www.ifc.org/thoughtleadership NOTE 46 • OCT 2017 Precision Farming Enables Climate-Smart Agribusiness Emerging market countries, particularly India and nations in Sub-Saharan Africa, can benefit from advanced farming technologies that mitigate the effects of climate change and protect environmental resources. Water scarcity is an issue that can be overcome by adopting climate- smart technologies such as micro-irrigation. There are several precision agriculture investment opportunities available to the private sector, including agricultural extension via digital advisory services, drip irrigation, solar pumps, and crop and soil monitoring. Existing and developing technologies will have a major role irrigation, and sprinkler irrigation in Sub-Saharan Africa in food production and food security in emerging markets. and most of India. 2 According to the International Food Policy Research Institute India’s potential model for change (IFPRI), the largest yield gain potential across the world’s key staple crops—maize, rice, and wheat—in percentage Building capabilities to sustain the adoption of more precise terms are in Africa, South Asia, and parts of Latin America. farming practices, rather than the full implementation of In a comprehensive attempt to identify the drivers of yield single factors, will produce the quantum leap necessary in increase, IFPRI’s selection of technologies included:1 India and Sub-Saharan Africa. (In fact, building access to • No- and low-till farming crop and site-specific technical knowledge and developing management capabilities is a precondition to improving • Precision agriculture • Soil fertility management (including nitrogen use) • Drip and sprinkler irrigation • Drought and heat tolerant seeds • Crop protection While IFPRI’s interim conclusions rank no-till farming as the practice most conducive to yield increase in the three crops tested, it notes that the interaction of multiple practices applied simultaneously will almost certainly produce the best results. Along the same lines, field tests over the past 30 years showed that applying soluble or liquid fertilizers through drip systems contributed to input saving, direct plant FIGURE 1Soil and crop monitoring: measuring utilization, and reduced chemical pollution. the water deficit The image shows water deficits in individual fields, measured by a NASA Despite the definitive advantages of these technologies aircraft flying over the Maricopa Agricultural Center in Arizona, USA. (Figure 2), there is near zero adoption of drought tolerant Green and blue colors indicate wet soil; red indicates dry soil. Source: NASA, https://earthobservatory.nasa.gov/IOTD/view.php?id=1139 seeds and little adoption of precision agriculture tools, drip 1 This publication may be reused for noncommercial purposes if the source is cited as IFC, a member of the World Bank Group. Region Rainfed Irrigated Rainfed Irrigated Farmers can also choose the area to be covered under Eastern Europe and Central Asia 56 14 41 23 East Asia and Pacific 19 57 17 64 MIS and the suppliers who install it, provide agronomical services for one year, and maintain the system for a period Latin America and Caribbean 13 95 14 109 Middle East and North Africa 12 85 24 74 Maize North America Oceania 0 15 0 75 0 15 0 58 of five years. The scheme enabled the transition of over one South Asia Africa south of the Sahara 21 36 92 115 18 31 84 106 million hectares to MIS in the last decade.3 Western Europe 19 17 15 18 Eastern Europe and Central Asia 23 28 24 30 As part of the effort to re-energize the second Green East Asia and Pacific 21 38 22 36 Latin America and Caribbean 1 34 1 40 Revolution campaign, Gujarat’s model is now being Middle East and North Africa 11 28 15 31 Wheat North America 17 28 22 32 emulated by other states. In parallel, community projects supported by local governments group together thousands Oceania 0 0 0 0 South Asia 38 82 35 80 Africa south of the Sahara Western Europe 24 18 25 69 25 18 25 66 of small farmers to overcome the inherent disadvantages 0 50 100 150 0 50 100 150 0 50 Percent change in yield 100 150 0 50 100 150 of scale (for example, Karnataka’s Ramthal Community Irrigation4 and Tamil Nadu’s Community Collaborative Water Management initiatives).5 Given the appropriate FIGURE 2 Yield increase response to no-till and irrigation under less-hot (left) and hotter financial and human resources, Gujarat, Karnataka, and (right) climate change 2050 Tamil Nadu offer critical lessons that may be applicable in Source: IFPRI, 2014. some Sub-Saharan African countries. Key barriers and the private sector role yields anywhere in the world.) In that context, some of India’s leading states may provide important lessons to be IFPRI’s agronomic assessment of potential drivers point to applied elsewhere. necessary but insufficient factors to increase yields. Public and private initiatives must address additional local and India is an agricultural giant with 194 million hectares of regional factors that constrain investments at the farm gross-cropped area, 66 million hectares of net irrigated level, including: area, and 127 agro-climatic zones. India’s central and state governments have been proactive in addressing obstacles • Infrastructure transportation to serve domestic markets, to the agricultural sector, which employs about half of intra-regional trade and export the workforce and accounts for almost 7 percent of GDP. • Cold-chain transportation and storage Despite robust subsidies for electricity, micro-irrigation, • Extension services that research and disseminate and fertilizers, rates of adoption for these technologies have agricultural knowledge been low, except in Gujarat. • Modern test-lab facilities and capabilities The lack of efficient knowledge dissemination tools is • Smartphone networks to support digital communication pervasive in India’s agriculture sector. Despite government in rural areas efforts to provide agronomic support, most farmers remain • Adequate commercial financing far from adopting available technologies due to a lack of • Safe and predictable power and water supply. effective transfer mechanisms. The model implemented The public and the private sector can work together in by the Gujarat Green Revolution Company (GGRC) partnership to disseminate technology, knowledge, and integrates input subsidies, primarily for micro-irrigation inputs. Public extension networks can set a competitive and fertilizers, with manufacturers’ on-farm support and stage through policies and programs, and private extension equipment performance warranty, both prerequisites to systems can directly support projects. The private sector can qualify as certified suppliers. also fund research, commercial financing, insurance, digital Gujarat’s Micro Irrigation Scheme gained popularity through knowledge dissemination, crop quality assurance and more. the provision of electricity connections on a priority basis to Yet there is no substitute to public investment in physical those farmers who adopt Micro Irrigation Systems, or MIS. infrastructure in roads, communication, and power, as well Unique features of the scheme include bank loan support as institutional reforms that enable fair land consolidation, for farmers and insurance coverage for both the system and reduce bureaucratic barriers and unequivocally fight the farmer for one year. The strength of the scheme lies corruption. In that context, both Sub-Saharan Africa and in its flexibility and transparency, including discretion for India face challenges that inhibit private investment. participating farmers to choose the type of MIS they prefer. 2 This publication may be reused for noncommercial purposes if the source is cited as IFC, a member of the World Bank Group. 350 350 Food Demand Index Food Demand Index Agricultural Output from TFP Growth Agricultural Output from TFP Growth Projected Agricultural Output from TFP Growth Projected Agricultural Output from TFP Growth 300 300 250 250 200 200 150 150 100 100 2000 2010 2020 2030 2000 2010 2020 2030 14% of total Sub-Saharan Africa demand can 14% of total Sub-Saharan Africa demand can be met by maintaining the current TFP growth rate. be met by maintaining the current TFP growth rate. FIGURE 3Food demand compared to agricultural output from total factor productivity (TFP) growth in Sub-Saharan Africa and South & South East Asia 2000–2030 TFP measures changes in the efficiency with which all inputs are transformed into outputs; here understood as farmers who use inputs more precisely and efficiently, or adopt improved cultivation and livestock practices. Source: Global Harvest Initiative, 2015 Global Agricultural Productivity Report, 2015, pp. 12-13. www.globalharvestinitiative.org/GAP/2015_GAP_Report.pdf Smart and precise agriculture investment 1. Agricultural Extension via Digital Advisory Services: opportunities “Technology alone is not a silver bullet,” according to Can the most food-insecure countries dramatically increase the Gujarat Green Revolution Company. Adoption of their farming productivity with minimal impact on the best practices is critical, and digital communication environment? A qualified “Yes” is the answer broadly agreed is necessary to bridge the technology gap. Basic upon, as are the necessary measures to achieve that goal. smartphones can bring digital agronomic support provided by human advisors to millions of farmers. Climate-smart agriculture is necessary to achieving the goal, and precision agriculture—at the appropriate level in food Reaching out to millions while keeping the trust of insecure countries—can also be a powerful tool when applied person-to-person advice is the challenge of effective appropriately, based on local crop and site specific conditions. adoption. Communication should flow between advisors and individual farmers, and it should support The reality is that it is still possible to farm relatively crop planning and management on a constant basis. effectively and competitively with little precision technology. Agro-advisory networks are crucial in the Indian and Consequently, the adoption of new techniques in less Sub-Saharan African agriculture sectors, given that the developed areas should start with a basic, affordable, and choice of inputs and methods of cultivation determine effective mix of technologies and practices. In a multiple- both the financial viability of farms and the optimal variables scenario, where all means are important, close conservation of land, water, and energy. Public support examination invariably teaches that they are not all would be particularly beneficial for allowing platform equally important. building, including data platforms. Private engagement Identifying the low hanging fruit is critical to setting a could then be increased via competition on the complex project in motion, certainly more so when the platform and extended reach of farmers through it. private sector is involved. And return on investment is a No- and low-till farming greatly reduce soil dominant factor. disturbance, which reduces soil erosion, builds soil The immediate benefits for small-scale farmers and organic matter, and helps reduce machine energy potential investment opportunities from the introduction of cost and pollution. It must be done properly to avoid such a mix of inputs, technologies, and capabilities in Sub- weed propagation. The accumulated and frustrating Saharan Africa and India include: experience in Sub-Saharan Africa and other parts of 3 This publication may be reused for noncommercial purposes if the source is cited as IFC, a member of the World Bank Group. the world show that introduction and implementation technologic breakthroughs, investment in the sector do not equal adoption. Digital Advisory Services, or should consider acquisition of or partnership with DAS, can be the standard tool for existing extension incumbent firms. networks and holds the key to adoption and, unlike Sub-Saharan Africa, with a few exceptions including other inputs, requires no investment from farmers. South Africa, is a relatively new frontier for micro Agricultural extension plays a key role in technology irrigation, with no established market or market dissemination, and the private sector is increasingly leaders. The main barriers to adoption are capital active in this domain. Today, Digital Advisory Services expenditure financing and advisory services. Despite are either part of the offering of input providers or the numerous obstacles to the technology, the stand-alone for profit, typically start-up platforms. In gap between a growing population and inefficient the first case and with few exceptions, existing free agriculture makes the region an attractive opportunity DAS is a differentiation tool to promote the use of for long term investors. manufacturers’ core products. In the second case of for- 3. Solar Pumps: Solar pumps that lift well water to profit stand-alone platforms, farmers are the revenue feed drip systems are a benefit multiplier. Yet the generators, and its application to small farms in food- introduction of solar pumps is slow despite their zero- insecure areas is far-fetched. carbon footprint and low-maintenance photovoltaic A recent assessment of privately supplied farmer technology. According to official estimates, over twenty advisory services examined the situation in ten million well pumps operate today in India, roughly countries. Four of the case studies came from India. split between electric and diesel.7 At a solar unit cost In these instances, the study identified considerable ranging from $1,500 to $10,000 for multiple farmers, benefits from extension by commercial actors. Their this potential multi-billion dollar market is already a advice helped improve yields, natural resource target for local and foreign manufacturers management, consistency of produce quality, and net The initial cost of solar technology coupled with the farm profits.6 The opportunity for investors may be established maturity of electric and diesel pumps (and found in free and brand-neutral platforms that produce subsidized electricity) are among the major barriers to non-prescribing analytics that enrich human advisors. solar pump adoption. Changes to subsidy policies now Free-of-charge systems should drive mass utilization underway may help pave the way for mass adoption and Big Data value for large agribusiness players. At a and hence further increase the role of private firms later stage, investors may benefit from Big Data’s appeal contributing to the proliferation of solar pumps. to mass communication and advertising platforms. 4. Soil and Crop Monitoring: Imagery-equipped drones The main barriers to DAS adoption are limited digital are often technically and financially affordable for infrastructure and illiteracy, areas where India has small farmer communities or regional operations. significant advantages over most of Sub-Saharan Africa. Accurate regional weather forecasts can provide data 2. Drip irrigation: In addition to its advantages over other relevant to the spread of diseases and pests. Monitoring types of irrigation for improving yields, drip irrigation and Predictive technologies seem applicable while is the best delivery system for soluble fertilizers. It algorithm-based prescriptive systems may not suit most also drastically reduces the propagation of weeds of the necessary support. Drones’ sensing is particularly and the need for herbicides. The private sector is well suited for small plots and contract farming. Small prepared to lead here. Foreign—principally Israeli— farms can benefit from quality and timely information and local leading brands dominate the established that can drive corrective actions and prevent crop micro irrigation market in India. Additionally, local failures due to defective irrigation and fertilization. adjacent large firms are considering or have already Contract farming is typically carried out by financially entered it. The introduction of drip and micro capable companies that depend on small suppliers. irrigation is estimated to cover no more than 10 Early detection and correction of soil and crop percent (approximately $1 billion) of its over 40 million deficiencies is a win-win proposition for both farmers hectares’ potential. Heavy governmental support seems and off-takers. If purchased and operated by large to be granted for the foreseeable future, and absent 4 This publication may be reused for noncommercial purposes if the source is cited as IFC, a member of the World Bank Group. agri-businesses, the investment in drones and imagery technologies and practices that result in low productivity analysis can be factored into the produce price paid and overdependence on nature. to farmers. Investments by cooperatives of farmers Given the proper regulatory environment and institutional supported by soft credit may reap similar benefits. support, foreign and local private corporations seem willing Extending the usage of equipment for soil and crop to explore the opportunity and invest where needed. Small- monitoring to farming cooperatives and contract farms scale farming, which is not inherently conducive to capital also benefits from new forms of capex utilization led intensive modernization or the easy adoption of updated by the private sector, now spreading from developed agronomic knowledge and methods, should be considered a countries into emerging markets.8 challenge that we can meet. n These technologies by no means discount the crucial role played by quality seeds, judicious pest and disease control, ABOUT THE AUTHOR and other ground-based or remote sensors, all of which can Igal Aisenberg is a leading Israeli executive in global be adopted by better informed farmers. New technologies agriculture and Agtech start-ups. He spent 25 years at aimed at optimizing input utilization—for example robots, Netafim, Tel Aviv, Israel, including as its President and CEO variable rate seeding, and irrigation—are being developed from 2009–14. (inaisen12@gmail.com) and their introduction to small scale farms may be ACKNOWLEDGMENTS applicable in the future. At present, every solution should be integrated and should have basic characteristics: The author would like to thank the following colleagues for their review and suggestions: Nina Zegger, Global Head, • Easy-to-use systems: simple and fast setup, yet accurate Global Climate Business, Manufacturing, Agribusiness and enough to provide advice focused on the farmer’s needs. Social Services, IFC; Anup Jagwani, Principal Investment • Minimum requirements for support and maintenance: Officer, Agribusiness and Forestry, Manufacturing, minimal dependence on farm-specific communication Agribusiness and Social Services, IFC; Thomas Kerr, Principal infrastructure and in-field hardware. Industry Specialist, Climate Policy Team, Climate Business, • Flexible digital interfaces: easy and free building IFC; Marcene Broadwater, Global Head, Climate Strategy & capability for users. Business Development, Climate Business, IFC; and Thomas Rehermann, Senior Economist, Thought Leadership, Conclusion Economics and Private Sector Development, IFC. Climate smart farming techniques can increase agricultural ADDITIONAL NOTE ABOUT productivity and farmer income, make rural communities CLIMATE SMART AGRIBUSINESS more resilient, and mitigate climate change. Precision This note is one of two EM Compass Notes about private agriculture is part of the solution to feeding a population sector opportunities within Climate Smart Agribusiness. The that is growing faster than available land supply, while second note focuses on the reduction of food losses and was also ensuring the sustainable use of water and energy. concurrently published as EM Compass Note 47. Per capita agricultural output in Sub-Saharan Africa and India is far below potential, mainly due to outdated For media queries, please contact Nadine Ghannam: nsghannam@ifc.org. 1 Food security in a world of natural resource scarcity: The role of agricultural technologies, International Food Policy Research Institute, 2014. 2 Ibid. 3 Gujarat Green Revolution Company Ltd.; http://ggrc.co.in/webui/home.aspx. 4 Government of Karnataka and 2030 WRG launch Karnataka Multi-Stakeholder Platform for Water to Drive Large-Scale Transformation in Water Resources Management, 2030 Water Resources Group, May 23, 2017. 5 Community Collaborative: Water Management - Tamil Nadu Irrigated Agriculture Modernization and Water Bodies Restoration and Management Project, World Bank Group, June 7, 2016, 6 Yuan Zhou and Suresh Babu, Knowledge Driven Development: Private Extension and Global Lessons, 2015. 7 Godyal, Anjali – Iha, Vikas, Solar water pumps for efficient irrigation, Indiawaterportal.org, Feb 18, 2017. 8 Otufodunrin, Lekan, Hello Tractor is Africa’s Uber for the farm, thehindu.com, June 24, 2017.; another example is the online platform Gold Farm, established in March 2016, to connect “small and marginal farmers” in Kolar and Gadag districts in the Karnataka state within India with farm equipment manufacturers, local entrepreneurs and in collaboration with Karnataka state government providing on-demand services for farm mechanization equipment. http://www.thehindubusinessline.com/specials/emerging-entrepreneurs/ondemand-services-taking-roots-in-farm-sector/ article9444483.ece; see also: http://www.goldfarm.in/home/ 5 This publication may be reused for noncommercial purposes if the source is cited as IFC, a member of the World Bank Group.