Leveraging Technology to Make Smallholder Farming Sustainable

By Sarah Devermann, SFS ‘17 Strategy Manager at ISF Advisors

Half of U.S. adults start their day with a cup of coffee. 

I saw the importance of this morning coffee routine firsthand while working as a barista at Uncommon Grounds — one of Georgetown’s on-campus coffee shops. For four years, I served thousands of cups of coffee to students, professors, visiting diplomats and other caffeine-deprived individuals on campus. However, it was not until I started working in the food systems space that I took a step back to think about where that coffee came from.

The majority — around 60% — of coffee comes from smallholder farmers who work on farms of less than 5 hectares, as defined by the Food and Agriculture Organization (FAO). There are an estimated 600 million smallholder farmers worldwide, many of whom are based in sub-Saharan Africa and South Asia. Not only are these smallholder farmers instrumental to coffee production, but they also produce around 30% of the world’s total food supply.

Smallholder farmers are the backbone of our food system, and are also some of the most susceptible to climate change. This population is no stranger to hardship; many smallholders do not have access to financial institutions and live on less than $2 a day. 

However, the acceleration of extreme weather events, natural disasters and changing weather patterns is beginning to challenge their already resilient nature. For instance, in the 1990s, Zimbabwe had one dry year every five years; today, the country has a dry year every two years. Furthermore, pest-driven losses are expected to increase by 50% in Africa. In India, drought threatens 270,000 acres of farmland.

There is no doubt that changing weather, pest habits and arid land increases will negatively impact coffee farming — and other types of farming — over the next decade. From an economic standpoint, these effects will not only be felt by smallholder farmers, but also by consumers downstream in the forms of price hikes and limited availability. Furthermore, these increased threats will challenge food security in many smallholder farmer-anchored regions, which can have widespread effects on interconnected health and political systems, increasing childhood malnutrition and causing political instability.

The good news is that a strong network of global actors is beginning to address the fragility of global food systems. In 2022, food and agriculture took center stage at COP27. In addition, there has been an influx of funding from both the public and private sector to find innovative solutions. 

One of the most promising introductions in the food and agriculture industry is the use of digital technologies, commonly referred to as “food tech,” “ag tech” or “climate tech,” to support smallholder farmers in adapting and building resilience in the face of climate change. These technologies offer a variety of tools, ranging from short message system (SMS)-based weather information to alternative credit scoring.

While the ag tech sector remains largely nascent, many of these innovative models show significant promise in helping smallholders adapt to climate change through varied business models. 

Although I am no longer serving coffee at Uncommon Grounds, I now have the opportunity to work with industry-leading players, such as the Gates Foundation and International Finance Corporation, to support smallholder farmers in the coffee value chain and beyond. In my role at ISF Advisors — a strategic and financial advisory firm focused on mobilizing capital into food systems — much of my work involves exploring the influence of ag techs in emerging markets. In the past few years, I have landscaped over 200 ag and climate techs in sub-Saharan Africa, interviewed dozens of founders, developed industry-leading taxonomies to categorize business models and advised on investment opportunities.

Ag tech models vary, but many of the most successful companies offer packaged goods and services for smallholder farmers and agribusinesses, including digital financial records, access to markets and climate intelligence. While these offerings may seem rudimentary at times, these fundamental resources can significantly impact smallholder farmers.

A few promising models helping smallholder farmer-anchored markets are outlined below:

Apollo Agriculture — The company provides farmers with a bundled offering that includes inputs (e.g., seeds, fertilizer), advisory services (e.g., weather information) and access to markets to sell their goods for fair prices.

Hello Tractor — The firm offers an Uber-like service to connect tractor providers with farmers in need of mechanization services. 

ClimateAi — The business leverages artificial intelligence (AI) and machine learning to help businesses and governments climate-proof their supply chains and identify opportunities for climate-smart expansion.

SunCulture — It provides off-the-grid solar irrigation pumps and other solar-powered machinery (e.g., lighting, mobile charging) through a “pay-as-you-grow” model, where farmers pay small monthly installments and the pumps can be remotely turned off in the event of missed payments.

Over the next decade, ag techs are anticipated to become increasingly important in helping smallholder farmers adapt to climate change. Current models are constantly evolving — adding new products and services — while new climate-centric models are emerging. For instance, Boomitra, an ag tech focused on generating carbon credits accessible to smallholders, recently expanded its operations to Africa. Traceability platforms can also help large agribusinesses, such as Nestle, track their produce from smallholder farms to fork.

The agriculture sector is being threatened by climate change, and although ag techs cannot solve the whole problem, they can provide the necessary intelligence, practical products and services to smallholder farmers to help them adapt.

So next time you sip a cup of coffee, take a moment to think about where your morning brew came from and what you can do to help future-proof the coffee value chain.