This report focuses on the current state of digital agriculture in the Commonwealth. The report assesses systemic constraints affecting agriculture in the region, examines how digitalisation is being leveraged to unlock constraints in agriculture and makes policy recommendations on how government can play a role in the digitalisation of agriculture.

Economic importance of agriculture in the Commonwealth

Agriculture is important to the economies of the different regions of the Commonwealth. The economic importance of agriculture in the different regions is discussed as follows.

Africa

• 42.48 Per cent of the population of Commonwealth Africa employed in agriculture.
• Sector contributes 17 per cent to GDP.
• 30–60 Per cent of all economic production is attributed to agriculture.
• Agricultural production in Commonwealth Africa is predominantly subsistence in nature and carried out in rural areas. Rural populations account for 58 per cent of the population in Commonwealth Africa.

Asia

• The agriculture, forestry and fishing sector contribute an average of 11 per cent to the GDP of Commonwealth Asia and employs 22 per cent of the population.
• The rural population plays a major role in agricultural activities in the Asian Commonwealth with 53 per cent of the total population residing in rural areas.
• The Asian continent is an important global food hub. It accounts for 19 per cent of the global food and agricultural exports.

Caribbean and Americas

• SIDS: Agriculture, forestry and fishing contribute 5.6 per cent to the GDP of the Caribbean SIDS. The low contribution to GDP can be attributed to the fact that for most SIDS, tourism is the key sector. The sector employs up to 9.42 per cent of the population of the Caribbean SIDS.
• Canada: Agriculture in Canada is mostly practiced commercially on a large scale. Even though only 4.3 per cent of Canada’s land is arable, the country has significant agricultural export volumes. Canada is the fifth largest exporter of agricultural and agri-food products in the world, with the country exporting over half of what they produce. The country exports approximately US$ 56 billion worth of agricultural and agri-food products annually.

Pacific

• 28 Per cent of the population of the Commonwealth countries in the Pacific is employed in the agriculture sector.
• The agriculture sector contributes 14 per cent to the GDP of the Commonwealth countries in the Pacific.
• Contribution to GDP by double figures is specifically observed in SIDS like Vanuatu, Tuvalu, Tonga, Papua New Guinea, Fiji and Kiribati

Europe

• The agriculture sector is important for the sustainability of rural populations. In Cyprus, up to 33 per cent of the population is rural. In the United Kingdom, the rural population is 16 per cent, and in Malta, it is 5 per cent.
• Up to 70 per cent of the land in Commonwealth Europe is agricultural land (71 per cent in the United Kingdom, 32 per cent in Malta and 14 per cent in Cyprus).

Challenges facing smallholder-level agriculture

The majority of farmers, traders and MSMEs (micro, small and medium enterprises) along agriculture value chains in Africa, Asia, Caribbean Small Island Developing States ( “Caribbean SIDS”) and Pacific Small Island Developing States (“Pacific SIDS”) operate informally as opposed to operating as formal businesses. Their informality limits their capacity to access finance, increase productivity and respond to the effects of climate change. By virtue of these characteristics, they face the following limitations.

Difficulty attracting finance and investment

• Smallholders lack proper records because they operate informally and on a small scale. Due to this, they possess characteristics that hinder them from attracting formal sources of financing. Formal sources of financing prefer to extend financing and investment to businesses that operate formally, i.e. have governing rules, structures and paperwork in place.
• In addition, as a direct consequence of this near absence, farm-level activity and yield data, the would-be agricultural insurers find it difficult to quantify and price the risk of rural smallholder producers.
• Smallholders, SMEs and traders are largely in the informal sector and providers of finance do not view them as attractive for investor capital. Additionally, the lack of records and statistics on farm activities and financing in developing countries makes the assessment of creditworthiness challenging for financial providers. (The study focused on the availability of records and documentation regarding farm activities.)
• Smallholder-level production is characterised by production risks that are linked to natural hazards such as droughts, floods, pests and diseases because their farming operations are mainly reliant on nature. The preference for financiers is to work with more predictable and less risky sectors.
• Smallholders lack the physical assets to harness as a guarantee/collateral for financing. This could be twofold: (1) the farmer lacks a title to the land to offer as a loan guarantee or (2) the value of the land may be too low or volatile.
• Although financing may be available, products may not be suitable for all types of agricultural activities. Agricultural activities typically have diverse needs such as timing of disbursements, amounts and risks. Agricultural value chains are unique, and financial products do not always respond to the risks and nuances within a given value chain. At a commercial bank level, there is more support for structured and tight value chains (structures, processes and actors are known) in comparison to value chains that have little to no structure.

In the Caribbean SIDS, there is less financing flowing to the agriculture sector when compared to other regions. Most countries in the region find it hard to mobilise concessionary funds because GNI per capita is used as a metric to determine the amount of concessionary funds that a county obtains; according to this metric, most countries in the region are characterised as middle-income countries. African countries on the other hand tend to attract more development finance because most of them are classified as low income. In the countries with high per capita Gross National Incomes like (Australia, New Zealand, Canada and the United Kingdom), most of the financing that flows from the agriculture sector is from government.

Climate vulnerabilities and resultant impact on agriculture productivity

The Caribbean and Pacific SIDS are some of the most vulnerable geographic regions in the world to the potential impacts of climate change. The regions do not have to wait to see the effects of climate change as events are already happening. There are increasing occurrences of strong hurricanes, extreme rainfall events, storms, floods, extreme droughts and rising sea levels among other changes. Climate change in the region has a direct impact on agriculture productivity because traditionally grown crop species are no longer relevant. Changes in climate events impact traditional agriculture practices. For example, farmers typically plant based on the knowledge that they have acquired and passed on for generations. However, due to climate change, farmers have to adapt to new crop species and ways of doing things as some of the traditional crops and the varieties they typically know how to grow are being severely impacted by climate change and are no longer resilient.

Difficulty with accessing markets

Smallholders find it hard to access markets due to the following reasons:

• Smallholders have low bargaining power because they tend to access markets individually rather than through collective efforts within the community.
• Poor post-harvest handling practices limit the marketability of agricultural produce.
• Poor infrastructure, particularly the road network to access markets, is a challenge that is faced by smallholder farmers that are predominantly based in rural areas.
• Limited access to market information.

Initiatives being done to graduate and formalise smallholders

1. Linking farmers with actors in the value chain with potential to champion change for smallholders. Smallholders are being linked to commercial farmers through nucleus farm models. Through this, farmers are able to access markets, inputs, agronomic and technical assistance.
2. Promotion of collectivism through cooperatives, associations and groups. Cooperatives share benefits, lessons and challenges. Individual smallholders, on the other hand, find it hard to find solutions when left on their own. Collectivism is good because it provides an avenue through which farmers can graduate from informality to formality.
3. Making smallholders finance and investor ready through trainings, mentoring and capacity building.

In this report, we framed digital agriculture (DAg) or digitalisation for agriculture (D4Ag) to consist of four pillars: (1) digital innovations, (2) data infrastructure, (3) business development & investment and (4) enabling environment. Ways through which digitalisation can be used to unlock challenges facing smallholder level agriculture. For digital agriculture to thrive, the four pillars of digitalisation must be in place. These pillars are (1) digital agriculture innovations, (2) agriculture data infrastructure, (3) business development and (4) enabling environment.

Current state of digitalisation for agriculture (D4Ag) in Africa

The most undeveloped pillar of (digitalisation for agriculture) D4Ag in the region is data infrastructure. This is despite the role that the pillar can play in unlocking inclusive innovations and reducing the cost for providers of digital solutions. Developing this pillar would thus put in place the rails required for digitalisation of agriculture to thrive, governments in the region ought to avail operating environments that enable the collection, dissemination, updating of agriculture-related data sets. In addition, innovative and engaging schemes that incentivise farm record-keeping by smallholder farmers may need to be affected by governments.

Current state of digitalisation of agriculture in Asia

The most undeveloped pillar in the region is the enabling environment pillar. Even though the region has made notable progress in deploying 4G, several aspects of the enabling environment, specifically, the readiness of the consumers to make use of available digital agriculture solutions, remain largely underdeveloped. Lack of awareness is a key barrier to adoption of mobile internet, and the consumption of digital agriculture solutions.

Current state of digitalisation of agriculture in the Caribbean and Pacific SIDS

In the Caribbean and Pacific SIDS, the business development pillar is still nascent. There is a need for an increase in the flow of financing to digital agriculture. Additionally, there is a need for government to play a much bigger role in creating a conducive environment for digitalisation of agriculture to thrive. Specifically, the topography in the region is a major limiter to the provision of mobile coverage. In addition, low population densities in several remote locations and a relatively modest population cause operators and other ecosystem players to struggle to scale up the provision of services and deployments in a cost-effective manner.

Addressing these may require collaboration between players from across the mobile ecosystem, as well as a supportive regulatory and policy environment that encourages investment and innovation. Partnerships between public and private sector players may be the ultimate initiative that influences the roll-out of wireless broadband coverage to locations that may seem, too remote and sparsely populated to be considered lucrative by the private sector.

Rationale for success with digitalising large-scale commercial farmers in United Kingdom, Canada, New Zealand and Australia

For the case of farmers in the countries like Australia, New Zealand, United Kingdom, and Canada with high per capita Gross National Incomes, farms are run as professional businesses. Commercial farms have incentive to adopt digital innovations and use smart farming methods since they present a vast opportunity to cut costs in the application of farming inputs, through better monitoring and tracking of the farm production processes. From the example of the countries with high per capita GNI, the formalisation of smallholder farmers has the potential to increase the consumption of digital agriculture innovations and solutions.

The need to close the gendered digital divide in countries with large smallholder populations

Given that by 2022, an estimated 60 per cent of global GDP is expected to be digitised, and governments and private sector players should invest in deliberate avenues to close the gendered digital divide. By 2018 GSMA estimates that women in low- and middle-income countries are on average 10 per cent less likely to own a mobile than men and 26 per cent less likely to use mobile internet. This directly affects their capacity to consume digital agriculture solutions. This is because, in countries with lower per Capita Gross National Income, mobile phones are by and large the primary means of consuming digital agriculture solutions.

Conclusion

Overall, below is a summary of pre-requisites that have to be in place for digitalisation to thrive.

1. Government must put in place the required infrastructure for digitalisation to thrive. Aspects like broadband, electricity, cell towers and others are critical enablers of digitalisation must be in pace for the digitalisation of agriculture to thrive. Governments could enable these variables by providing tax rebates and subsidies to targeted private sector actors and leverage public-private partnerships to put in place the required infrastructure.
2. The data infrastructure and data enablers are critical rails for digital innovations to thrive. The Government ought to ensure that the rails on which developers can build are in place. Particularly, the countries with high per Capita Gross National Incomes have been able to develop data infrastructure through setting standards for data sharing, conducting frequent agriculture censuses and studies, sharing government collected data through open Application Programming Interfaces (APIs).
3. In countries characterised by smallholder-level production, governments ought to play a more active role in business development. When digitalising agriculture, scale plays a big role because of the need to recoup fixed costs invested at the development phase. In countries that are characterised by smallholders, providers find it hard to scale up solutions as the return on the investment is low. For investment in innovations to make sense in such environments, there must be subsidisation at the development stage. In such countries, it is therefore important for development partners and the government to come in and subsidise early-stage development. Doing this would champion investments from actors that are building the rails for the digitalisation of agriculture.
4. Impact investors, that move into agricultural value chains with large numbers of smallholder actors should invest in robust impact evaluation processes in order to document learnings and improve processes. This will go a long way in ensuring that the benefits of their investments trickle down to the smallest stakeholders.