Farmer 3.0 Africa: Block Commodities integrating small-scale farming into the global market

In Africa, building a more sustainable and equal society means empowering smallholder farmers, who make up 70% of the continent’s labour force. For this to happen, a new system is essential, and technology is here to lead the way.

Agriculture is the principal economic activity in Africa, employing 70% of the continent’s population Smallholder farming is the backbone of African agriculture, since 90% of farming output comes from small-scale producers.

However, we can’t take these figures at face value. Africa is actually a net food importer, with its annual bill of $35billion estimated to reach as much as $110 billion by 2025. In a continent of more than 30 million square km, land availability is not the problem. The hindrances to economic growth lie in poor management of land resources, along with inefficient banking practices bound in red tape, leaving most of the farming population on the margins of financial inclusion.

With interest rates going as high as 40%, most smallholder farmers are unable to afford the fertilisers, seeds and equipment they need to scale up production. On top of that, many farmers are out of physical reach of financial services: in rural areas of sub-Saharan Africa, institutions such as banks and insurers cover only 14% of the population.

Lack of information, poor transparency, severely limited access to funding and financial incentives, and inefficient trading practices hold back farmers’ production by 50% of its potential.

Moreover, unnecessary bureaucracy and the cost of middlemen traders across the supply, together with inconsistent record keeping, create an inefficient system where farmers’ direct access to money and resources is limited, information on input and sources is not clear, and duplications are common.

Not only does financial exclusion hold back farmers from growing their production, it also prevents them from climbing out of poverty, since without the right tools, they cannot produce at a sufficient level for commerce.

Building a new sustainable ecosystem with innovation: New technologies are pivotal in creating the farms of the future.

The long-established agricultural system in Africa has only addressed the external needs and interests of commercial players. It is about time we developed an ecosystem which prioritises the people of Africa. To make change happen, it is crucial that smallholder farmers have access to the information, resources and tools necessary to enable them to grow production and enter the trading market.

Fortunately, emerging technologies such as blockchain and decentralised systems are able to promote financial inclusion by eliminating the need for banks and middlemen. When using cryptocurrencies, for example, interest rates can be lowered to approximately 10% and accounts can be managed from a mobile phone. Indeed, the rapid technology take-up in Africa is exemplary, with internet user in Africa increasing by 20% over the last year and mobile money being a critical alternative of payment method.

Technology allows farmers to make and receive payments with no restrictions of place or time, giving them flexibility and power over their transactions. At the same time, there is full accountability: transparency and record keeping of all transactions.

“When we look at the farming and agriculture landscape in Africa, in terms of production and economy, we see there has been great exclusion of small-scale farmers from the market. 90% of food for the continent comes from European commercial farmers. Block works to integrate smallholder farmers into the system and give them access to the markets by adding value to their practices,” says Clinton Van Eden, head of Africa operations of Block Commodities, a leading agritech company operating in sub-Saharan Africa.

Beyond finance, innovative technologies are also set to educate and bring information to farmers more rapidly and easily. As a decentralised network, blockchain allows all transactions to be recorded openly, including input and output of all products, selling prices and costs throughout the supply chain.

This transparency will be a decisive factor for a consuming market which is becoming more socially and environmentally conscious.

The intercontinental manufacturing system currently in place implies that the multi-layered supply chains surpass geographical boundaries, resulting in a lack of transparency and accountability. Consumers have limited knowledge and understanding of the manufacturing process, allowing for flaws and gaps to go unnoticed by the public eye.

“Consumers are increasingly more aware and more demanding. Blockchain will support greater ethics and social responsibility from businesses. Consumers will be able to make better informed choices and the farmers are sure to get their fair share as well,” says Bobby from Pure Grow Africa.

Quality of food means also secure provenance: origins of food and traceability in the supply chain. This has always been a problem in the food industry, creating notable scandals around the world, such as the horse meat scandal in the UK and sawdust found inside cheese in the US. Now, thanks to blockchain technology we are able to address this.

Furthermore, an open-sourced practice will ensure farmers are not ‘left at the mercy of traders’ and middlemen, bringing value to small scale farming and allowing the market to operate fairly. They will have open access to information, input and resources to help them manage their production.

Empowering women: The key to food security

This new farming model also takes women farmers into account, who have been sustaining farming but receive little or no recognition for their crucial role in feeding Africa. Despite women making up the majority of farm workers — over 50% in Sub-Saharan Africa — on average only 15% of landholders are women, and they receive less than 10% of available credit.

Discriminatory regulations and one-sided practices are depriving women of their land, rights, and livelihoods. Technologies such as blockchain and smart contracts can provide secure land registry systems and can also ensure widening access to credit without discrimination, allowing women to grow their productivity.

Having the power of access to funding in their hands, female farmers can not only purchase more seeds and fertilisers, but also scale up their production by investing in smart technologies such as machine learning, drones and predictive behavioural analytics which offer accurate results for optimised performance, as well as lessen women’s physical burden through the use of machinery.

“Technology really represents the main driver of farming’s feminisation in African countries. Women who represent the lion’s share of agricultural labour will be the main ones to benefit from agri-tech innovations,” says Stefania Barbaglio, Director at Cassiopeia Services, which is working closely with many of Block Commodities’ projects.

The revolution is just the beginning

The implementation of technology into agriculture is just the first step towards building a more sustainable and equal ecosystem, where race and gender differences will no longer prevent individuals from reaching their potential. The aim of a blockchain-powered system is to build a solid foundation that will reach other sectors in African economies which could benefit from innovation to enhance transparency, accountability and efficiency.

Technology is revolutionary for developing economies because it places individuals at the centre of the economy, building a model which no longer serves the interests of corporations and discriminatory forces, but instead allows small players to be part of the market and own their place on the global stage.

For Africa, we firmly believe that innovation can help to revolutionise the agricultural and food industry, allowing Africa to feed itself and become one of the biggest contributors to the world’s food basket.

Feed Africa to feed the world: this is what we believe in.

Watch this space for more updates on Block Commodities and blockchain projects in Africa. Subscribe to our FinancialFox YouTube channel for all the latest developments and news.

Uganda opens gate for Blockchain revolution in African agriculture

Announced this morning, a revolutionary project led by London listed Block Commodities (NEX: BLCC) is set to transform African agriculture. Addressing the problem of inefficiency in farming practices and exclusionary policies, Block is deploying blockchain to create an ecosystem designed to help farmers overcome the numerous challenges faced in growing production.

Thanks to blockchain technology and cryptocurrencies, Block has been able to develop a unique model to empower smallholder African farmers, offering lower interest rate loans for buying fertiliser and better terms for repayment. Farmers are in a better position to grow their produce in a new agricultural ecosystem, which thanks to Block’s key partners in Africa, can maximize production and reduce inefficiencies.

Pure Grow farmers will be part of Block’s blockchain ecosystem

The revolution starts now in Uganda

In this first phase, Block is partnering with Pure Grow Africa, a leading supplier of high-quality agricultural produce based in Uganda, supporting the development of the blockchain-powered ecosystem which lies at the core of its mission to help Africa grow.

The scheme will benefit 1,000 smallholder farmers selected by Pure Grow to integrate Block’s blockchain ecosystem. The farmers will be given cryptocurrency loans with which to purchase fertiliser — vital for increased production — starting repayments only after harvesting. The loans’ interest rates stand at around 12%; less than half of the current rates.

Moreover, in order to maximise the project’s results, Block has developed a strategy to ensure that farmers are able to embrace the technology, and that the agricultural output is well-maintained and distributed.

Bobby Juuko Kimbugwe, Director at Pure Grow Africa, is committed to ensuring that the farmers enjoy maximum benefit from the project: “We are placing smallholder farmers at the centre of our work; they are at the core of what we do. We want them to understand that they do not need to have money in their hands to be able to grow production,” he commented.

Upon successful completion of the pilot phase, the scheme will reach 50,000 farmers across sub-Saharan Africa.

Block Commodities’ wide-reaching ecosystem is also underpinned by agreements with other key partners: FinComEco, Dala Wala, The Swarm Fund and Vipa Holdings.

Agriculture: the Foundation of African economies

Cryptocurrency loans allow farmers to grow production

Agriculture is the backbone of many economies in Africa: all across the continent, the sector employs 70% of the population, most of whom produce only enough to feed themselves and their families. In sub-Saharan Africa, activities related to agriculture already account for nearly 50% of the GDP.

Yet, figures from the World Bank are promising, indicating that the agribusiness in sub-Saharan Africa could reach a market value of US1 trillion by 2030. This highlights the enormous opportunity ahead for farmers; however, in order to ensure that African economies are able to keep up with the growth in this sector, policies and initiatives must be put in place to manage the increased output.

Block Commodities’ project is acting at the core of this issue, using technology to empower smallholder farmers so that they can scale up their production from subsistence to commercial level, generating revenue for themselves.

In Uganda, where the pilot project is taking place and the economy is heavily reliant on agriculture, access to fertilisers and seeds could double the income of smallholder farmers, raising the per capita income to $1,200, bringing Uganda closer to a middle-income economy.

Improving agricultural practices can not only give farmers a better life, but also help Africa achieve its first Millennium Development Goal: eradicating poverty — a goal which was not achieved by 2015 — and reduce the continent’s ever-increasing food import bill.

Investments in agriculture have a proven record to spur social and economic growth in Africa. In Ethiopia, for example, thanks to combined efforts by the public and the private sector to tackle problems in agribusinesses, poverty is reducing by 5% a year. It is this scenario, as well the creation of thousands of jobs, which gives the large young population in Africa the prospect of a brighter future.

Block is unlocking the potential of agriculture in Africa: the revolution has started. Look out for the upcoming chapters of Block’s project.

Block Chairman Chris Cleverly has been in Uganda to close the deal and meet farmers from Pure Grow. Here are the highlights of their meeting.

The power of innovation to disrupt failing systems: The case of African farming and FarmCoin

“Creating a smart network between the farmers and the outer environment is now achievable because of technology… These things are now available for us to use and create a unique solution for farming problems in Africa,” says Chris Cleverly, Chairman of Block Commodities, the UK company empowering African agriculture through blockchain-based technologies and sustainable development.

In today’s world, where traditional barriers are constantly being broken down by the latest technological and scientific advancements, we can start to see how these new innovations can be used to challenge long-standing centralised establishments that have until now towered over all sections of society.

Understanding the particular economic strengths and resources at a more local level is key to tailoring a growth plan that can addresse the untapped potential and develop a sustainable and efficient ecosystem in each country.

In Africa, a continent of more than 30 million square km, land availability is certainly not a problem. The hindrance to economic growth is found in poor management of land resources coupled with inefficient banking practices bound in red tape, leaving most of the farming population on the margins of financial inclusion.

The lack of access to services that developed countries would take for granted leaves millions of Africans unsupported when it comes to financial infrastructure. Loans, credit lines and savings accounts are some of the opportunities which remain unavailable to many.

The rise of new technological structures is here to shake up the status quo, just in good time.

Defining the problem: “Underdevelopment” due to inadequate systems and untapped resources

Agriculture is indeed a huge market in Africa: 700 million Africans are farmers. Yet, despite this figure, Africa is a net food importer, with its annual bill being $35billion, estimated to reach as much as $110 billion by 2025.

The food deficit in sub-Saharan Africa has grown 570% since 2001, reaching over US$40 billion in 2015. Twenty million Africans face food insecurity, a reality particularly tough in South Sudan, Somalia, Nigeria, Kenya, Ethiopia and Uganda.

The region’s largely unsustainable and inefficient agricultural infrastructure, commodity trading systems, and poor resources management have left farmers producing only 50% of the potential that an optimised structure could bring about.

Most farmers in Africa can produce just enough to feed their own families, unable to generate any further income. In Sub-Saharan countries, smallholder farmers represent 70 percent of the population.

On top of that, banking and financial services are a privilege for many in the developing world: there are 3.5 billion of unbanked people worldwide.

The key to developing African agriculture is easier access to fertiliser, which has been until now the real stumbling block. The average global of fertiliser consumption is 135kg per hectare, whereas in Sub-Saharan Africa it is only 17kg, with no increase for decades. With local interest rates for fertiliser purchase going as high as 45% in countries like Zambia, it is nigh on impossible for subsistence farmers to increase their production.

The cavalry arrives: Blockchain, technology and innovation

Block Commodities, in a joint venture with FinComEco, a fully integrated financial and commodity ecosystem, and supported by Swarm, the leading blockchain private equity fund, is working to tackle the inefficiencies within the African farming supply chain, ultimately maximising production and creating a leading Agritech ecosystem powered by blockchain technology.

Deploying blockchain technology to create an integrated commodity ecosystem, Block and its partners have developed FarmCoin, a security investment token that provides a fully regulated infrastructure to the commodity ecosystem working together for ultimate financial inclusion for unbanked farmers in Africa.

Both having extensive experience in the region, Block and FinComEco have identified the opportunity to deploy blockchain and cryptocurrencies to streamline the agricultural supply chain, with the first step being to tackle the extortionate interest rates for farmers who not could otherwise increase their production. Combining their expertise, they have designed an ecosystem aimed at increasing agricultural output within a permissionless environment, free from the constraints of financial institutions; simply empowering individuals.

In the new model Farmer 3.0, farmers are entitled to loans to purchase fertilisers at interest rate of approximately 10%, due to be repaid only after the harvesting period.

However, the project is not only about making interest rates more affordable with blockchain. FarmCoin also enables a whole system with conditions which are much more conducive to optimised farming performance.

FarmCoin is about investing in infrastructure to spur economic growth in African countries via optimal farming performance. The token will provide more efficient and smoother transactions, movement and logistics, empowering wi-fi connections, data processing, soil analysis, transport and vehicle maintenance, drones and satellite — as well as supporting the development of leapfrogging technologies.

Farmers will be able to bring surplus crops to a warehouse to be sold via a FinComEco- facilitated commodities exchange. Once the crops are sold, the warehouse fees and loan interest are paid and the net profit credited to the farmer in FarmCoins, which can be exchanged for goods and services, including at educational and medical institutions.

Blockchain applications also improve the flow of information, allowing farmers and suppliers to keep production records and analyse the farming market more efficiently. Moreover, with increased consumer awareness about sustainability, carbon footprint and responsible farming, blockchain comes in handy as it allows the food chain to be tracked transparently from harvesting all the way to the end consumer.

“The whole development chain can benefit from this token,” says Hirander Misra, from FinComEco, highlighting that increased farming output has the potential to cause a significant increase in African GDP.

“It is all about getting farmers access to fertiliser and develop an efficient ecosystem where they can trade easily. Making use of an integrated supply chain and alternative means of finance, African farmers are now equipped to lift from subsistence farming to commercial level, perform commodity trading and access services to support production growth.

If we can demonstrate we can improve access and efficiencies, we can make a substantial impact in Africa” commented Chris Cleverly, Chairman of Block Commodities and co-founder of FarmCoin.

The pilot project is starting in Uganda end of the summer with 50,000 farmers, and it has full government support.

Rapid technology take-up in Africa has also helped with the success of implementation of FarmCoin. In Uganda, over 70% of people now own a mobile phone. In 2014, this figure was 52%.

FinComEco counts on the support of key technology partners, like GMEX, Saescada and Codel, who provide applications, banking platforms and software to ensure the smooth running of FarmCoin projects.

FarmCoin is designed to provide a strong foundation for farming economies across Africa and beyond, leading the Agritech sector and promoting financial and economical inclusion and growth.

FarmCoin is open for funding via Swarm platform. Click here for more information

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