Can agtech bridge the gap for developing countries?
A recent academic paper, based on analysis of 30 years of geographic data from the UN’s Food and Agriculture Organisation, found that developing countries have the capacity to match the agriculture productivity of rich countries.
With the UN estimating that by 2050, the world’s population will reach 9.1 billion, advancement in productivity in places of traditionally poor output will be needed, to meet a necessary ramping up of food production levels by more than 70%.
The research, a collaboration by academics at York and Toronto universities, covered 9 million plots of land in 162 countries and they concluded that geography is not as influential as had been thought.
The authors believe that a more judicious use of policy around crop mix and the influence of AgTech can bridge the gap.
According to the paper, entitled Land reform and productivity: A quantitative analysis with micro data, rich countries (the top 10% by GDP per person) are about three times as productive as poor ones (the bottom 10%).
The findings include data showing that rich countries are using better tech and infrastructure and benefit from more enlightened government policies. The influence of geography, according to the study, is minimal.
Germany- Mozambique comparison
For example, the data indicates that Germany and Mozambique are comparable, in terms of land quality and climate. However, in Germany, where farming accounts for 0.6% of the economy, farmers grew 7,200kg of cereal crops for every hectare of land in 2016.
In Mozambique, which depends on agriculture for 25% of its GDP, farmers grew just 820kg per hectare, a little more than one-tenth of Germany’s yield.
The bottom line of their analysis is that if all the world’s farmers extracted the maximum potential output from their fields, the gap in yields between rich and poor countries would vanish almost entirely.
To achieve this, according to the authors, improved mix of crop would shrink the productivity gap by 20%. Efficiencies discovered through AgTech and better policy would remove the remaining 80%.
A recent World Bank report backs this up for certain crops. The report showed cereal-crop yields in lower-middle-income countries are three times higher than their historical level.
Theory meets reality
But the complexities associated with agriculture mean a gap between theory and practice must also be addressed. Despite the optimism around AgTech, there are realities around infrastructure and the nature of farming in most developing countries that must be managed.
500 million of all 570 million farmers today are smallholder farmers and 475 million of these farmers own less than 2 hectares of land.
Many of these smallholdings are not suited to many of the AgTech innovations that have come on stream, which are more in line with large farm operations and hugely expensive.
Importance of capacity building
There is recognition of this among governments and multilateral institutions. In recent years there has been a growing build up of projects involving capacity building, technology transfer and policymaking.
Other projects which seek to develop more productive agricultural outcomes in developing nations centre around training scientists, regulators and policymakers on a variety of topics, including food safety, sustainable agriculture, biotechnology, and integrated pest management.
Meanwhile medium-sized agribusinesses often operate via outgrower schemes –a network of smallholders feeding into the central agribusiness.
This structure can be used to deploy AgTech aimed at tackling post-harvest loss, processing technology such as solar drying to preserve goods for storage, irrigation technology, and soil management techniques that can in time make a difference.
Access to finance vital
While there is optimism around what technology, better policy and crop mix can do to change the narrative, more immediate and effective progress can be gained by providing developing world smallholders and agribusinesses with access to existing technology, inputs and land, and perhaps most critically, access to financing and markets.
Again, the surge in projects related to capacity building is indicative. Without establishing trust, accurate records and reliable, sustainable, regional, and local markets, productivity is redundant. Without training that empowers the local populace to use the technology sent their way, the picture won’t change.
Infrastructure itself is also essential for a thriving agricultural sector – with reliable supply of electricity and water and efficient distribution systems critical for agricultural technologies to be successful.
To learn more about Farrelly & Mitchell’s capacity building services read further and contact through Feasibility & Financial Modelling.
As Farrelly and Mitchell's co-founder and Managing Director, Malachy provides unmatched expertise. Working alongside CEO's, executives, and leaders from public and private sectors, Malachy empowers agribusinesses to fully achieve their potential.
Malachy Mitchell's featured publications
Food safety & security
Food safety & security
Food safety & security
Empowering global food and agribusinesses to make the right decisions
We believe that with the right guidance, your agribusiness can grow. We create value for our clients by empowering them with tailored, evidence-based insights. Our team removes uncertainty and identifies opportunity, paving the way to sustainable growth and profitability.Contact us