Digitization in finance has become a necessity in most industries worldwide; however, one of the most important industries, agriculture, is one of the last to see major innovation in fintech solutions. As world population increases, expected to reach 9.8 billion by 2050, food production must also increase. More food production equals more capital and financial solutions are needed for the industry. Agriculture experts work to bring various new technologies that will make the industry more profitable, efficient and sustainable. While many of these technologies are very practical and for on-farm use, Agri-fintech solutions cannot be forgotten in this effort. In 2022, it was reported that 60% of farmers globally still use cash as the main payment method, which shows the room for improvement in the agri-fintech sector. Beyond payment methods, agri-fintech is unlocking financial access for agribusinesses in lending, insurance, banking, marketplaces and trading. Let’s explore some of the solutions agri-fintech is bringing to farmers and agribusinesses.
Farm Payments
Tracking transactions and sending and receiving money securely helps farmers operate more efficiently. Companies like Bushel enable farmers to make digital payments, which mitigates fraud, provides proof of delivery in commercial sales, increases collaboration with farmers, and optimizes farmer customer experience. With any new technology, implementing and adopting such technologies can be difficult, especially in developing countries where access could be limited. Agriculture experts recognize that digital payments will increase efficiency and bring a better sense of security and financial management for farmers worldwide.
Insurance
Farmers and agribusinesses take on great risk when planting, growing and investing in food production globally. Weather, natural disasters and climate change can all alter the productivity of the industry. Obtaining insurance is crucial to securing the livelihood of many agriculture operations. One example of an agri-fintech company, GramCover in India provides insurance for farmers and bridges gaps in rural areas. Some agri-fintech start ups are using satellite enabled climate insurance, which integrates multiple technologies to drive decisions on farms.
Market Access
Utilizing online platforms to access markets has been in place for quite some time in most industries. In agriculture, this is something that is continuing to evolve and grow. Agri-fintech companies are now making it easier for farmers to locate buyers, thus saving time, money and improving efficiency overall. One example is FarmShine in Kenya, which provides a digital platform for buyers and sellers to trade on mutually beneficial terms. Farmshine along with other agri-fintech companies are helping make favorable connections within the industry, which improves profits, minimizes costs and even contributes to traceability.
Final Thoughts
The possibilities for agri-fintech solutions will continue to evolve in the coming years. Unlocking financial access for farmers is crucial to improving efficiency and overall operations on farms around the world. Agriculture experts recognize the need to increase production and feed the growing population. Agri-fintech, though indirectly, will contribute to this need in the areas of payment, insurance, market access and other crucial categories.
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