Following a panel discussion on natural resources and rapid development as part of the 2016 McCourt Policy School Conference: (R)Evolution of the Global Economy – Conflict and Collaboration in the 21st Century, the Georgetown Journal of International Affairs sat down with Deborah Hamilton of USAID’s Feed the Future Partnering for Innovation program to discuss the impact of agricultural technology in developing countries.
GJIA: What specific business challenges do you think smallholder farms in developing countries face that larger-scale farms may not, and how has technological innovation helped to mitigate these challenges?
DH: Because there are more than half a billion smallholder farmers in the world, it is very hard to generalize; every market in every country is different, and even within individual communities there are a myriad of challenges. One of the major difficulties for smallholder farmers is distribution. There are some remote regions with no basic infrastructure, like well-paved roads. Even if these places grow the best tomatoes in the world, simply getting those products to a more central location and then to an export market is a huge challenge in transportation. That doesn’t even factor in the complex task of growing the crop, which involves access to water, fertilizer, labor, and mechanization. What we call leapfrog, or disruptive technology, is helping with these processes. For example, many smallholders now have cell phones that transmit GPS coordinates and crop data. The Syngenta Foundation for Sustainable Agriculture sells FarmForce, a cloud-based web application for farmer cooperatives, business organizations, and other aggregators to use in organizing and monitoring farm activity. Another company, Hello Tractor, is launching a low-cost Smart Tractor, which is embedded with GPS and internet communication technology that connects the owner of the tractor with farmers who can text for tractor services (think Uber).
GJIA: Which business models and strategies are most effective for directly engaging companies with smallholder farmers?
DH: One of the most interesting things we have learned at Feed the Future Partnering for Innovation is that success in developing markets often happens in unexpected ways. For example, we supported a small nonprofit called Compatible Technology International (CTI), which is based in St. Paul, MN, in introducing a suite of pearl millet processing tools in Senegal. CTI proved to be very nimble at adapting its thresher so that women could more easily use the tool. In doing so, the company unexpectedly discovered that women were also using its grinder to make peanut butter, which they were then selling on the market.
In contrast, we have worked with some multinational companies that have not been as adept at downsizing their product and lowering their price points enough to reach smallholder farmers. While there is usually someone in a company who is passionate about selling to smallholders, the company’s overall priority is to focus on its most profitable lines of business. Putting in the resources and the time and also understanding the market are challenges for larger businesses because those projects are high risk and unfamiliar territory. It goes against conventional thinking—that companies with greater resources would be more successful at working with smallholder farmers—but sometimes a local company or a startup is going to do far better in a developing country than a big multinational corporation.
GJIA: What are the major risks associated with partnerships in emerging markets, and what strategies are implemented to turn those risks into market-led growth?
DH: Companies face the challenge of entering into developing markets and finding the right nonprofits and farmer groups to work with. The obvious concern for investors is that these partnerships will not deliver. Partnering for Innovation funding helps support the cost of reaching, training, and providing technical assistance to farmers. In the United States, we have government-funded extension services that simply do not exist in Africa and other developing markets. Large companies can’t just go in and sell their products; they also have to do farmer training, outreach, and other things that are expensive and not necessarily within their existing skillsets.
GJIA: How substantial of a role do local and national politics play in the successful implementation of new agricultural and technological practices?
DH: The political and regulatory landscapes play a major role in bringing new technologies to developing markets. They affect whether or not a product can be imported or exported. They also dictate taxes or tariffs, which affect the price point. When companies enter a smallholder market, particularly very poor ones where people are earning a dollar per day, price point is everything. Many companies can’t get the price point low enough in many cases, and if governments are putting barriers up to market entry, then prices become even more prohibitive. These barriers might compel companies to say, “forget it, we are going to another market,” and smallholder farmers then do not get access to coveted technology.
We are working with a South African company, for instance, that introduced egg incubators to smallholder farmers, especially women, in Kenya so that they can start their own chicken businesses. The company was doing well in this market until the Kenyan government changed its import policies. Now the company cannot get its incubators into Kenya and is losing hard-won momentum.
Additionally, our partnership with a small U.S. company, PortaScience, shows how the policy or enabling environment affects the ability to bring new technologies to smallholder farmers. In East Africa, mastitis, a bacterial infection of the udder, affects a third of the region’s 35 million cows. With the infection causing estimated net losses of more than $80 USD per cow each year, the total income loss for East African farmers can be significant. In Rwanda, about 110,000 smallholder farmers work in the dairy sector, which may grow as the government provides an additional 350,000 families each with one dairy cow—originally targeted for 2015, now projected to happen by 2017— under its GIRINKA program. Yet mastitis affects more than half of the country’s dairy cows, reducing milk production, quality, and safety, often rendering their milk unsellable.
To help address this problem, in 2013 Partnering for Innovation funded PortaScience to introduce UdderCheck, a rapid testing dipstick for mastitis, into the Rwandan smallholder market. These sticks detect the lactate dehydrogenase (LDH) enzyme in milk, which shows an infection in just two minutes. Although other tests are more expensive and complicated, the company found that without a government policy that requires higher quality milk, smallholder farmers do not have an incentive to change their practices; even the $0.36 USD that the company was charging for the dipstick was too expensive for farmers. PortaScience may be able to revisit this market in a few years, however, when governmental policies change to provide both incentives for farmers to supply healthy milk and regulations prohibiting the sale of poor quality milk.
Deborah Hamilton is a representative of Feed the Future Partnering for Innovation, a USAID program that establishes and manages public private partnerships to commercialize agricultural technologies in developing countries. As the previous president of The Keystone Center, she led the marketing and development division and co-founded the Green Products Roundtable. She has also led initiatives at the Council on Foundations, Grantmakers in Health, National Center for Family Philanthropy, and the Association of Small Foundations.