Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms David Nielson Yuan-Ting Meng Anna Buyvolova Artavazd Hakobyan Agriculture Global Practice The World Bank Group © 2018 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Contents Contents Acknowledgments ................................................................................................................................ v Abbreviations ......................................................................................................................................... vi Introduction ............................................................................................................................................. 1 Technology adoption and the transformation of agriculture..................................................... 4 Organization of the report and typology of digital tools for agriculture .................................. 7 PART I. Digital tools activate agricultural knowledge and information systems ..................... 9 Practical examples of the use of digital technologies to activate agricultural knowledge and information systems.................................................................................................................... 11 Russian examples of agricultural knowledge and information systems .......................................................... 11 Global examples of agricultural knowledge and information systems .......................................................... 15 CASE STUDY: Digital tools and soil information systems ................................................................... 17 PART II: Digital tools stimulate agriculture market opportunities ............................................... 24 Practical examples of the use of digital technologies to stimulate agriculture market opportunities....................................................................................................................................... 25 Russian examples of digital solutions for market opportunities ..................................................................... 25 Global examples of digital solutions for market opportunities ...................................................................... 27 CASE STUDY: Interoperability and the IoT ecosystem...................................................................... 33 Conclusions and areas for further work .......................................................................................... 37 Annex: People and organizations consulted for the study ....................................................... 39 References ............................................................................................................................................. 40 © 2018 Agriculture Global Practice. The World Bank Group iii Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms Boxes Box 1. A note on farm structure in Russia ............................................................................................ 2 Box 2. What is blockchain? ................................................................................................................ 26 Figures Figure 1. ExactFarming online platform: Dashboard ...................................................................... 12 Figure 2. Global digital map of soil PH .............................................................................................. 18 Figure 3. Detailed map from the CONEAT index ............................................................................ 19 Figure 4. Mobile application based on the EGRPR: Soil properties of the yield, calculated normative yield, and fertilizer application rates.......................................................... 22 Figure 5. Hello Tractor owner app ..................................................................................................... 28 Figure 6. Technology applications in the Umati Capital offering .................................................. 30 Figure 7. Connected Farmer solution for dairy management....................................................... 31 Figure 8. A schematic of interoperability of an IoT system ............................................................. 34 Photo Photo 1. Twiga Food farmers deliver produce to kiosks with help from IBM’s blockchain technology ......................................................................................................................................... 32 Tables Table 1. Mapping typologies of digital tools on an agri-food value chain..................................... 8 Table 2. Key policy issues for IoT interoperability and the role of the public and private sectors ............................................................................................................................ 36 iv © 2018 Agriculture Global Practice. The World Bank Group Acknowledgments Acknowledgments Unleashing the Power of Digital Technology: Big Business Opportunities for Small and Medium Farms, This report was prepared by the World Bank’s held in Moscow on May 15, 2018. Agriculture Global Practice team lead by Artavazd Hakobyan (Senior Agriculture Economist and We would like to sincerely thank all partners and team leader) and David Nielson (Lead Agriculture colleagues who helped us collect information and Economist, co-team leader and lead author). The team learn about their experience with digital agriculture was comprised of Yuan-Ting Meng (Consultant and in Russia and globally. Many people contributed to research analyst) and Anna Buyvolova (Consultant this work by sharing their experience and providing and soil scientist). The team benefited from interac- advice. We provide the list of people consulted in tions with partners, who contributed by providing the Annex and sincerely thank them for their time. information and sharing their experiences on vari- We also gratefully acknowledge the contribution of ous topics of digital agriculture both in Russia and Dr. Yuri Hohlov, Chairman of the Board of the Institute globally. Based on the findings and results of this re- of the Information Society, who kindly reviewed the port, the team organized a conference in Moscow to- final version of the report. All errors and omissions gether with the Ministry of Agriculture of the Russian remain the responsibility of the team. Federation, the Internet Initiatives Development Fund, and the Russian Association of Internet of Last but not least, the team is very grateful to Irina Things. The team greatly benefited from the pre- Prusass for assistance throughout the process, and sentations and discussions during the conference to Hope Steele for her excellent editorial support. © 2018 Agriculture Global Practice. The World Bank Group v Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms Abbreviations AI artificial intelligence API application programming interface CEC cation exchange capacity CGD Center for Global Development DEM digital elevation model DTM digital terrain model EC European Commission EGRRP Unified State Register of Soil Resources of Russia ESDB European Soil Database EU European Union FAO Food and Agriculture Organization of the United Nations FASIE Foundation for the Assistance to Small Innovative Enterprise FMIS farm management information systems GGCMs global gridded crop models GIS geographic information system GODAN Global Open Data for Agriculture and Nutrition GPS Global Positioning System HYV high-yielding variety IBM International Business Machines Corporation IIASA International Institute for Applied Systems Analysis IIDF Internet Initiative Development Fund INSPIRE Infrastructure for Spatial Information in Europe ICO initial coin offering ICT information and communication technology IoF2020 Internet of Food and Farm 2020 IoT Internet of Things IS PGBD Information System Soil and Geographic Database ISRIC International Soil Reference and Information Centre ISSGDB Information System Soil and Geographic Database IT information technology NDVI normalized difference vegetation index NRCS Natural Resources Conservation Service ODbL Open Database License OEMs original equipment manufacturers OFIS Olam Farmer Information System PPP public-private partnership SMEs small and medium enterprises SSURGO Soil Survey Geographic Database STATSGO State Soil Geographic Database UAV unmanned aerial vehicle USDA United States Department of Agriculture WFP World Food Programme WRB World Reference Base for Soil Resources WSS Web Soil Survey WTO World Trade Organization WUR Wageningen University Research vi © 2018 Agriculture Global Practice. The World Bank Group Introduction Introduction farm products. For these reasons, among others, the Internet is a critical tool in their farming toolbox. Farming is changing—for some farms. Rapidly emerging technologies that capture, manage, com- However, many of Russia’s farms—especially small municate, and use information in digital form are and medium farms—lack the connectivity and skill- dramatically transforming the way that farming and sets needed to take advantage of such technolo- agribusiness are done across the globe—especially gies. Many of these small farms also lack the equip- for large commercial farms. Nowhere is this more ment and the know-how to take advantage of the true than in the Russian Federation (box 1), where transformational digital opportunities from which many large agri-holding companies operate at the they might profit. Yet the ever-expanding connectiv- cutting edge of the application of digital technolo- ity and availability of information and communication gies. These large industrial farms, with sizable land technology (ICT) and digital tools could make it pos- and livestock holdings, possess the financial re- sible for transformational developments to happen sources and the management know-how to own on small, traditional, remote, and disadvantaged and leverage the most advanced technology. Some farms too. have sophisticated information technology (IT) staff to develop and manage digital approaches to many The upside of technology adoption is evidenced aspects of farm operations. in the domestic trajectory of yields and production. Between 1992 and 2016, the adoption in the early On some large farms in Russia today, links to satel- 1990s of new technologies such as new machines, lites control farm machinery and customize the ap- as well as new seed varieties, allowed farms to grad- plication of inputs to specific areas in farmers’ fields. ually leverage big data, remote sensing, the Internet Hyperlocal weather information drives field-level of Things (IoT), and artificial intelligence (AI). In the activity and marketing decisions. Information plat- last two or three years, the State Statistics Service forms allow farmers to plan and monitor the use of recorded wheat yield increases from an average their farm equipment and to find buyers and sellers of 1.9 tonnes per hectare in 1992 to 2.7 tonnes per for the products they use and produce. Pests and hectare in 2016, as well as a nationwide increase in diseases can be identified remotely (using digital grain production of 1.5 times.1 As of 2017, 28 of the imaging from drones and satellites) and responses 85 regions in Russia were utilizing precision farming can be mobilized rapidly. Soil monitors measure soil techniques (Collinson 2018; Ministry of Agriculture of moisture to trigger irrigation and enable new cus- the Russian Federation 2018). tomized approaches to water management. Mobile phones send actionable signals to farm equipment. On the flip side, Russia has also witnessed the oppor- Sophisticated management applications help to tunity and production loss that comes from the low do farm planning. Production and harvest monitor- level of technology use. The loss is observed most ing tools make it possible to control the quality of significantly in the 30 percent of total production 1 Data are from the ROSSTAT Database. © 2018 Agriculture Global Practice. The World Bank Group 1 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms Box 1. A note on farm structure in Russia The structure of agricultural production by type of farm has changed substantially since the early years of the post-Soviet period. During the 1990s production in large agri-enterprises declined sharply as a result of out- dated technology and lack of investment. Production on predominantly noncommercial household plots was more stable during that period. As a result, in the period 1991–2002, the share of household plots in overall production increased from 40 percent to 65 percent. In the 2000s, however, growth in the agriculture sector was supported by production in both household plots and agri-enterprises. After 2010 there was a shift toward commercial production driven by investments, government programs, and increasing demand. Such growth of commercial production was predominantly led by agri-enterprises (former kolkhoz and sovkhoz enterprises and new corporate agribusinesses) and an emerging new class of family farms. The role of household plots in total agricultural production therefore started to decline. A share of households registered as family farmers, but oth- ers exited agricultural production because of an aging population, health issues, migration, and the refusal of younger generations to do manual work on their own household plots. The agrarian structure in Russia today is based on three types of farms: (1) agri-enterprises—large industrial farms with extensive land and livestock holdings that collectively control roughly 80 percent of all agricultural land and produce roughly 45 percent of agricultural GDP; (2) emerging family farms—individual farms operated by family famers and limited hired labor that collectively control roughly 10 percent of all agricultural land and produce roughly 5 percent of agricultural GDP; and (3) household plots—small land plots adjacent to rural homes that col- lectively control roughly 10 percent of all agricultural land and produce roughly 50 percent of agricultural GDP. Although many agri-enterprises are nearly the same in area farmed, management, and technology as collective farms from Soviet times, since 2000 some have become much more modern in terms of their market orientation, in their approach to farm management, and in the technologies that they employ. Source: Authors, using Rosstat data. lost during harvest without proper machinery, and might be left behind. This does not have to be the the production loss that results from an unsatisfac- case. But ensuring that small and poor and remote tory storage environment (Collinson 2018; Ministry farms share in the benefits of digital advances may, of Agriculture of the Russian Federation 2018). In at least in some dimensions, require proactive assis- 2017 the country’s investment in ICT for agriculture tance from the public sector. The emergence of digi- industry remained the lowest in the world at 3.6 bil- tal tools and technologies is also making it possible lion rubles, an equivalence of 0.5 percent of total for public programs and policies to be more efficient, investment in fixed assets according to Rosstat data. relevant, evidence-based, tailored and targeted, transparent and monitorable, and generally more ef- The developments and tools mentioned above are fective than ever before in their support of agricul- transforming farming and agribusiness in Russia ture. As a result, the public sector has the possibility and across the world. They are raising productivity of playing new roles and using new digitally enabled and driving increases in value added and incomes methodologies to support the agriculture sector— in farming—however, as suggested above, they also and it has new tools to work proactively with small bring with them the possibility that smaller farms farms to ensure that they are not left behind. 2 © 2018 Agriculture Global Practice. The World Bank Group Introduction This technical note accompanied, and served as re- example, digital technologies can be used to con- source material, for a conference on digital agricul- nect smaller producers to markets at no or lower ture that was held in Moscow on May 15, 2018. The cost, thus boosting their opportunities to be includ- note provides a survey of many ways in which ICT ed in value chains. This is important because small and digital tools are being used in Russia and glob- producers could have access to more income op- ally to transform agriculture. It examines instances portunities, generate more jobs in rural areas, and in which there are public and private collaboration improve the livelihoods of a considerable number of entry points for expanding the benefits of digital rural inhabitants. technologies to small and medium farms in Russia. As evidence shows, small and medium farms in This note provides an overview of the potential for Russia are underserved by government programs digital agriculture in Russia. It surveys examples of and underperform if generally compared with large the use of digital technologies on Russian farms to- farms (Hakobyan and others 2017). However, these day—a phenomenon that occurs for the most part farms have the potential to expand production, be in Russia’s very large agro-enterprises. It examines more competitive, and enter niche and premium efforts (often by the private sector) in other countries markets where large agro-holdings may not be to help poorer and smaller farms adopt and take ad- competitive. The emergence of digital technologies vantage of digital technologies. Finally, it indicates for farms and agribusiness can be harnessed, with areas of further follow-on work that will be needed the help of the public sector, to help small and me- to identify measures that could be considered to ex- dium farms across Russia to do this, and to raise the pand the adoption of digital technologies in Russian incomes and livelihoods of farm families while im- agriculture—including to small farms and small agri- proving the sustainability of natural resources. For business enterprises. © 2018 Agriculture Global Practice. The World Bank Group 3 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms Technology adoption and the Russian Federation 2018).2 However, precision tech- transformation of agriculture nologies are most effective when they are already combined with modern agricultural technologies, Technology adoption in agriculture, and the benefits such as HYV seeds, better fertilizer and pesticides, of such adoption that accrue to farmers, are topics and efficient farm management. Therefore such preci- that have been extensively studied. Often focused sion technologies work best when the farms are large on the adoption of several specific farm-level tech- and sophisticated, have access to capital, and have a nologies—such as high-yielding variety (HYV) seeds, specialized labor force that can use the technology fertilizers, irrigation schemes, and so on—the litera- and apply it to the benefit of the farm. Precision tech- ture has developed explanations as to why farmers nologies are also complex, knowledge-intensive, and do (or do not) adopt technology. Factors that affect expensive to introduce. Small and medium farmers technology adoption include farmers’ wealth and (such as individual farmers and household farmers in education level, their access to information, and the Russia) rarely, if ever, have access to or can utilize pre- availability of technology (Feder, Just, and Zilberman cision technologies. 1982; Fuglie and Kascak 2001). More recently the adoption of digital technologies and the benefits Perhaps this is why agriculture is behind other sec- that are consequently accruing to farmers are being tors in adopting digital technologies. Despite all investigated more vigorously. the technological advances registered by the agri- culture sector in the digital economy, the sector re- The adoption of digital technologies in agriculture is mains far behind others in adopting digital technolo- uneven in scale and scope. Commercial, large-scale gies, as identified by a recent study by McKinsey agriculture in the developed world, including large (Laczkowski and others 2018). agri-enterprises in Russia, has been adopting and adapting digital technologies for some time now. Experiences from several countries show that farm- Specifically, these include so-called precision tech- ers do not always use digital applications, but when nologies in agriculture. An accumulation of evidence they do use these applications they consistently indicates that precision technologies reduce pro- benefit from them. Such applications range from duction costs and improve yields, and that over time checking the weather on a mobile phone and mak- these technologies positively impact the bottom lines ing payments and transferring money through mo- of farms and agri-enterprises (Schimmelpfennig 2016). bile applications to using sophisticated crop fore- Mounting evidence shows that such precision tech- casting and mapping tools. Although the literature nologies are benefiting Russian agri-holdings, which on the adoption of mobile phone applications for increasingly adopt them as local content and software agriculture is not as extensive as the literature on providers and equipment manufacturers expand the discrete agricultural technologies, there are several technologies to Russia (Ministry of Agriculture of the important takeaways from the current research: 2 See also (1) Точное животноводство: состояние и перспективы / Е. В. Труфляк. – Краснодар: КубГАУ, 2018. – 46 с.; (2) Точное земледелие: состояние и перспективы / Е. В. Труфляк, Н. Ю. Курченко, А. С. Креймер. – Краснодар : КубГАУ, 2018. – 27 с.; and (3) https://kubsau.ru/science/foresight/publications/. 4 © 2018 Agriculture Global Practice. The World Bank Group Technology adoption and the transformation of agriculture Benefits from mobile phone applications, but lack of efficiencies in agricultural research systems not their adoption rate, are positively correlat- of Russia, Brazil, China, and other countries. ed with the wealth and education of farmers— that is, as is the case for discrete technology What digital technologies can do, however, is aug- adoption (HYV seeds, for example), farmers ment the potential of existing agricultural technolo- with more years of schooling and more assets gies by reducing input requirements, advancing are likely to benefit more from mobile phone farm management through improved precision of applications (Cole and Fernando 2012). farming, better connecting farmers with markets, re- ducing information asymmetries, and making better Digital applications can reduce and eliminate inputs widely available. temporal and spatial problems associated with discrete agricultural technology adoption. For In what way do digital technologies transform ag- example, access to mobile phone– based ad- riculture? They first disrupt labor requirements. visory services or information on agricultural Evidence shows that labor costs are reduced in large technology is more continuous than agricul- farms when digital precision technologies are being tural advisory services, which in most instances used. Because of their structure, food value chains is one-time and discrete. As a result, if a new have the capacity to absorb agricultural labor, and seed variety is available, farmers who use mo- evidence shows that the quality of jobs increases bile technologies to learn about the seed vari- when farmers use digital technology. For example, ety are more likely to benefit more than farmers farmers who use digital means to connect to mar- who rely on the advice from traditional exten- kets transition from being just farmers to becoming sion agents (Aker 2011). famers-processors-packers-distributors-retailers. Farmers’ literacy levels are not associated with Second, digital technologies increase the value of mobile technology adoption (Aker and Mbiti agricultural production. Improved access to infor- 2010); in other words, the research rejects the mation and better access to markets helps produce widely held assumption that farmers do not more customized products demanded by consum- have enough skills to apply and benefit from ers, and therefore helps to generate and keep more digital applications. value at farm level. Third, they reduce costs. The challenge is to promote their wide adoption and The question is whether and how digital technolo- scaling up to broader categories of farmers, espe- gies can transform agriculture in the way other dis- cially those who would benefit more from improved crete technologies have transformed the sector, for incomes. instance, during Green Revolution. It is unlikely that digital technologies alone would result in another According to the key takeaways from the digital ag- Green Revolution. As a matter of fact, the next Green riculture conference that took place in Moscow on Revolution would be difficult to achieve given the May 15, 2018, in the current state of Russian agri- low level of public spending in agricultural research culture technology development the following phe- in the United States and Europe and the continuing nomena require most attention: © 2018 Agriculture Global Practice. The World Bank Group 5 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms Technology development in general has en- agro-product transaction and export. An eco- abled a wide range of technology start-ups system approach to constructing an enabling and established firms entering the digital ag- environment to provide tailored applications riculture marketplace, from soil assessment requires all IT specialists, farmers, telecommu- services and farm data analytics to unmanned nication-mobile operator providers, and the vehicles for automation. However, these solu- public sectors to contribute to the hardware, tions work mostly in siloes, prohibiting wider software, and content-specific application to access by the majority of agriculture practitio- maximize the benefit digital technologies can ners because of technical barriers and finan- bring to agriculture. cial constraints, the results of incompatible standards between digital infrastructure or the Open data remain the main bottleneck for lack thereof, and the non-commercialization of digital technology to proliferate in the sector. these technologies. Specifically, data quality; data security; and the method used to collect, manage, and analyze Demand in the digital agriculture space is nei- require further progress and the building of the ther well defined nor surveyed. ICT solution data science arsenal. Leveraging the regula- providers and technology companies have the tory mechanism will be crucial to building and backend infrastructure but lack the expertise to scaling up the use of digital technology in ag- identify the gaps where digital technology can riculture. generate the most value addition. Currently, from a supply-chain perspective, digital tech- The industry lacks qualified IT specialists to nology has been most developed and repli- take advantage of the availability of big data cated toward one end of the spectrum, directly analytics: one out of every 1,000 employees is facing consumers with delivery of ready-made an IT specialist (Ministry of Agriculture of the food. The application of technologies for input Russian Federation 2018). In addition, the cur- supply, machinery, and agronomical data mod- rent education system does not provide suffi- eling remains comparatively rare; only a few cient agribusiness and other relevant training, early start-ups have explored technology for relegating the responsibility to industry alone. 6 © 2018 Agriculture Global Practice. The World Bank Group Organization of the report and typology of digital tools for agriculture Organization of the report Making information available to farms and agri- and typology of digital tools business for agriculture The second category is about functions that enable The analyses and discussions of this report are market access and provide market opportunities. It based on a review of global and Russian tools, tech- combines two typologies of technologies: nologies, and services for digital agriculture. Our team reviewed various reports and websites and Linking market participants interviewed firms, experts, farmers, and developers to identify technologies that are most common in Facilitating digital transactions agriculture globally and are most relevant and ap- plicable for Russian agriculture. Our objective was The five elements of the typology introduced im- to identify those technologies and tools that either mediately above represent five basic functions that have potential for use by small and medium farmers digital tools can facilitate in the agriculture and agri- or are already being used predominantly by small business sectors (table 1). By improving the ways in and medium farmers. In this report, we did not at- which these functions operate (making them faster, tempt to analyze implications of our findings for pub- more effective, less expensive, more accessible, lic policy, leaving that exercise for future work. available to more people, more convenient, more user friendly, and so on), digital tools have the po- Digital tools and technologies help deal with infor- tential to improve the performance of the agricul- mation asymmetries and make information more tural and agribusiness sectors. For example, by freely and speedily available to users. Because of making hyperlocal information about soil moisture the inherent public good properties of information, or crop diseases more easily available, digital tools there are a variety of roles for the public sector in can contribute virtually instantaneously to on-farm providing and regulating the use of digital tools in productivity. agriculture. In exploring how digital tools are used in agriculture, and in exploring the role for the pub- For some farms and agribusinesses (particularly lic sector in this regard, it is useful to consider a larger firms), using digital tools to facilitate the above typology of the functions that digital tools can pro- functions is something that they have been able to vide in the sector. Here we consider two broad cat- do on their own. However, there are elements of egories of the functions of digital tools in agricul- public goods in the provision of the five functions ture. The first category is about functions related to identified above—especially for small farms. By ex- more effective agricultural knowledge and informa- amining each function—and by examining the roles tion systems: and responsibilities and incentives of actors at each level of aggregation (that is, at the farm level, at Capturing information from farms and agribusi- the local government level, at the national govern- ness ment level, at the agribusiness level, and so on) for each function, it is possible to identify the role of Managing information the public sector. Identifying this role is particularly © 2018 Agriculture Global Practice. The World Bank Group 7 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms useful because it applies to giving small and poorer to expanding the benefits of digital technologies farmers access to each of the functions in a more to small and medium farmers. Within each part we efficient manner than would be the case without probe each typology and present examples of typical public sector intervention. Careful examination and technological solutions from Russia and around the articulation of such roles is beyond the scope of the world. In addition, each part contains a case study present report, but would be a valuable exercise in that describes a practical example of public policy further work as an input into strategic planning for intervention that can help expand the benefit of digi- agricultural and rural development (in Russia and tal technology in the agriculture sector, especially for beyond). small and medium farms. Part I presents a case study on digitizing soil information systems. Part II presents How should this report be read? The two groups a case study on promoting the interoperability of IoT described above form the two main sections that platforms and their benefits for agriculture. The re- follow. The two sections categorize typologies of port concludes with a summary of proposed areas digital tools and services for agriculture with a view for future research and recommendations. Table 1. Mapping typologies of digital tools on an agri-food value chain Value Chain & Technology Logistics/ Financial Typology Farm Production Inputs Transport Services Processing Market Agriculture Knowledge and Information System Capturing information from AgroDroneGroup* Olam n.a. n.a. AgroTerra* n.a. farms and agribusiness AgrivitaFarm* Smart4Agro* GeoScan* Panasonic Russia* RoboProb* R-Sept* Trimble* Managing information aWhere n.a. n.a. n.a. n.a. n.a. ExactFarming* Making information available Gamaya n.a. n.a. n.a. n.a. Farmerline to farms and agribusiness Market Access and Market Opportunities Linking market participants Connected Farmer n.a. Hello Tractor n.a. n.a. Kaluga Agribusiness Twiga Food Development Agency* Facilitating digital n.a. n.a. DigiFarm TakeWing* n.a. n.a. transactions Tarfin Umati Capital Note: * Russian firms; n.a. = not applicable. 8 © 2018 Agriculture Global Practice. The World Bank Group PART I. Digital tools activate agricultural knowledge and information systems PART I. Digital tools activate in digital form on a more timely basis, at less cost, agricultural knowledge and and in more easily usable form. One emerging information systems source of information is remote sensing. Satellites are collecting field-level information about crop Steady advances in agricultural knowledge have cover, crop conditions, crop health, soil conditions, profound implications for agriculture and agribusi- weather conditions, and crop yield estimations, and ness. Advances in knowledge about crop and live- are making all of this information available to farmers stock genetics can raise on-farm productivity and as well as to agribusiness and to other industry ob- improve the quality of farm products. Advances in servers (including ministries of agriculture). Drones knowledge about how weather and soil characteris- are capturing even more detailed information at the tics affect crops can also raise on-farm productivity field level, including monitoring for and identifying and improve the quality of farm products. Advances crop diseases, monitoring soil moisture, and provid- in knowledge about mechanization can improve ing images for use in establishing property boundar- labor productivity on farms and in agribusinesses. ies and for many other uses. Such advances in knowledge can be transformative for the agriculture sector. Another emerging source of information about what is happening at the farm level falls under the catego- But developing agricultural knowledge depends ry of the IoT. In many places, on-the-ground sensors on the capture and use of information (data about continuously relay information to farmers about wa- on-farm trials, weather data, information about soil ter usage, soil moisture, field (or greenhouse) tem- characteristics and quality, and so on). Furthermore, perature, and other important production variables. putting agricultural knowledge to use depends on This allows rapid response to current conditions— being able to transmit information from knowledge adjusting irrigation pumping and turning on or off wa- sources to the level of the farm and agribusiness. ter and heaters in greenhouses, to name just a few. Digital tools are making it possible to capture infor- Strategically placed weather ground stations relay mation at every level, to manage and analyze it to critical, detailed, and location-specific weather infor- create knowledge, and to send knowledge-based mation to weather information services. Sensors on information back to users at the farm and agribusi- farm machinery record the location of the machinery ness level. This section discusses each of these as well as operational and performance data. steps and presents examples from Russia and from other parts of the world. These and other digital tools are making the flow of information and communication from farmers and their advisors to public program officers simple and Capturing information from farms systematic—not only to farmers themselves, but also and agribusiness to public agencies. For farmers, such information enables better planning and decision-making, thus Vastly more information about what is happening on unlocking possibilities for improved productivity and farms and in agribusiness is available now than ever profitability. For public agencies, these tools allow before—and this information is increasingly available the collection of farm-level data for the purposes of © 2018 Agriculture Global Practice. The World Bank Group 9 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms monitoring and evaluation with respect to the out- overcome earlier obstacles to ensure easy storage, comes of public programs; they also allow feedback updating, and retrieval of agricultural data; accept by users and other stakeholders on the performance and systematically collect on-farm and market data of public policies and programs. from remote sensing, market transactions, and other digital data collection sources; facilitate the dissemi- nation, manipulation, and analysis of agricultural data; Managing information and facilitate access to farm-level and aggregate sec- toral information for the purposes of analysis. Digital tools are transforming the way that knowl- edge and information about agriculture are man- aged at every level. Making information available to farms and agribusinesses At the level of farms and agribusinesses, the vast increase in the availability of knowledge and in- More than ever before, digital tools and services formation, together with the ability to manage and make it possible for relevant and detailed informa- utilize that knowledge and information, is an im- tion and knowledge to be made available directly to portant factor in substantial growth in productivity farmers and to other stakeholders in the agriculture and profitability. Digital farm management tools are sector. Such digital services can be either “push” or making it possible for farmers themselves to use de- “pull” in nature. On the one hand, such services can tailed information about production variables (such allow advisors to push information directly to farm- as weather, field conditions, milk quality, feed con- ers when experts recommend that farmers consider sumption by livestock, market prices, and so on) to using it for their own crops and conditions—perhaps formulate and evaluate production options and to sending information to their phones or to other lo- make real-time and longer-term decisions to opti- cally available digital devices. A common example mize profit and productivity. of this in Russia can be found on large agri-holdings. For these farming companies, detailed technical in- At the aggregate level (such as at ministries of agri- structions can be relayed from agri-holding head- culture), advances in digital tools are making it pos- quarters directly to staff in fields. Similarly, precise sible for public programs, services, and policies in information and instructions can be sent directly support of the agriculture sector to be more efficient, from satellites to farm workers and farm machinery relevant, evidence-based, tailored and targeted, in real time as they work with crops and livestock transparent and monitorable, and generally more ef- in fields and barns—adapting seeding rates, fertiliza- fective than ever before. One of the most basic agri- tion, feed mixes, and so forth on the go. This is preci- cultural information functions of the public sector lies sion agriculture. in the area of agricultural statistics. Historically, public agricultural statistics systems in many countries have On the other hand, such digital information services often been clumsy to use and not very reliable. A can be pull in nature—allowing farmers to pull infor- digital national agricultural statistics system (system- mation they need, to get answers to questions they atically linked to the national statistics authority) can have, and to give feedback regarding what more they 10 © 2018 Agriculture Global Practice. The World Bank Group PART I. Digital tools activate agricultural knowledge and information systems need to know. Farmers and their partners can get in- same goal of increased productivity with higher ef- stant access (in digital form) to information about mar- ficiency requires tailored approaches and may also kets and prices, analysis of possible disease threats require (at least initially) targeted public support. A in their fields together with expert advice on how to number of homegrown innovations have witnessed deal with such problems, weather data and location- early results serving the market, although they main- specific forecasts, and so on. This allows effective ly serve medium and large-scale farms (1,000 hect- communication between farm and agribusiness en- ares and larger) rather than small farms. In this sec- terprises—helping farmers to optimize the precision tion, a number of examples are presented of digital and efficiency of their practices and activities as well tools that are currently being used on farms and by as helping them to mitigate risks. agribusinesses in Russia. Practical examples of the use of digital Farm management technologies to activate agricultural knowledge and information systems A cloud-based farm data management platform, ExactFarming, collects and makes sense of farm Digital technologies are used for agricultural knowl- operation data including pesticide usage, farm edge and information systems in Russia and in the vehicle operation, and vegetation status through rest of the world. This section provides examples satellite images to inform farm decision-making from each in turn. (figure 1).3 The platform also disseminates data in- cluding weather and soil (ability to disseminate soil data is forthcoming) tailoring to specific account Russian examples of agricultural knowledge holder geographic conditions. Through partnership and information systems with MAP (a charitable organization that provides medicines and health supplies to people in need),4 In Russia, domestic digital technology development as well as local weather field stations, ExactFarming in managing agriculture data and operations is still extracts weather data onto its software platform for in a nascent stage. Technology serving agro-hold- multi-source data integration; and with Agrosignal,5 ings to medium-size farms remains the main type of a Russian software company, ExactFarming moni- agri-tech in the market for a variety of reasons. Such tors farm vehicle location, tasks, and performance, technology ranges from advanced devices captur- such as completion rate and speed, through GPS ing real-time data through Global Positioning System for economic planning. (GPS) technology, satellites, and sensors for optimal farm operation management to unmanned vehicles With farm data captured, ExactFarming is able to for automation. For small and medium farms, the pursue several initiatives to help facilitate client 3 For further information about ExactFarming see https://www.exactfarming.com/en/. 4 Information about MAP can be found at https://www.map.org/. 5 Information about Agrosignal can be found at https://i3connect.com/company/agrosignal. © 2018 Agriculture Global Practice. The World Bank Group 11 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms business by working with agro-dealers to bridge above 1,000 hectares; around 30 percent of the ac- gaps throughout the supply chains, and with finan- counts manage farms of less than 1,000 hectares. cial institutions as well as agro-holding companies ExactFarming states that the key to increasing tech- to extend credit to small and medium farms. The nology uptake among small and medium farms lies foundation for effectively capitalizing on the data-in- in the trust between users and the relevant technol- formed decision tools so that they become engines ogy in achieving the for economic growth is a shared understanding of the technology, its analytics, and its implications; proclaimed goals, including better decision making equally important are the organizational support and and timely advice for improved productivity. Price is leadership needed to adjust and restructure the cur- not the issue: the software fee is usually a neglect- rent system to pilot and course correct. able proportion of the overall farm expenses: 50 ru- bles per hectare per year compared to 12,000 to Among the 5,000 accounts on the platform, the 20,000 rubles. To encourage technology adoption, majority of the farmlands under management are field demonstration remains the most effective and Figure 1. ExactFarming online platform: Dashboard Source: ExactFarming screenshot. 12 © 2018 Agriculture Global Practice. The World Bank Group PART I. Digital tools activate agricultural knowledge and information systems convincing way to communicate its economic ben- information on a leaf, for example, which is useful for efit for the business. identifying diseases) to obtain 10 times more data than NDVI can provide. With this technology, the company builds a database with which to make farm The use of drones work recommendations by processing real-time data with a proprietary algorithm. Beyond the in- Within the Russian agri-tech spectrum, the develop- house database, AgroDroneGroup also recognizes ment of unmanned aerial vehicles (UAVs), commonly the benefits of open data from other business enti- known as drones, for crop and soil quality monitor ties to inform its analytics. is comparatively mature. Several products and ser- vices have undergone pilots and are moving on In order to widely disseminate drone services to to mass commercialization. AgroDroneGroup and farms, AgroDroneGroup is piloting its services under GeoScan employ drones equipped with cameras to the sharing economy model to “uberize” drones for 6 conduct aerial surveys. These surveys are capable agriculture work on demand. The pilot drew thou- of obtaining, among other things, orthophotos (aerial sands of interested drone pilots to be part of the try- photographs that have been geometrically modified out. Despite its initial success, the key for such ser- to present a uniform scale), data for normalized dif- vice would require enhanced agriculture knowledge ference vegetation index (NDVI) mapping, snap- on the pilots’ end and an improved communication shots of crop conditions and levels of germination, channel to best disseminate data in useful form in a and information about water erosion. timely manner. Currently the main channels of com- munication are mobile phone and e-mail. As opposed to standard satellite images of 15–30 meters per pixel resolution, GeoScan UAV provides images of 5 centimeters resolution, covering farm Robotic soil testing and mapping sizes from 30,000 hectares to 100,000 hectares. These images—turned into digital terrain models In an attempt to complement current soil test meth- (DTM) and digital elevation models (DEM) through ods, RoboProb designs a robotic platform for auto- software data processing, analysis, and visualiza- mated soil sampling to minimize human error and tion—inform farms of the state of the land and the increase efficiency.7 The platform is a self-propelled direction of soil cultivation, monitor diseases and complex that can work as a stand-alone device or as yield, and model for floods. a trailing unit on any transport vehicle. AgroDroneGroup, a company that develops and The automation service of RoboProb soil sampling, manufactures UAV-based solutions, leverages hy- labeling, and packaging is able to save farm labor re- perspectral technology (which can provide detailed quirements so it can decrease from a team of five to 6 Information about AgroDroneGroup is available at http://agrodronegroup.ru/ (in Russian); information about GeoScan can be found at https://www.geoscan.aero/en/about. 7 Information about RoboProb can be found at https://www.roboprob.com/ (in Russian). © 2018 Agriculture Global Practice. The World Bank Group 13 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms a one-man team that will suffice for up to 36 pieces The shared characteristics of this support are of sampling in one attempt. The robotic complex le- brought together through incubator and accelera- verages ground-based methods to mitigate the as- tor programs, which convene mentors and industry sessment errors that exist between the device and experts to work with tech entrepreneurs on their the soil, to which remote sensing is highly prone. products and business plans; through office and lab While positioning accuracy to up to 1 meter, the de- infrastructure, which facilitate business and product vice is able to move at a speed of up to 30 kilome- development; and through tax benefits and access- ters per hour. ing a wide range sources of finance through show- case events as well as business competition. Once the tasks are completed, the data extracted from the farm are compiled into an electronic soil In examining the current landscape of Russian ag- map that details the fertilizer application of each plot. ri-tech development and its challenges, Managing Partner for Agri-Tech at Skolkovo Venture, Pavel The above examples demonstrate the promise of Danilov, and CEO of AVG Capital Partners, Roman digital solutions development for Russian agriculture Trofimov, point to the significance of a clear grasp of to closely manage farmland with an evidence-based market orientation and the ability of tech entrepre- approach. Financial support is crucial to spurring the neurs to identify their critical needs as well as their growth of the agri-tech space founded on evidence- own niche in serving specific segments. Because based research rather than trial and error, thereby of the dynamic technology adoption trajectory, the refining and proving product viability, market fit, and capacity required to develop appropriate technol- value proposition to a wide range of clients. ogy, and the time necessary for such development, the market now sees a fragmentation of available services, leaving much of the opportunity for crop Encouraging entrepreneurship and agri-tech and high-value product uncaptured. Additionally, the start-ups financing system has not yet been able to support the overall development. The logical exit plan for a Support for the agri-tech landscape in Russia cur- technology start-up—selling the technology to a big rently is concentrated at the federal level. Initiatives corporation—is not fully viable because the institu- such as the Internet Initiative Development Fund tions are not ready to acquire. (IIDF) and the Skolkovo Foundation and Skolkovo Venture, as well as state-owned nonprofits includ- With the majority of funding from the public sector ing the Foundation for the Assistance to Small going to subsidies, the limited proven sustainability Innovative Enterprise (FASIE), are building the tech- and benefits for small farms lead the private sec- nology ecosystem to assist ideas turn into products tor to explore ways to channel financial resources and facilitate peer learning by providing a dedicated into an alternative public-private partnership (PPP). space for brainstorming and dialogue. On the rise By scouting high-potential companies with fund are the interest and appetite of venture capital and managers of agriculture expertise, industry experts private equity in guiding agri-tech start-ups to under- and business veterans within the fund network can stand market needs and access funds. provide strategic advice to the companies as well 14 © 2018 Agriculture Global Practice. The World Bank Group PART I. Digital tools activate agricultural knowledge and information systems as assess their investment readiness. Liaising with Along with Wageningen University Research (WUR) diverse actors throughout the value chain on behalf in the Netherlands, the 70 partners of IoF2020 from of the agri-tech community, an alternative PPP has 14 countries focus on five work pillars: project man- the potential to consolidate a broad array of fund- agement, trial management, IoT integration and ca- ing for companies at various stages of maturity or in- pabilities, business support, and ecosystem devel- vestment readiness as the return objective and risk opment; and on five agriculture value chains: arable appetite vary. Funding from venture capital, private crops, dairy, fruits, vegetables, and meat. Notably, equity, public finance, and development finance will among the 38 private sector partners, 24 are small contribute to developing a solid tech ecosystem with and medium enterprises (SMEs). The project em- flexible financing options for businesses to achieve phasizes actively involving end users, the farm- their objectives. ers, to co-design and to provide feedback on user experience. Global examples of agricultural knowledge Launched in the first and second quarters of 2017, and information systems IoF2020 has developed 19 cases to date with vari- ous areas of progress. Within-field management Internationally, the use of digital technology to cre- zoning, an IoT deployment on potato farming, aims ate and maintain agriculture information systems to develop detailed soil maps, input a variable rate occurs primarily at the national or the supranational application map service, and facilitate automation level of aggregation—and in some cases is champi- and machine communication. The setup probes oned by the private sector. Technology deployment field soil moisture, soil organic matter, and min- to obtain, extract, and manage agriculture informa- eral composition to create a soil map from which tion from and to farms is economically viable only on the variation rate application map is developed a large scale. The Internet of Food and Farm 2020 through a geographic information system (GIS) (IoF2020), a mega IoT pilot project in agriculture platform. On the software front, the system can co-funded by the European Commission (EC), aims translate crop management tasks into machine to convene key private, public, and not-for-profit tasks, allowing for automation by aligning machine stakeholders throughout the value chain to validate interfaces. The pilot program seeks to reach higher technology choices: from timely and precise farm yield and quality with lower production cost by im- data through IoT for productivity enhancement and proving farm management, serving small farms of traceability, and from GPS and sensors for livestock 50 to 200 hectares. movement monitoring, to machine learning technol- ogy for dairy quality assurance. Apart from the tech- Another application of IoT on farms is illustrated nology, IoF2020 seeks to identify user needs and by utilizing precision crop management to monitor concerns, including system interoperability, data wheat crops’ real-time nutrition status through both security, and localization; to structure optimal busi- ground and satellite images. With the data at hand, ness models and processes; and to provide agri- the project seeks to assist farms with water and ni- tech entrepreneurs with relevant data and market trogen application through digital task management entry support. and automation of the application process. © 2018 Agriculture Global Practice. The World Bank Group 15 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms Another category of the use of IoT on farms has to Remote sensing imagery and crop do with establishing real-time communication be- management tween farm machines. Machinery interoperability is achieved by standardizing and aligning protocols, The majority of worldwide examples of agriculture vocabulary, and semantics. Such efforts will en- information technology deployment rely on the ef- able efficient data sharing among farm machines. fect of economics of scale, thereby starting with By working with farm machine manufacturers and large-scale farms. Gamaya,9 a Swiss agri-tech com- software companies, the project seeks to facilitate pany employing drones equipped with hyperspec- data transmission between field machinery and farm tral cameras to collect farm images for precision management information systems (FMIS) both on- farming, entered their first market in Brazil. The hy- and offline and through application programming perspectral technology is able to detect the state interface (API) harmonization, thereby making real- of the crops and also the rate of the crop develop- time analysis of diverse data formats possible for ment by measuring the light reflected by the plants. precision farming. Complemented by information gathered through other sources of data, including satellite and sen- sors, the data are then interpreted by Gamaya’s in- Using big data and local data for crop house software using machine learning and artificial management intelligence (AI), providing detailed insights and ac- tion plans for farms through its cloud-based platform. An example of a private sector initiative to make detailed and local information available directly to In addition to the ability to extract and act upon the farmers and agribusiness is the platform developed data analytics derived, Gamaya plans to scale up the 8 by a U.S.-based firm called aWhere. aWhere oper- work to create a global crop database with crop- and ates in a global-scale agronomic modeling environ- region-specific intelligence. With the help of hyper- ment with immense processing capacity that col- spectral imaging technology, Gamaya started with lects over 7 billion points of data every day to create soy and cane cultivation solutions to identify weed unprecedented visibility and insight across the ag- infestation for adequate herbicide applications and ricultural soils. aWhere’s hyperlocal agricultural in- to detect nutrient levels at various crop stages, as formation and insight support precision agriculture. well as to map soil erosion and estimate yield. Using proprietary blending and predictive modeling, aWhere provides field-level observations and fore- casts weather, growth stages, and pest and disease Exploring public support for investments risk. aWhere’s information platform and tools offer in on-farm use of digital technologies the possibility of transforming the way agricultural decisions are made by grounding them in data and To adopt technologies as advanced as the hyper- analytical insight that have never existed before. spectral imaging used by Gamaya, the upfront 8 Further details about aWhere are available at http://www.awhere.com/. 9 Further information about Gamaya can be found at https://gamaya.com/. 16 © 2018 Agriculture Global Practice. The World Bank Group PART I. Digital tools activate agricultural knowledge and information systems investment required often proves prohibitive for 100,000 farmers in 21 countries across multiple small and even medium farms. The company is ex- continents. ploring approaches to overcome such challenges with the model of flipping technology ownership: OFIS helps the conglomerate manage smallholding instead of owning the technology on the farm end, clients around the world, and in return makes spe- the public sector can bear the upfront cost of install- cific operation design and services back to the farm ment, reacting to and leveraging the data captured possible. With a mobile device, OFIS records GPS for program design, tailored extension, and advisory data for logistics, farm location, and input transac- services delivery. The key is to make data available tions; it also provides a revisable survey model to to relevant stakeholders beyond the financial and gather relevant farm data. Furthermore, the system technical constraints that often hinder small farms’ performs decision-making tasks by analyzing sta- access to necessary information. Whether such an tistical data and locating key social infrastructure approach will be a game changer that proves viable information and farmer profiles to inform user ac- depends on a collective effort of the public and pri- tions such as farm training design or business risk vate sectors and civil society to devise a mechanism mitigation. that accounts for the overall technological capability, data security, and shared cost as well as revenue and From the farm’s/cooperative’s perspective, the data technical assistance for end users to leverage the captured by OFIS help inform the company so it can farm and market intelligence at their own command. deliver tailored modules on extension services for improved agriculture practices. In addition, payment can now be processed online directly to farmers, Private sector support for on-farm adoption of thereby expanding their access to financial services. digital technologies While it is appropriate for the public sector to sup- CASE STUDY: Digital tools and soil port some aspects of the development and adoption information systems of digital tools and approaches, for many applica- tions, the private sector also plays a role in support- Over 150 years ago, Russian Professor Vasiliy ing adoption by farmers. Traditional private sector Dokuchaev established agricultural experimental entities throughout the agriculture value chain also work through morphological and genetic soil sci- invest in bringing digital technology to small and ence as a separate branch of knowledge. Russia medium farms. The global input company Olam em- introduced soil science to the world and became ploys the in-house Olam Farmer Information System the first country to start taking care of and restoring (OFIS) to obtain farm-gate level data, deliver train- soil cover at the country level. Russia has a strong ing modules, and record first-mile business trans- tradition of education and research in the area of 10 actions. As of 2017 Q2, the system had registered soil science. However, after the 1990s, the number 10 Further details about Olam are available at http://olamgroup.com/. © 2018 Agriculture Global Practice. The World Bank Group 17 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms of organizations collecting soil data decreased being pursued in order to reduce the gap between and soil science lost its importance. In this section the demand for soil data and their availability. we discuss international experience at collecting soil data; the current situation in collecting data in On a global level, the International Soil Reference Russia and data availability; barriers to making data and Information Centre (ISRIC) has created the available (for example, national security, poor infra- SoilGrids soil information system (Hengl and others structure, lack of a unified approach); and the ben- 2017). This system provides public access to global efits to farmers of using digital tools while collecting maps, with a resolution of 250 meters, of a number soil data. of indicators of soil properties, including organic car- bon, bulk density, cation exchange capacity (CEC), Information on the state of soils and soil cover is fun- pH, soil texture fractions and coarse fragments, and damental when taking decisions about combating depth of the parent material. The ISRIC also pro- desertification, halting and reversing land degrada- vides access to the classes of the World Reference tion, and improving agricultural land quality. These Base for Soil Resources (WRB). The SoilGrids system all contribute to sustainable agriculture as well as to is constantly updated. strengthening food security. Achieving these goals requires the availability of detailed and up-to-date SoilGrids data can be uploaded under the Open environmental information, including soil informa- Database License (ODbL). Access to SoilGrids tion. Creation of digital soil databases and the devel- maps is provided via a soil web-mapping portal at opment of digital soil mapping methods are actively SoilGrids.org (figure 2); through a Web Coverage Figure 2. Global digital map of soil PH Source: soilgrids.org, June 6, 2018. 18 © 2018 Agriculture Global Practice. The World Bank Group PART I. Digital tools activate agricultural knowledge and information systems Service; and via the SoilInfo App (Hengl and others The SSURGO standardized digital geographic data- 2017). Constant data updating and detailing helps to base contains information in the form of digital maps create more accurate global models—for example, at scales from 1:63,360 to 1:12,000 and provides the global gridded crop models (GGCMs)—that facili- most detailed level of the information. This database tate reliable assessments of the impact of climate was developed mainly for planning and managing change and land degradation on food production natural resources at local and regional levels: farms (Folberth and others 2016). and ranches, settlements, and districts. It serves as a source for identifying eroded areas and develop- On a country level, in the United States, the collec- ing methods for erosion control, and for determining tion, storage, management, and dissemination of in- the potential for land use. The STATSGO database formation on the soil cover survey are the responsi- (at a scale of 1:250,000) provides less detailed in- bility of the Natural Resources Conservation Service formation, which is necessary to solve problems at (NRCS), an agency of the United States Department the state level. The NRCS operates with more than of Agriculture (USDA). For various purposes, the 20,000 U.S. soil profiles.11 NRCS has created soil-geographical databases, such as the Soil Survey Geographic Database (SSURGO) Another example of soil data use at the state level and the State Soil Geographic Database (STATSGO). is the Department of Agriculture of Uruguay, which Figure 3. Detailed map from the CONEAT index Source: The Ministry of Agriculture of Uruguay, available at http://web.renare.gub.uy/js/visores/coneat/.. 11 Raster data from SSURGO and STATSGO2 are accessible and can be downloaded via the Web Soil Survey (WSS) at https://websoilsurvey.sc.egov.usda.gov/App/HomePage.htm. © 2018 Agriculture Global Practice. The World Bank Group 19 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms also provides public access to soil information. Soil evident that the national soil database of Russia is types are classified according to their productivity in its infancy. There is no clear content in Russia’s 12 and measured by the index called CONEAT. The soil resource management policy (Shoba and others CONEAT index of a property also correlates with the 2008). The result is a lack of a unified approach and price of the land and makes the market transparent: objective in soil inventory and the creation of soil- it is easy to compare properties. An online detailed geographical databases: work is being undertaken map shows specific properties as types of soil in dif- by different teams with different methods. ferent colors (figure 3), the productivity index of each type of soil, and the average CONEAT index for the It is important to note that in Soviet times such a each land use pattern. state system existed. When that system was func- tioning, large-scale mapping of all agricultural In Europe, the main source of soil data is the European lands of the country was carried out several times. Soil Database (ESDB). It includes the territory of Based on the large-scale maps, a series of medi- Belarus, Moldova, Russia, and Ukraine (Stolbovoy um-scale soil maps of the regions was created, as 13 and others 2001). In addition, soil information is in- well as several soil maps for the whole country. cluded in the Infrastructure for Spatial Information in Hard copies of soil maps are now part of the soil Europe (INSPIRE) as one of 34 themes. INSPIRE has data center of the V.V. Dokuchaev Soil Science been a directive of the European Union (EU) since Institute, which contains more than 20,000 soil May 15, 2007. It obliges all EU members to create an maps at a scale of 1:10,000 to 1:25,000 as well as infrastructure of spatial data on the Internet to facili- about 70 medium-scale soil maps at the regional tate the standardized exchange of geographical in- level. In addition, the archive contains soil maps of formation between countries. Different types of spa- different countries of the world where soil scien- tial data that are provided by different organizations tists carried out soil surveys in Soviet times. These are used simultaneously and combined into layers in maps are being digitized and updated, as neces- different user applications. It is believed that ensur- sary, using satellite data and digital soil mapping ing the wide availability of such information will al- technologies. low many industries and government institutions to improve operating efficiency and reduce costs. The After 1990, the joint project of the Russian Academy project implementation will end in 2019. The bene- of Science and the International Institute for fits from efficiency gains alone are expected to be in Applied Systems Analysis (IIASA) named the Land the order of 1 billion Euros per year (INSPIRE 2003). Resources of Russia was the first experience after the Soviet period of creating a unified digital data- Comparing the situation in Europe with collecting base of soils at the country level (IIASA and RAS soil information in Russia with given examples, it is 2002). 12 For further information see http://web.renare.gub.uy/js/visores/coneat/. 13 See Столбовой В., Монтанерелла Л., Медведев В., Смеян И., Шишов Л., Унгурян В., Добровольский Г., Жамань М., Кинг Д., Рожков В., Савин И. ИНТЕГРАЦИЯ ДАННЫХ О ПОЧВАХ РОССИИ, БЕЛОРУССИИ, МОЛДАВИИ И УКРАИНЫ В ПОЧВЕННУЮ ГЕОГРАФИЧЕСКУЮ БАЗУ ДАННЫХ ЕВРОПЕЙСКОГО СОЮЗА // Почвоведение. 2001. № 7. С. 773–790 (in Russian). 20 © 2018 Agriculture Global Practice. The World Bank Group PART I. Digital tools activate agricultural knowledge and information systems The project Unified State Register of Soil Resources A data center is an organization with its own regional of Russia (ЕГРПР - EGRPR) aims to perform a com- and subjective specialization; it collects and stores 14 plete computer inventory of soils in Russia, in- initial information in the format of international stan- cluding preparing technical documentation, de- dard ISO 28258. termining soil-ecological zoning, and compiling a collection of representative soil profiles (Stolbovoy At present, the network of data centers includes and Molchanov 2015). The Russian Unified State three agrochemical centers (out of the 110 operat- Register of Soil Resources. Version 1.0 is a collective ing in Russia): the Belgorod Agrochemical Service monograph of 768 pages, accepted and approved Center (TSAS “Belgorodsky”), the Moscow Federal and used as an official document by the Russian State Budgetary Institution State Agrochemical Federation Ministry of Agriculture (Stolbovoy 2014). Service Center (FGBU GTSAS “Moskovsky”), and It describes a digital database based on the soil map the Rostov Federal State Budgetary Institution of Russia made in 1987. The database is available on State Agrochemical Service Center (FGBU GTSAS 15 the website. The regulations of the federal registra- “Rostovsky”), as well as the Southern Federal tion service indicate that the assessment of lands’ University and the Faculty of Soil Science at quality for taxation should be based on the EGRPR. Lomonosov Moscow State University, which also The Ministry of Agriculture uses the EGRPR in the collect data on soil. The work is performed volun- framework of Russia–World Trade Organization tarily on the basis of an agreement for scientific co- (WTO) agreement to estimate the efficient use of operation. Poor infrastructure imposes limits on the Russian land for agriculture. project development: the information is collected on hard copy and is not digitized, the format of the Work on the creation and development of the data collected differs, and Internet connectivity in Russian Information System Soil and Geographic institutions is limited. Database (ISSGDB) has been performed since 2008 at the initiative of the Dokuchayev Society of Soil This ISSGDB initiative may duplicate the efforts of 16 Science; this database is based on the same soil Russia’s Ministry of Agriculture to collect and sum- map as the one used by the EGRPR. marize soil data collected by Agrochemical Service Centers; this work is carried out by the Analytical The ISSGDB is a network of data centers that coordi- Center of the Ministry of Agriculture. Partly the data nates its work and reflects the availability of primary are presented on the website of the atlas of agri- soil information, as well as its storage locations. The cultural lands, which is currently actively updated by system does not provide free access to data. the ministry.17 14 The Unified State Register of Soil Resources of Russia (Единый государственный реестр почвенных ресурсов России) is available at http://atlas.mcx.ru/materials/egrpr/content/intro.html. 15 See the Unified State Register of Soil Resources of Russia (Единый государственный реестр почвенных ресурсов России) at http://atlas.mcx.ru/materials/egrpr/content/intro.html. 16 The Informational System Soil-Geographic Database of Russian Federation is available at https://en.soil-db.ru/. 17 Data are available at the Federal GIS Agricultural Lands Atlas http://atlas.mcx.ru/ (accessed June 6, 2018). © 2018 Agriculture Global Practice. The World Bank Group 21 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms Derivative products can be created on the basis Figure 4. Mobile application based on the EGRPR: Soil properties of the yield, calculated normative of the ISSGDB. One example is the subsystem for yield, and fertilizer application rates calculating the grain crop yield, functioning as part of the ISSGBD (figure 4). This is a web application for calculating the rated grain crop yield for the se- lected field. The calculation is based on the actual data of soil and agrochemical observations stored in the ISSGBD and correction factors; it also takes into account the area-based coefficients of agro-climato- logical potential capacity.18 In Russia, both public authorities and the pri- vate sector might be interested in creating a sin- gle soil-geographical database. The Ministry of Natural Resources and Ecology and the Ministry of Agriculture of Russia could use the data for plan- ning the sustainable use of soil resources; creating a cadastral passport for each land plot; creating a ba- sis for quality education and research practice; and providing a platform for the development of interna- tional relations and global projects in the spheres of food security, environmental quality, and so on (Rozhkov and others 2010). The private sector is interested in using spatial soil Source: http://gis.soil.msu.ru/soil_db/assessment/ (in Russian only). data to create new products (web applications) by providing information tailored to a client’s require- ments. Companies engaged in precision agriculture data to plan an erosion control program or to plan and the production of machinery and fertilizers could an irrigation system for farms and select suitable be interested in using them as well. crops; designers, architects, and urban planners may use data to design the area. Digitized and The interpretation of official soil data is important available soil information helps to transfer technol- in order to obtain specific results for land users; ogies to different regions with similar soils, condi- the data may be interpreted by government units tions, or soil limits. The experience of soil manage- or agencies as well as by the private sector. For ment and lessons learned may spread from one example, agronomists and horticulturists can use location to another. This is important especially for 18 Data are from the Russian Information System Soil and Geographic Database: Grain crop yield calculation, available at http://gis.soil.msu.ru/soil_db/mobile/assessment/ (accessed June 6, 2018). 22 © 2018 Agriculture Global Practice. The World Bank Group PART I. Digital tools activate agricultural knowledge and information systems small farmers and will help them to get access to data, and qualified staff—will facilitate information new practices. exchange between regions and help achieve nation- al and international objectives for both sustainable Thus the establishment of data collection infrastruc- development and business development. This will ture in Russia—that is, a system including policy become a significant milestone in the development measures, institutional arrangements, technologies, of the science founded in Russia. Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms PART II: Digital tools stimulate who have only small quantities of product to sell, to agriculture market find other farmers who also want to sell the same opportunities product. By selling their products together, such farmers are able to increase the scale of the sale and Digital tools are important not only for helping farm- thus find better prices and better transport options. ers to harness the power of technical knowledge Digital tools are also helping farmers to find buyers and information, but also for allowing farmers and for their products more easily (even if those buyers other agricultural actors to overcome traditional are distant) and helping them easily find shops or barriers (isolation, asymmetric information, and so outlets that have key inputs in stock. Such digital ap- on) to become much more effective participants in plications are making markets deeper, more trans- both input and output markets. Two important di- parent, and more efficient—even in remote areas mensions of this phenomenon have to do with (1) where isolation, thin markets, asymmetric informa- dramatically improving and expanding linkages be- tion, and the absence of economies of scale in mar- tween market participants; and (2) facilitating the ket transactions can be substantial obstacles to fluid reliable and rapid transactions of financial assets, market dynamics for farm-related products. even in remote and cashless locations. These two functions are discussed briefly in turn in the para- graphs that follow. Facilitating financial transactions Digital tools helping to facilitate financial transac- Linking market participants tions are becoming ubiquitous even in rural and re- mote areas where liquidity and convenient access Digital tools are emerging that make it possible for to financial assets has been problematic in the past. farmers and other agricultural value chain partici- Digitally facilitated transactions can be faster and pants quickly and efficiently to identify and contact more transparent and can have greater accountabil- potential partners and clients, even in remote and ity than was possible in the past. Farmers can access distant locations, whom they might otherwise nev- their own resources much more quickly and reliably er have known about. Such tools are substantially and in some cases get easier access to credit. The reducing transactions costs for farmers and other emergence of tools such as blockchain have the market participants. A popular example is farmers’ potential to bring greater accountability to farmers’ use of Internet applications to find available service transactions while at the same time providing the providers nearby with needed equipment for hire means through which to verify the origin and quality (tractors, harvesting equipment, tillage equipment, of farm produce—even for partners and consumers transport, and so on). This makes it possible for small located thousands of miles away from the farm of or- farms, in particular, to take advantage of modern and igin. Such tools also enable policy instruments, such capital-intensive farming techniques even if they do as input vouchers, that have been much more cum- not have sufficient capital to purchase the needed bersome and subject to misuse in the past. eVouch- equipment. Such tools are also making it possible er tools and programs have become mechanisms for small farmers who want to sell their products, but through which to provide time-bound and limited 24 © 2018 Agriculture Global Practice. The World Bank Group PART II: Digital tools stimulate agriculture market opportunities support to targeted farmers for their purchases of The investors, however, do not gain ownership of farm inputs, including fertilizer and seed. By reduc- the business. The purpose of the offering is to tap ing transaction costs and enhancing accountability into the potential to streamline industry payment. underlying transactions, such digital tools are help- Another example of an ICO in agriculture is issued ing to expand the business of agriculture in rural by the Russian farmers’ cooperative LavkaLavka.21 It areas. should be noted, however, that the use of crypto- currency in the Russian Federation remains unregu- lated and, therefore, the projects do not have a legal Practical examples of the use of digital basis. technologies to stimulate agriculture market opportunities In Tartastan, ITcoin is launched as the first cryp- tocurrency used for tracking beef cattle health This section considers examples of digital tech- as well as tracing the meat throughout the supply nologies used to find solutions that take advantage chain (Suberg 2017). Developed by Infinans,22 ITcoin of agriculture market opportunities in Russia and seeks to boost the local meat processing industry around the globe. by increasing trust through better product and data transparency. Russian examples of digital solutions for market Blockchain, on the other hand, is known for its ability opportunities to encrypt information and publicly share such infor- mation within the network (box 2). This feature has Blockchain in agricultural value chains been utilized for smart contracts, listing details of transactions, and establishing payment and delivery The application of blockchain in Russian agriculture timeframes to improve transparency for all parties remains in the technology pilot stage for bringing in involved. In central Russia, for example, Kolionovo agribusiness investment and meat product trace- Farm has leveraged blockchain for smart contracts ability. The technology company TakeWing provides to enhance business efficiency and reliance. 19 the blockchain backend technology for its client, Agrivita, to issue an initial coin offering (ICO), an To date, the technology and its application still re- 20 application of cryptocurrency. To issue an ICO, quire both public and private sectors—particularly Agrivita creates a white paper detailing the project the finance institutions, technology specialists, and and system seeking investment. Interested inves- business owners—to enhance regulation and pro- tors provide funds and in return receive the cryp- vide support for the public to understand the risk tocurrency in the amount stated in the white paper. and advantages of employing it. 19 Information about TakeWing is available at http://www.takewing.com.tw/. 20 Information about Agrivita can be found at https://agrivita.ru/. 21 Further information about LavkaLavka, the organic farm-to-table restaurant cooperative, can be found at http://restoran.lavkalavka.com/en/. 22 Further information about Infinans is available at https://infinans.info/ (in Russian). © 2018 Agriculture Global Practice. The World Bank Group 25 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms Box 2: What is blockchain? Blockchain is a secure, shared, distributed ledger technology that decentralizes any transaction process that transfers something valuable. In a blockchain network, if a participant—also known as a node or a peer—wants a transaction, it requests the transaction, which is broadcast to all other nodes connected to the network. The transaction is validated by all other participants in the network; once this has been done, the transaction is added as a “block” to the chain of transactions that is formed to date. Blockchain is disrupting the way trust is formed and practiced, the indispensable element behind any form of transaction involving more than one party. Going back to the conventional definition, blockchain is considered disruptive because it essentially decentralizes the authority of trust and distributes and shares the responsibility of trust to everyone in the network. Because this trust is distributed, blockchain is believed to increase transpar- ency and enhance security because transactions are made only by consensus between involved participants and cannot be tampered with. The improved trust, in turn, enables businesses, government, and society to reduce transaction costs and lessen their dependence on intermediaries along any transaction process. To sum up, blockchain has four main characteristics. It is transparent, consensus-driven, immutable, and trustless (trust is not necessarily a requirement).a The use of blockchain in agriculture can benefit the global food system by improving the process in which food is produced, delivered, and sold.b In particular, blockchain is believed to have immense potential in three key areas of the agriculture industry: (1) provenance and transparency; (2) mobile payments, credits, and decreased transaction fees; and (3) supply chain transactions and financing. For example, blockchain can address the is- sues of food quality and safety because it improves traceability and transparency within agriculture value chains. The improved traceability and the immutability of data can also help verify the accuracy of food production, cer- tification, and food processing steps more easily and efficiently. Blockchain can also help reduce food loss and food waste costs since transactions can expedite and are less likely to be disputed in the process. Moreover, smart contracts—self-executing contracts run by a computer program that can be encoded to blockchain—en- able involved parties to transact without intermediaries, eventually lowering the final price of the product for the end-consumers. The ability to skip middlemen in agricultural value chains could potentially create and improve access to finance in the developing worlds. Challenges Despite the opportunities that blockchain could potentially introduce, it is still too early to determine the vi- ability and scalability of blockchain in agriculture and broader development sectors. The Center for Global Development (CGD) notes that privacy concerns for publicly shared data, operational and institutional resiliency, and governance are remaining hurdles to be addressed before applying blockchain to development challenges. Furthermore, as Agfunder points out, “connecting the technology to viable business models and compelling use cases” is the challenge for blockchain and for agri-tech at large. Last but not least, blockchain adoption in agriculture would also require a significant level of technical understanding from farmers. Going forward Much hype surrounds the potential of blockchain in global development, including in farming and agriculture sectors. The technology not only disrupts business as usual but also requires a fundamental change in the way society works as well as the way we think. That said, it is worth continuing the discussion on blockchain’s implica- tions so we can harness the technology to solve the global food security challenges. 26 © 2018 Agriculture Global Practice. The World Bank Group PART II: Digital tools stimulate agriculture market opportunities Additional resources Noteworthy Application Cases in Agriculture The World Food Programme (WFP) is applying blockchain for cash transfer schemes to support Syrian refugees. Ripe and Filament, a blockchain project, works to make secure transfer of crop and supply chain data. Skuchain is leveraging its expertise in supply chain management to improve the traceability of the food sup- ply chain by applying blockchain. The company Provenance helps improve the traceability of food and food origin across the supply chain. International Business Machines Corporation (IBM) introduced a peer-to-peer network-based weather application. The Dutch Ministry of Economic Affairs, the University of Wageningen, and the TNO organization introduced their proof of concept on the blockchain application for the South African table grape supply chain. Other resources See Satoshi Nakamoto’s original white paper on bitcoin for technical details (Nakamoto, no date) News articles on blockchain and agriculture featured in this note: Growing the Garden: How to Use Blockchain in Agriculture (Maslova 2017) From Bitcoin to Agriculture: How Can Farmers Benefit from Blockchain? (Weston and Nolet 2016) Blockchain: Beyond Bitcoin to Agriculture (Gro 2018) How Adoption of Blockchain Technology Will Disrupt Agriculture: Understanding the Implications of Blockchain Technology in Agriculture (Sanghera 2018) Blockchain and Economic Development: Hype vs. Reality by Center for Global Development Check out Stanford University’s initiative to build the Master List of Blockchain Projects in International Development Listening to Podcasts? Try Smart Kitchen Show’s Blockchain for Food at https://soundcloud.com/ smart-kitchen-show/blockchain-for-food Source: World Bank ICT for Agriculture Community of Practice. a. World Bank Group Blockchain Lab 2. b. Weston and Nolet 2016. Global examples of digital solutions for market the revolution that digital technology can bring to opportunities their doorsteps, facilitating access to market and fi- nance. In emerging markets especially, local innova- Worldwide small and medium farms and agribusi- tion has burgeoned in solving issues stemming from nesses have witnessed and experienced first-hand the lack of market information, market information © 2018 Agriculture Global Practice. The World Bank Group 27 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms asymmetry, impediments to business development data will be stored locally and resumed when the due to distance, and the challenges presented by network comes back. long distances to financial institutions and connec- tivity to various existing platforms. Because of the relatively isolated areas where most smallholder farms are located, the platform esti- mates the demand for tractor services and distance Linking farmers with suppliers of farm to the field to determine whether a request would machinery services trigger a task or booking to deploy the closest ve- hicle for work. These features help the community to Operating in Nigeria and Kenya and entering South maximize economic benefit from each vehicle. Asia, including Bangladesh and India, Hello Tractor brings tractor services through its mobile platform to Working with both private and public sectors, Hello farms upon request (figure 5). With a model similar Tractor facilitates business and revitalizes existing to that of Uber, Hello Tractor leverages the notion services that were difficult to scale. Working with the of the sharing economy to improve farm productiv- local government in Nigeria, the platform helps the ity through tractor rental: instead of purchasing the agriculture agency to manage and deploy its trac- machinery at a huge upfront investment, the service tor services to members of its constituency within creates an opportunity for tractor owners to earn ad- the geographic boundary by delineating the area of ditional income when their fleet is idle and for rent- coverage on the platform. With original equipment ers to free up part of their financial resources by pur- manufacturers (OEMs), the Hello Tractor products chasing tractor services on demand. and services help OEM businesses entering frontier markets, thereby increasing supply and improving The issues facing smallholder farmers in access- farmer access to machinery for improved productiv- ing tractors are manifold. Besides the upfront ity at a lower cost. investment, the quality of existing services is not uniform or guaran- teed because fleet management is Figure 5. Hello Tractor owner app poor and distant farm locations make farms difficult to reach. Trust is one other significant element dictating the success or otherwise of such rental service. Hello Tractor there- fore equips compact tractors with a GPS monitoring device to keep track of the fleet’s location and workload, giving insights into each tractor’s sta- tus and whether it is misused or in need of maintenance. At times when the network connectivity is down, the Source: Hello Tractor, https://www.hellotractor.com/. 28 © 2018 Agriculture Global Practice. The World Bank Group PART II: Digital tools stimulate agriculture market opportunities With the wealth of data gathered through the devic- The digital solution also extends to the payment es, Hello Tractor envisages capitalizing on the pos- option. By partnering with Citi Bank, Umati Capital sibility of generating other farm services for small processes payments online, providing clients with communities in the future. quick access to funds. In 2015 Umati Capital had also partnered with Airtel Kenya to launch a bulk mo- For small farms, the barrier to accessing timely and bile money payment solution that had initially been appropriate financing is often a deal breaker or mak- developed for faster disbursals to Umati Capital er in operation planning and business investment. clients but was later white labeled and offered to Situations where smallholder farmers and suppliers other clients by Airtel Kenya under the brand name receive late payments or transact under long pay- Aida. Thanks to digital technology that enables data ment terms lead to unstable cash flow or insufficient analytics with speed, the lending decision can be working capital. Farmers and suppliers struggle to concluded within 24 hours upon receipt of relevant keep the business going. documents. Linking farmers to financing in Kenya Linking farmers with financing in Turkey Leveraging digital technology, the Kenyan financial In Turkey, a fin-tech company called Tarfin provides tech start-up Umati Capital provides small agribusi- finance to small farms by working with input suppli- ness players (suppliers) with up to 80 percent of the ers under the assumption that financing for input value of their receivable amount in cash, on behalf of purchases will benefit farms the most.24 Through an trader, processor, or retailers (buyers).23 This financ- online platform, Tarfin provides point-of-sale financ- ing method, also known as factoring and invoice dis- ing to farms for the long-term goal of digitizing all counting, is seldom extended to small agribusiness segments throughout the transaction. To date, farm- players because of its higher risk and because of ers are able to pick up inputs from a supplier in the the difficulty in assessing small players’ creditworthi- vicinity once the lending decision is made; this seg- ness. With the ever-ubiquitous mobile devices and ment of the transaction does not involve any bank its in-house software solution, Umati Capital is able notes going in or out of pockets. Nevertheless, to monitor and access debtors such as supermarket digital banking in Turkey is not fully fledged. Paper chains transaction data through a shared API, there- documents such as promissory notes and physical by assessing credit risk via alternative methods for visits to bank for repayment are required of farmers lending decision making (figure 6). Instead of rating at a later stage in the process. small agribusinesses or farms whose data may not be available or may be time-consuming to retrieve, To further scale up and realize the digital finance the evaluation of debtor creditworthiness has prov- objective, Tarfin stresses the importance of build- en to be more efficient. ing a robust algorithm through alternative data to 23 Further information about Umati Capital is available at https://umaticapital.com/. 24 Further information about Tarfin can be found at https://tarfin.com/. © 2018 Agriculture Global Practice. The World Bank Group 29 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms Figure 6. Technology applications in the Umati Capital offering Source: Umati Capital. structure a credit assessment tool for farmers who companies and mobile network operators are the do not have prior borrowing experiences. In addi- anchors that enable such leapfrogging to become tion, developing its input supplier network and fi- reality. Designed specifically for the African market nancial institution partnership in the country will be and supported by Vodacom’s Mezzanine software, the key to extending services to all corners of the Safaricom rolled out its Connected Farmer solution, country, and to convincing banks of the feasibility of a mobile-based platform that allows agribusinesses leveraging alternative credit rating models and the to communicate, manage, and process payment bankability of small farms. transactions with smallholder farmers (figure 7). DigiFarm is another platform that allows smallholder farmers to receive extension services, input sup- The use of smartphones to link farmers with plies, and financing through mobile devices. agribusiness in East Africa A couple of key products on the Connected Farmer Digital technology has transformed the way farms platforms include CF Seasonal, which links 150,000 and agribusinesses in emerging markets operate— macadamia farmers to Kenya Nut Company, with all particularly with the ever-decreasing cost of owning transactions going through M-PESA (a leading East mobile devices. Already seemingly ubiquitous, it is African mobile money option by Safaricom); Dairy anticipated that smart phones will have virtually uni- Management solution, facilitating dairy cooperative versal coverage, and at that point even the poorest member management, milk production, and de- and most remote farm families will have access to di- livery, tracking which data are used to rate farmer verse digital services and tools. Telecommunication creditworthiness for input purchasing at partner 30 © 2018 Agriculture Global Practice. The World Bank Group PART II: Digital tools stimulate agriculture market opportunities Figure 7. Connected Farmer solution for dairy management Source: Connected Farmer. agro-dealers. The platform also supports a closed devise suitable local content and mechanisms; and eVoucher delivery system to ensure that the subsi- from international organizations such as the African dies go to the target beneficiary. To date, the solu- Development Bank in program design support and tions have been piloted in seven African countries expert participation in communicating with member including South Africa, Nigeria, and Ghana. In Kenya states. 167,000 farmers have registered on Connected Farmer and 660,000 have registered on DigiFarm to receive agriculture best practice advice and input Blockchain in agriculture credit. The advent of blockchain, one type of distributed Reviewing the early success of the solutions, ledger, brings the potential to revolutionize trace- Vodacom resorts to the full support received from ability and data transparency throughout the agricul- Kenya’s Ministry of Agriculture in convening key ture value chain. As a decentralized platform, data stakeholders including agronomists, farm coop- are encrypted and broadcast within the peer-to-peer eratives, agro-dealers, and financial institutions to network, enabling all parties to agree on the data © 2018 Agriculture Global Practice. The World Bank Group 31 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms authenticity before adding the new block of data with major retail stores such as Walmart, Nestlé, and onto its existing structure. The append-only charac- Costco, the IBM blockchain system aims to boost teristic prohibits deletion of the earlier information, food product traceability to mitigate recent food providing data security and integrity. safety issues including contamination. The system will have the ability to help track and identify the To date, the majority of the blockchain applications source of contamination within the complex food in agriculture are in the concept stage or early pilot supply chain for timely action. phase, with the private sector as the main driver of the application (Galen and others 2018, p 12). A pre- At first sight, blockchain technology seems to be dominant portion of agriculture blockchain initiatives mainly serving the big conglomerates because of is housed in the United States, Europe, or Australia; the advanced technology and the infrastructure in- around 30 percent of their pilots are in Sub-Saharan vestment required. In April 2018, IBM Africa in Kenya Africa (Galen and others 2018, p 13). unveiled the pilot result of its partnership with the local agriculture logistics start-up Twiga Food to ex- In Australia, AgriDigital recently piloted blockchain tend financing for the small agribusinesses it serves. technology in facilitating the national grain supply Twiga Food helps smallholder farmers deliver their chain transparency, provenance, and matching title product to the kiosks across the country (photo 1). transfer of the grain asset to payment (AgriDigital With this technology, agribusinesses are able to and CBH Group 2017, p 2). receive microfinance loans for working capital use thanks to the transaction data stored on the mobile On the blockchain system, digital title was created money platform that is the main financing and trans- and the grower holds the title until receiving pay- action channel for the majority of the Kenyan popu- ment from buyer, after which the title is then trans- lation. On the IBM side, the blockchain platform as- ferred, with quality and quantity of the commod- sesses business creditworthiness through machine ity recorded in the system. In between, the system also handles auto-payment through cryptocurrency in parallel with standard banking methods. The Photo 1. Twiga Food farmers deliver produce to kiosks with help from IBM’s blockchain technology exchange of digital currency and title can be pro- cessed at the rate of four transactions per second (AgriDigital and CBH Group 2017, p 3). The platform also tracks physical inventory routes, creating identi- fication of the authenticity of organic oats, for exam- ple, through the various data points captured along the way (AgriDigital and CBH Group 2017). In 2017 International Business Machines Corporation (IBM) deployed and piloted a blockchain application for the food industry and agribusiness financing in the United States and Africa respectively. Working Source: IBM. 32 © 2018 Agriculture Global Practice. The World Bank Group PART II: Digital tools stimulate agriculture market opportunities learning and an artificial intelligence algorithm that The key characteristics of an IoT system have to do provides lending decisions. with the ability of “things”—farm objects (as nodes in the overall system)—to communicate with one an- With the immutable characteristics of blockchain, other and to work together to optimize the efficiency lending process transparency has increased, with and effectiveness of farm operations. Interoperability additional benefits of fraud reduction. The whole is thus central to maximizing IoT potential for agricul- process is executed through mobile devices. ture application. Both pilots share an emphasis on how the end-user Probing into the enterprise of building an interoper- perceives such technology, considering user friend- able ecosystem for agriculture, the system is based liness, the potential benefits of such technology on an IoT platform where data are collected from re- scaling up, and whether and to what extent it adds spective devices and then uploaded onto the plat- to overall profitability. Going forward, from proof of form; the platform stores, transmits, and enables concept to prototype, it is essential to adjust as the data discovery for applications. The technology technology capacity evolves to deal with the ever- involved can be broken down to three layers: the increasing amount of data. Commercialization of the device layer, the network layer, and the application technology will require deep customer understand- layer (Verdouw, Wolfert, and Tekinerdogan 2016, p ing and an identification of where the opportunities 5), thereby enlisting the collaboration of both public lie. Regulation and policies for blockchain technol- and private entities (figure 8). ogy likewise require attention to ensure compliance to existing ruling and authorities. Because of the vast scale the agriculture sector en- compasses, the challenges involved in scaling up IoT applications among all its stakeholders cannot CASE STUDY: Interoperability be overstated. The collective insights derived from and the IoT ecosystem information sourced from many individual farms will prove invaluable for further product and services Powered by micro- and macro-level data, precision design within the IoT system, thereby tailoring of- farming enhances farm productivity and efficien- ferings to farms of all sizes and in all subclimatic cy through the granular view of farm performance regions. to inform adequate decisions and to task orders. Through sensors, GPS, and a wide range of hard- The following key policy areas have been identified ware and software, the final user-friendly advice in to address challenges in interoperability that must fact undergoes a stream of processes from data be dealt with in order to unleash the full capability of collection and data management to consolidation digital agriculture through IoT. and analytics. As diverse as the scales and types of farms in the subcategories of agriculture, the various Facilitate open data and ensure data security models and versions of machinery, equipment, and information systems adopted on a farm are difficult Making data available to a wide array of audienc- to align. es, including software engineers, agronomists, and © 2018 Agriculture Global Practice. The World Bank Group 33 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms Figure 8. A schematic of interoperability of an IoT system Source: Authors data scientists, facilitates all types of analytics to in- On the flip side of data openness, data security and form farm operations as well as to design products privacy in an interconnected system arouse signifi- and services tailored to specific end-users’ needs. cant concerns. Agricultural data of any level—such as Agronomic statistics housed under public authori- household surveys, farm production records, and busi- ties provide a fundamental basis for the aforemen- ness intelligence records—entail sensitive and confi- tioned actors as well as mobile network operators dential insights not only into individuals but also into and telecommunication companies to structure new broader geographic security or economic interests. layers onto the IoT platform, thereby deepening ex- isting knowledge and enriching analysis for preci- Legislation around the data-sharing mechanism’s sion farming. guiding purpose of data access, intellectual property 34 © 2018 Agriculture Global Practice. The World Bank Group PART II: Digital tools stimulate agriculture market opportunities rights, sustainable funding for system management, Conduct market analysis on agriculture servic- and licensing could shape a more favorable environ- es and product demand ment that encourages a secured and cooperative practice. With the data and analytic models at hand, the question now is what the demands are in terms of Standardize data semantics and syntax services, products, and applications from farms of diverse scales and across multiple geographic lo- The advent of big data via a full spectrum of chan- cations, crops, and climatic regions. A deep dive nels and devices prompts the standardization of into the demand and supply of respective client semantics, data language, syntax, and data format, segments will help shape business strategies, a priority to ensure interoperability. Efforts toward provide value position, and address the core pain such standardization have been limited so far. In points for end-users. the agriculture sphere, the Food and Agriculture Organization of the United Nations (FAO) has es- Support technology research and develop- tablished AGROVOC, a multilingual agricultural the- ment saurus that supports content management in agri- cultural information system.25 The Global Open Data Continuous research on technology development for Agriculture and Nutrition (GODAN) is another ini- to advance computing speed and strengthen the tiative convening the public and private sectors as existing IoT platform capacity by consolidating and well as high-level policy support to streamline and expanding application capacity will propel the eco- enhance database quality as well as usability. system to evolve and closely serve the industries. Investment in training for data scientists, technology Develop technology infrastructure to ensure specialists, and end-users and in rapid prototyping sufficient bandwidth and storage will speed up the IoT ecosystem evolution, thereby gaining deep customer insights to capture untapped Processing a wealth of data within a limited time development opportunities. span requires solid performance on the infrastruc- ture front, where the IoT system operates. Stable Table 2 summarizes the above discussion in matrix broadband Internet and effective coverage are the form. Although the majority of tasks in building an catalysts for not only timely but also accurate data enabling IoT ecosystem require public and private sharing and computation. Because of the ever-in- partnerships, it is essential to consider also the po- creasing quantity of available spatial and temporal litical system and power dynamics within the coun- data, sufficient storage for the historical database try and to seek anchors and champions for specific will need to be in place for comprehensive analytics. policy agendas. 25 Further information about AGROVOC is available at http://aims.fao.org/vest-registry/vocabularies/agrovoc-multilingual-agricultural-thesaurus. © 2018 Agriculture Global Practice. The World Bank Group 35 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms Table 2. Key policy issues for IoT interoperability and the role of the public and private sectors IoT Interoperability: Russia Public Sector Private Sector Public-Private Partnership 1. Open data & security n.a. n.a. ★ 2. Language standardization n.a. n.a. ★ 3. Infrastructure ★ ★ ★ 4. Market research & analysis ★ ★ ★ 5. Research & development ★ n.a. ★ Note: n.a. = not applicable. Conclusions and areas for further work Conclusions and areas reliable and that has minimal latency and a stable for further work network connectivity to process big data without a time lapse. A majority of digital progress may be This report has explored many examples and di- spearheaded by the private sector; the public sector, mensions of how digital tools and approaches can nevertheless, is the main enabler to extend the tech- transform, and are transforming, farming and agri- nology nationwide. Public and private partnership is business in Russia and around the world. It has also therefore ever more relevant as nations are ushered noted throughout that many digital tools have so far into the era of digital economy. benefitted mostly large farms, posing the danger that small farms will be left behind. Several areas Focusing on broadening access to precise agricul- of future work would be very valuable to begin to tural data and market opportunities for smallholder develop ways to avoid leaving small farms behind. farmers, the public sector—apart from providing ba- These include, among others, the following: sic and critical infrastructure—can tap into its existing databases to inform agri-tech product design and What types of public sector interventions would enrich upcoming databases built by companies in be needed to unleash the power of digital in the ecosystem. Additionally, security—as one of the the form of activating agricultural information top agenda items and main pillar for the digital para- for smallholder farms in Russia? What types of digm to thrive—cannot be compromised. The public interventions would be both justified (as public sector has the proper instruments and imperatives goods) and feasible? to regulate data dissemination, to prevent access by unauthorized entities, and to intervene when neces- What types of public sector interventions would sary. Only with a secured environment can trust be be needed to unleash the power of digital in built in the newly established digital ecosystem. the form of activating agriculture market oppor- tunities for smallholder farms in Russia? What To scale up digital technology utilization within the types of interventions would be both justified entire farming spectrum, and particularly the small- (as public goods) and feasible? holder farming communities, four elements—cus- tomers, technology, competitors, and culture—are What financing options could be explored to central to examining target segment contexts, issue bring digital transformation to small farms? severance, and solution relevance. These four ele- ments inform strategies to enlist partnership, mobi- What types of system and operating environ- lize financial resources, and construct infrastructure ment developments would facilitate a vast where the existing environment is unsatisfactory. expansion in the use of the power of digital in farming (especially for small farms) and agri- The scaling strategy should prioritize assessing the business in Russia? local context and size of new markets: a landscape survey detailing the level of digitization throughout The foundation of digital transformation in agricul- the value chain and end-users’ attitude toward the ture is anchored in IT infrastructure that is supremely innovations can provide a customer portrait that is © 2018 Agriculture Global Practice. The World Bank Group 37 Unleashing the Power of Digital on Farms in Russia – and Seeking Opportunities for Small Farms helpful for fine-tuning product design. The state of ex- With the technology expertise and sectorwide isting infrastructure will shed light on the significance determination in place, the question now is what of, for instance, a tractor deficit, the satisfaction level constitutes optimal financing options to bring this toward the alternatives or the lack thereof, and wheth- transformation to small farms. The prospective op- er the technology-based innovation will be powered tions can come from the respective technology by a solid IT base. These quantitative and qualitative business models, which dictate stakeholder re- indicators can inform an implementation plan. sponsibilities involving investment, procurement, economic structure, and ultimately the source of Scaling up innovation requires a sustainable eco- finance growing from the services available on the system encompassing supports from key anchors platform. Financing mechanisms that explore fund- in public, private, and nonprofit sectors at all levels seeking diverse returns such as private equity, to communicate to end-users the benefits, policies, venture capital, grants, or blended finance mixing and available financing in facilitating opt-in. As is cus- development fund and private monies are other tomary in the agriculture industry, stakeholders are promising approaches subject to specific scenarios prone to be risk averse: a dedicated engagement- and negotiations. communication plan will be crucial to pre-empt user resistance and to address authorities’ misconcep- To seize the economic benefit of digital transfor- tions. Buy-in from the public sector is instrumental mation in agriculture, Russia requires continuous to de-risk new market entry by financing pilots and technology research and development to build a subsidizing uptakes to encourage wider innovation global architecture that serves multiple industries dissemination. IT infrastructure supported by private simultaneously; to increase market maturity includ- sector partners will ensure uninterrupted connec- ing user mindset, product pricing, and design; and tivity and machine interoperability to maximize the to enhance public-private partnerships to devise a dividends of digital agriculture innovation to improve sustainable business model facilitating the expan- standards of living through increased productivity, sion of digital technology use for the entire agricul- income, and available workforce. ture industry. 38 © 2018 Agriculture Global Practice. The World Bank Group Annex: People and organizations consulted for the study Annex: People and organizations consulted for the study Entity Key Contact Title Wageningen University and Research Kees Lokhorst Senior Researcher, Livestock Research Kaluga Agribusiness Development Agency Stefan Perevalov Chief Executive Officer Skolkovo Fdn Roman Kulikov Head of the direction “Biotechnology in agriculture and industry” Agrotech Fund Skolkovo Venture Pavel Danilov Managing Partner Investments Gamaya Yosef Akhtman; Igor Ivanov Chief Executive Officer; Chief Commercial Officer R-Sept Alexey Khakhunov Chief Executive Officer Agrivita farm Andrey Kasatskiy Chief Executive Officer Panasonic Russia German Gavrilov Head of business development Ericsson Andrey Grishin Senior Business Development Officer Sergey Biryukov Account Manager Trimble Dudkin Denis Yurievich Regional Manager for Agriculture, Russia and Belarus AgTech Ventures Roman Trofimov Chief Executive Officer Institute of the Information Society - Russia Yuri Hohlov Chairman of the Board Exact Farming Egor Zaikin Director of Development Smart4agro Aleksander Tretyakov Head of Consulting Department HelloTractor Jehiel Oliver Chief Executive Officer CPS - AgroNTI Coordinator Viktor Kononov General Director Rabobank Ruud Huirne Director Food & Agri Tarfin Mehmet Memecan Chief Executive Officer Farmerline Worlali Senyo Director of Growth, Development and Research Wageningen University and Research; IoF Sjaak Wolfert Senior Scientist Data Science & Information 2020 - EC Management in Agri-Food; Coordinator AgroDronGroup Dmitry Rubin Founder AgroTerra Stanislav Shishov Innovation Director TakeWing Alexander Kasatskiy; Ivan Lavrentiev Lead Blockchain Developer Vodafone David Rhodes Business Development Manager Dokuchaev Soil Science Institute Igor Savin Deputy Research Director Lomonosov Moscow State University Oleg Golozubov Researcher United States Department of Agriculture Edwin Muñiz Assistant State Soil Scientist, Natural Resources (USDA) Conservation Service © 2018 Agriculture Global Practice. 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