Alexander Kalina © Alex @ stock.adobe.com
Nutrition has become the main cause of death and disease in the world, and it affects both ends of the scale: 820 million people are undernourished, while 1.9 billion adults are overweight. Many are looking to agritech, or agricultural technology, for solutions. So what can crowd farming bring to the table?
Key considerations: pressures on the agri-food industry
Agriculture and the food industry converge at three key challenges for the future: demographics and population growth, climate change, and scarcity of natural resources.
Global population has increased from three billion in 1958, to 7.7 billion today. By 2050, it is expected to reach 9.7 billion, and the UN Food and Agriculture Organization (FAO) predict that farmers will need to produce 70% more food to meet the demand. Already, 50% of the world's vegetated land is used for agriculture, and simply using more land is not the solution. Meanwhile, agriculture’s share of global GDP has shrunk to just three percent, one-third of its contribution just decades ago.
Add to this the specific issues in the agri-food industry of disparities in commodity prices, access to information, funding, and markets, and it becomes clear that creating a more sustainable food supply chain is critical for the agri-food industry and a sustainable future.
Agri-food meets Sharing Economy
The agri-food industry is already huge, estimated to be worth at least $8 trillion. Given that most agricultural funding is driven by government policy or banks, it can be difficult for smaller farmers, or farmers growing crops other than top commodities, to access capital. Without it, farmers livelihoods and entire economies are at risk. In recent years, start ups have sought to bridge this gap by creating digital platforms to provide farmers with access to crowd-sourced capital, while also enabling consumers to buy directly from farmers and suppliers. Crowd-investing platforms enable farmers to raise capital from a group or crowd of investors, often with profit-sharing schemes built in. Such platforms empower agroprenuers to thrive where previously they had struggled.
Some platforms such as EM3 AgriServices allow farmers to access machinery and goods, while peer-to-peer platforms like WeFarm enable knowledge sharing, and food marketplaces such as Crowdfarming.com provide direct-to-consumer or business-to-business (B2B) sales.
Alternative food networks (AFNs), which emerged in the 1990s, are a type of sharing economy initiative, bringing the production and consumption of food closer geographically, economically, and socially. They perform a variety of functions, from forming farmers cooperatives or consumer groups to managing commercial community gardens, and connecting network-based, privately owned, and publicly owned farms. The increasing demand for local, seasonal, and ethically-sourced produce has converged with the farmers' needs to access capital and to negotiate fairer prices, attracting attention from the sharing economy, and leading to a boom in crowd-farming initiatives.
Crowd-farming describes a system in which the consumer participates in ownership of the flora and land cultivated by a remote farmer. The produce that the farmer produces may go to the consumer owners, creating a direct link between producer and consumer while avoiding overproduction and waste along the value and supply chains. Buying directly from farmers provides traceability and transparency, and creates a positive social and environmental impact by creating and protecting jobs in the agricultural sector, creating new agro-entrepreneurs, and ensuring fairer pricers for farmers.
Crowd-farming is facilitated via a digital marketplace, enabled through mobile apps, online ordering, and wholesale platforms. To become a crowd-farmer, a consumer would access the platform via a website or app, pick the commodity of their interest, and specify the quantity they would like to receive. When the harvest season arrives, the consumer would receive the product delivered directly to their doorstep.
In addition to increasing consumer knowledge regarding where their food comes from and how it was produced, by taking orders in advance, farmers can better plan their harvest and only cultivate as much as they are going to sell, significantly reducing waste. This streamlined supply chain also allows food producers to earn a higher percentage of profits by cutting out middlemen.
When combined with blockchain-based platforms, applications such as Smart Contracts and Blockchain Certificates can ensure traceability for farm-to-consumer processes and thereby deliver accurate information regarding provenance and food processing. Additionally, when these platforms are coupled with machine learning, these emerging marketplaces can predict the next purchase consumers are likely to perform, thus helping in decision-making from the farmer's perspective.
The original Crowdfarming concept came from a crowdfunded IndieGoGo project, launched in Spain by two Valencia orange farmers from the Naranjas del Carmen farm. After some local success, they went on to launch crowdfarming.com to share the direct sales channel with more farmers. The objective is to simplify the food supply chain and empower both farmers and consumers.
Indian-based Crofarm is a farm-to-business (F2B) supply chain startup that buys fresh produce directly from farmers and supplies them to online and offline retailers. In its first year, Crofarm had developed a network of more than 5,000 farmers and 100 retailers, and significantly cut down on waste in the food supply chain.
Money Farm Gambia is a new tech start up founded by IT specialist Modou Nsz Njie to match farmers with investors in response to overly bueruacratic systems and funcing challenges in the Gambian agricultural sector. Despite zero seed funding, within one year the platform had already raised $20,000 across six investors.
In Argentina, the prospect of tokenized agricultural assets offer famers the ability to protect against volatility and liquidity issues arising from pandemic uncertainties, the falling peso, and astronomical inflation. Blockchain infrastructure provider Coreledger has recently partnered with Abakus to launch a digital barter economy in Argentina to enable farmers to trade tokenized assets on the soon-to-be-launched Abakus platform. This means that soybeans could effectively become an asset-backed currency, to be traded for cattle, corn, or even the peso.
The mechanisms of shared community-supported agriculture have become more multi-faceted over time. Resources are shared at different stages of production and a variety of formal and informal distribution and decision-making schemes are established. Opening democratic spaces of direct cooperation between producer and consumer creates a model that could allow society to fundamentally reimagine the food system. Although upscaling remains a challenge, crowd-farming could play a critical role in creating healthy, diverse, and joyful future food communities and jobs.
This digital platform impacts not only entire supply-chain logistics by removing middlemen, but also increases the number of well-informed consumers who have fair access to healthy and local food while remaining connected to the production, processing, distribution, and post-consumption phases of the food cycle. It also empowers the market with more significant consumption insights, which can improve profitability for both the grocer and the food producer, thus possibly reducing food waste. Several food-waste startups are creating marketplaces to help connect growers with restaurants, food distributors, and also consumers for "ugly and damaged" produce, which is not attractive enough for traditional channels.
Recent developments such as tokenization of agriculture commodoties to enable to them to be tradable on the blockchain further open up the world of crowd-farming. It remains to be seen whether agricultural-backed tokens truly solve volatility and liquidity issues inherent in cash and stock-based saving plans. The argument in favor is that these tokens become actual stablecoins, backed by real assets, as opposed to unstable fiat currencies. Tokenized agriculture will no doubt provide an opportunity for developing countries to generate more investment and export opportunities across a range of agricultural industries, improving financial inclusion on the ground and giving locals a medium of exchange that’s not at risk of devaluation.