By Zhann Meyer; Head of Agricultural Commodities: Nedbank CIB
While big data and digital innovation is most certainly playing a part in revolutionising agriculture across the globe, the diversity and complexity of the farming landscape in Africa means that the disruption is likely to take place at a much slower pace on this continent than is the case in most first world regions.
This is particularly true in terms of agri-finance, where banks simply don’t have the infrastructure and systems in place to engage individually with the large numbers of small-scale farmers who make up much of the farming industry. To add to the complexity, the increasingly strict compliance and regulatory requirements placed on banks in terms of engagement with their clients creates a level of risk that very few banks would ever be prepared to accept.
However, that’s not to say that the growing access to massive amounts of agricultural and weather data, coupled with the enhanced data flow seen today, won’t be instrumental in shaping the way farmers in SA operate, or how banks finance them. It most definitely will. It’s just likely to take a little longer than some might have hoped, to ensure that it is done right.
For starters, when it comes to the small-scale agriculture operations, partnerships with cooperatives and commodity trading specialists will always remain key to unlocking the collective benefits of big data. It’s the same model as is currently in place for finance solutions for these smaller operations. For example, Nedbank CIB has well-established relationships with numerous international and African-based agricultural trade organisations, to which we provide structured finance and revolving credit facilities to our clients.
Given this established partnership approach, the application of big data and digital technology for the benefit of these small farming operations would of necessity follow a similar methodology and be driven primarily by these large trading partners. Importantly, however, for Nedbank CIB the most vital aspect of any such adoption of big data applications across these partnerships is that they would have to deliver primary benefits to the farmers themselves, preferably in the form of enhanced farming insights and practices and sustainably increased yields.
At a large commercial farming level, while the term ‘big data’ is something of a buzzword these days, the concept of utilising massive flows of data and information – both digital and traditional – is nothing new to all agriculture stakeholders. For years, farmers and financiers have been using satellite imagery of their lands and weather data to analyse trends, optimise practices and maximise yields. The difference today, however, is that new digital advances are making it much easier to instantly access precisely the data you need, and in many cases, have that data analysed for you electronically. But here too, banks seldom engage directly with the farmer and instead deliver benefits to multiple agriculture operations through focused partnerships with cooperative organisations. The difference between these partnerships and those with small-scale farmers, however, is that the smaller numbers of farmers represented by each co-op or trade organisation makes it possible for the full benefits of big data to be unlocked.
Nedbank CIB’s relationship with Aerobotics – an SA-based company specialising in aerial data collection and analytics – is a prime example of how digital and big data will be shaping large-scale agriculture, and its funding, going forward. By rolling out this innovative drone-based imaging technology and advanced analytical capability to our larger agricultural clients, Nedbank, in close partnership with Aerobotics, will effectively give them on-the-ground access to world-class tools to mitigate their risks and improve their operational management abilities. The technology also delivers the additional benefit of serving as an early warning system for Nedbank as a financier, and allows us to continually assess how efficiently the farmer is using the finance we provide and the proficiency of the entire farming process in terms of getting crops off the land and into the market – which is ultimately what ensures our loans are repaid.
By allowing Nedbank CIB to get involved in the farming supply chain early in this way, the Aerobotics technology, and the data it provides delivers mutual benefits to all stakeholders. The farmer is able to easily and comprehensively assess every aspect of their operation, down to checking the health of individual trees, counting and monitoring livestock, and even measuring the impact of water constraints, while the bank is able to monitor and manage its risk and use this information to structure more flexible and competitive finance and solutions that ensure the protection and growth of the farmer’s operations in the long term.
Obviously, when it comes to the effective application of big data to benefit all agriculture stakeholders in Africa, it’s still very early days. But the progress we’re seeing thus far, and the obvious potential is very exciting. And over time, as the data records grow and we are able to map trends and set viable benchmarks, big data will not only become increasingly valuable but will undoubtedly become a vital cornerstone of the success and sustainable growth of the entire agriculture sector.
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