile phones (referred to as m-services here), such as information on farming practices or market prices, training or links to potential buyers. However, most of these services have yet to take off. Many remain at the pilot stage, and hardly any are financially viable. Empirical evidence on the impacts of such services is scarce and inconclusive.

The limited success of agricultural m-services in developing countries is not entirely surprising. While smallholder farmers offer a potentially lucrative market for such services because of their sheer number, they are difficult to reach due to their geographical dispersion, low purchasing power and limited digital literacy. M-services that are going to benefit these farmers are exactly those that aim to overcome these constraints by offering economies of scale, thus reducing transactions costs. The complexity of the system needs to be handled by the service provider or intermediaries with an economic interest in facilitating the service.

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