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Watch: With Smartphones, Software, Building Better Agricultural Value Chains

Growing demand of agricultural produce offers huge potential to foster socioeconomic development at the bottom of the pyramid. Agriculture is the main source of income for three quarters of the world’s poorest people, especially in the rural areas of developing countries. However, a major obstacle and source of inefficiency in current agricultural value chains are the mainly manual and paper-based processes. Non-transparent paper records hamper collaborative business with the players of the formal economy – the buyers and traders – who are required to deliver high-quality products with a transparent logistics history.

The African Cashew initiative (ACi)

Our research work takes place in the cashew value chain sector in Ghana. West Africa provides about 40 percent of the annual global production of in-shell cashews, which amounts to about two million tons. Our involvement in the African Cashew initiative (ACi) – a $48 million USD international aid project, co-funded by the Bill and Melinda Gates Foundation and the German Federal Ministry for Economic Cooperation and Development, started in March 2010. The ACi project aims to:

– Strengthen the global competitiveness of African cashew in its five project countries, which include Benin, Burkina Faso, Côte d’Ivoire, Ghana, and Mozambique.

– Increase annual income for 150,000 small scale farmers by $15 million USD .

– Create 5,500 additional jobs in the African processing industry.

– Increase the amount of raw cashew nut processed in Africa by 45,000 metric tons.

Our research work concentrates on improving of the traditionally inefficient cashew value chain by designing, implementing, and piloting tailor-made ICT systems and processes. For the first pilot experiment, we limited the scope to one cashew union, the Wenchi Cashew Farmers and Marketing Union, in the Brong Ahafo region. In a close cooperation with representatives of the cashew union and ACi project partners we conducted extensive field studies, redesigned some of the most essential business processes of the union’s cashew value chain and developed and tested the ICT applications in real life.

Our developed ICT systems and improved business processes went live for the cashew harvesting season beginning March 2011. During a four-month pilot phase we electronically registered roughly 350 participating cashew farmers from the “Wenchi Cashew Farmers and Marketing Union,” five buying stations (where the cashew farmers sell their crops), and one processing plant. Roughly 120 metric tons of cashew purchases (more than 1,600 cashew jute sacks) have been captured and processed via our system. Without any system downtimes and 100 percent of the anticipated system users actively participating, the system and the processes showed their appropriateness and robustness.

The ICT system consists of the following three main components and was conceptualized following the Free and Open Source Software (FOSS) approach.

– The desktop application is used at the union office to a) maintain the master data records of all registered cashew farmers, processors, and buyers, b) to analyze current cashew levels and cashew purchases at the individual buying stations in almost real time, and c) to set and distribute the current market price to the individual buying stations. It can run in offline mode if connectivity is not available and synchronize via a light weight synchronization mechanism. The user interface is based on a Geographical Information System (GIS) to simplify the end user interaction for people with low IT knowledge.

– The smartphone mobile application is used at the buying stations to track cashew purchases. It utilizes the built in camera to scan barcodes that identify individual cashew farmers and cashew jute sacks. Using the internal storage it can run offline and synchronize via either HTTP, or in erratic connectivity areas via SMS.

– The central server is responsible to keep all Desktop and Smartphone clients in sync. Any third-party stakeholder can connect to the system and utilize the data via a public service interface. With the integration of an external SMS gateway provider the central server also serves as market information system for SMS only clients (e.g. distribute market prices or agricultural best practices to farmers).

4-month pilot during cashew harvesting season 2011

During the cashew harvesting season, the system adoption was very good and we were able to electronically track 96 percent of all cashew purchases. During interviews with the pilot participants after the cashew season the main reasons for the system adoption include:

– exact record keeping and analytics

– visibility, traceability, proof of production capacity

– trust in the union, process compliancy of buying stations

– direct financial benefits

– loyalty towards union / sense of allegiance

Being able to show the end user a real business value is the only possible way to convince them to use a new system, regardless of how fancy the user interface is behind it. (Although we’ve put a lot of effort into an appropriate UI design).

With the ICT enabled process we have added an important feature to the value chain-traceability. We can track each cashew jute sack from the individual cashew farmer, along the buying station, the loading process until it reaches the processing plant with a lot of additional information like when it was scanned, who scanned it, when it was loaded, and the sack weight.

This transparent value chain is the basis to get certification for specialty markets (e.g. Fair Trade), which is an important value-add to the cashew value chain and attracts additional international buyers. Other positive impacts are increased awareness of each value chain stakeholder, improved trust relationship, improved analytics and traceability, reduction of input errors and time efforts caused during manual processing.

Replication in another agricultural value chain

The software architecture concepts and business process knowledge applied to the cashew value chain in Ghana are only one example application for a variety of very similar agricultural value chains like coffee, cocoa or cotton. In addition we’ve proved the concept of replicating the system and processes in another agricultural value chain: shea.

The shea use case is part of a collaborative project between SAP and PlaNet Finance with the aim of improving the incomes and living conditions of shea collectors. The first pilot of the ICT-enabled shea value chain went live mid-September 2011 with more than 3,000 registered women of the Star Shea Network (SSN)-a national organization with small cooperatives in north-east Ghana. Those women groups collect the shea nuts and similar to the cashew use case sell those at buying stations where they get stored and later transported to processing plants or buyers directly. Current results at the mid of the shea harvesting season already show a promising result. An adoption rate of 97 percent and already more than 2,000 shea jute sacks processed by the system show that the concepts are replicable across other agricultural use case scenarios.

We are currently preparing to scale up of the cashew value chain (expand to several thousand farmers and also to other West-African countries) and the shea value chain (expand to 4.500 women by end of 2011). Additional features like micro credits and cashless transactions will enable the system to incorporate further requirements to make the agricultural value chains much more efficient. In the future, we also plan to replicate our concepts in other agricultural value chains like coffee, cocoa, or cotton.

You may find more information on SAP Research activities here.

Carsten Friedland, Christian Merz, Tirdad Rahmani all contributed to this article.

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Agriculture, Technology, Telecommunications