Checklist for Assessment of Farmer Digitization Technology or Platform

Farmer Registration

To make a technology offer irresistible, if you hear claims about millions of farmers being registered on a platform, it’s important to ask the below 5 questions.

1) How is digitization defined? 2) What data and information are required for farmer registration? 3) Is there any verification process? 4) What is the consent mechanism? 5) Who owns the data?

You may find that:

1. Some technologies are farmer-based e.g. farmers have an App which they have to download and it has to be operated through their mobile - less chances of manipulation at least need to access farmers' phone. There are technologies which are operated through agents or suppliers, easy to manipulate farmers' data without even farmers' knowledge.
2. While technology providers claim that certain data fields are mandatory, you may find their systems often allow users to enter random information. There is no data verification – one could copy names from an electoral roll and use a fake phone number (+91-11111 11111 or +91-00000 00000) for every farmer.
3. Technology providers take credit for scale (akin to Bill Gates claiming credit for a startup’s success just because its pitch deck was made in PowerPoint). However, when issues arise, they shift the blame onto their customers. In a farmer digitization initiative for a state government, when I found dead and landless were registered as farmers, a Pandora box opened and the client admitted that 33% of the data was fabricated – though there was no way to confirm if the actual figure was higher or lower.
4. Some technology providers entice non-profits or AgTechs by promising to connect them with buyers willing to pay a dollar or two per farmer registration or with last-mile delivery partners who would not only take care of entire operations but would also pay royalties for transactions. All hot air – never happens and non-profits end up piling on real/unreal data which they perhaps can’t even delete if promises not made.
5. These companies often target senior officials in non-profits and government agencies, selling them grand visions. Meanwhile, mid-level staffs – who have a better understanding of ground realities – are largely ignored in the process but reality hits soon when the expenditure side of the income statement swells. Worst thing that happens in such circumstance – under pressure, staff undertakes every manipulation possible in vanity matrices to pass time and save job, further weakening the chance of sustainability.
6. Government programs, including SRLMs, are frequently used as easy routes, with bulk farmer registrations happening through them and their FPOs. Ground-level staff in these programs often recognizes the hollowness of these claims but can do little to address them, as senior management is misled by tech providers. As a result, farmers are digitized without they, or their FPO or their VLE knowing and a few days later, their data may be on sale through these SRLM partners.

Farmer Transactions

If you hear claims about thousands of farmers transacting or a high transaction ratio, it's important to ask the following five questions:

1) How is transaction defined? 2) What do they mean by topline, turnover, GMV, GDV, GRV? 3) What are the numerator and denominator for the transaction ratio? 4) How are financial transactions verified? 5) If they mention engagement or activation ratios, ask them what process defines engagement?

You may find that:

1. Transactions do not necessarily mean financial transactions. Some platforms count information exchanges as transactions as well. Get to know about financial transaction data: informational transaction data is just vanity matrix.
2. As counter-intuitive you may sound, some platforms count transactions twice. For example, if FPOs purchase $2 million worth of crops from farmers and resell them to buyers while recording both transactions, the platform may claim a $4 million GMV.
3. While a technology provider may highlight its payment gateway, in reality, more than 95% of transactions could be cash-based with no verification mechanisms. If such KPIs are taken at face value, they can be manipulated at will, creating millions or billions of transactions without evidence.
4. Some providers claim to be transforming the lives of small and marginal farmers as impact of their technology, yet their average farmer transaction size could be as high as $10,000-$15,000. If you ask whether these are farmers or traders, they might evade the question – saying, land record verification wasn’t required during farmer registration.
5. If someone claims a 10% transacting ratio with a farmer base of 1 million, you might assume 100,000 farmers are transacting. Don’t jump to conclusions – ask for the numerator and denominator. Some platforms manipulate figures by using engagement or activation numbers as denominator which may represent only 5 – 10% of the farmer base, leading to an inflated transaction ratio.
6. Regarding engagement/activation, you may find that data is often not farmer-specific. The system may allow bulk uploads from spreadsheets, sitting under a mango tree, sipping tea without even knowing the farmer. They may defend this by claiming, any activation is reported to farmers through text message and therefore farmers would complain. Technically true but question is – are contact numbers verified?

Revenue & Expenses

If a provider presents a financial model that makes you dream of running your own for-profit AgTech and freeing from the daily pressure of donor hunting and reporting. Take a reality check through two following questions:

1) Ask about their current customers business numbers 2) Who has paid how much to whom?

If you try verify, you may discover that, despite agreements requiring customers to pay technology providers, the reverse is often true – technology providers might have paid more to their customers to claim, without basis, that they are one of top-10 or top-20 AgTechs, as far as scale is concerned. Boosts people’s CV or LinkedIn profile, don’t they?

And finally, request a field visit to a randomly selected or most successful customer. If they refuse, citing trade secrets, that’s a red flag.

Final Thoughts

In the last couple of months, I have met many such organizations, both for-profit and non-profit, that have found it hard to struggle with their fear of missing out, losing a good amount of their time, focus, and sometimes money on such thinly validated offers and ideas. Please understand, working with smallholder farmers directly is costly, and the average revenue you may earn from them is meager; it’s uncertain how long you may need to invest to reach BEP before you start making some money.

You need to differentiate between working with farmers and claiming to work with farmers. Working with traders, middlemen, and input dealers while claiming to impact farmers, in microfinance parlance, is akin to a MFI lending to moneylenders who, in turn, lend to the poor on their terms, yet MFI claims financial inclusion at the ground level. A few cheerleaders claim accessibility benefits – never forget, moneylenders have always been the most accessible (even in the middle of the night). If accessibility doesn’t come at a fair price, I don’t see the reason to cheer.

This document is not intended to dissuade anyone from exploring this space. Its sole purpose is to facilitate informed decision-making. One should understand – it’s a marathon, not a sprint, and there is no certainty of success and no quick money. Therefore, before you decide to enter, you must be absolutely clear about what you are getting into. Whether it’s a genuine effort to solve a problem or the allure of building a sustainable business, you need to assess how long it might take and whether you can create something truly unique to capture farmers' attention.

There may be individuals or organizations with vested interests who use various means to make this space or their specific product seem appealing, but your assessment must remain firmly grounded. Otherwise, many such initiatives struggle to sustain themselves, constantly shift goalposts, and rebrand these shifts as pivoting. However, at the end, any initiative must be assessed against the objectives it had set out for itself.

You decide. ??

In case, you want to understand more, please DM, I'll be available.