Agritech startup aims to uplift farmers

A local agritech startup is dreaming of changing an age-old system that has not been kind to farmers.

Farmers toil the land day in, day out, enduring high heat and humidity to feed the nation. Ironically, they always get the short end of the stick. Whenever farmers bring their produce to bagsakan or market centers, it is the middlemen who end up earning more.

Agro-DigitalPH has taken the liberty of challenging or disrupting the status quo. Wanting to raise the standard of living and income of farmers across the Philippines, the startup designed a platform in 2019 that offers smallholder farmers an alternative way of monetizing their produce. It aims to digitize the food value chain and dismantle the “feudal” food system by offering solutions for production planning, demand forecasting, warehousing and logistics.

“What we’re trying to do here is basically to shorten the value chain and they sell it to a marketplace to monetize the goods,” Henry James Sison, founder of Agro-DigitalPH, tells the Inquirer in a Zoom interview.

The customers are small farmers, normally organized into cooperatives or associations who, according to Sison—a farmer himself and IT professional— have “had enough of the current way of doing business.”

“We empower cooperatives and associations to do the business themselves,” Sison says in a mix of English and Filipino.

Middlemen are not being taken out of the equation. Rather, Agro-DigitalPH is reducing layers of intermediaries to consolidate and sell agricultural products to the consumers.

Sison points out that Agro-DigitalPH does not act as an intermediary that buys the goods from farmers and resells to customers. Instead, it is akin to an agent that connects farmers to potential buyers. It equips cooperatives or associations to handle the process themselves while providing digital support.

Shortening the farm to market value chain

“Middlemen have their place in the sun,” Sison says, adding that Agro-Digital PH could not take the direct-to-farmer route as most farmers’ cooperatives do not have the capability to distribute directly. “What we’re trying to do is to minimize it, meaning, for us it’s acceptable for a transaction to pass through maybe one or two layers,” Sison explains.

Specifically, the startup aggregates groups of farmers by consolidating their assets and capabilities to achieve greater economies of scale. Produce requirements are pooled and assigned to farmers to ensure coordinated production activities. This means farmers can approach institutional buyers and commit to delivering the produce at a specific date.

This is how it works: buyers place their orders through the platform. The startup then finds groups of farmers who can meet quality, volume and time requirements. After the buyer and the producer strike a deal, farmers plan and manage production while buyers can track the status of their order.

If a client orders five tons of pechay (snow cabbage), the platform will look for 10 farmers who can produce 500 kilos each of cabbage.

For every transaction facilitated via the digital platform, Agro-Digital PH carves out a single-digit percentage fee.

Asked how farmers are better off using this platform compared with the old system, Agro-DigitalPH estimates that farmers could enjoy a 30-percent net increase in new sales and 15 to 25-percent margin improvement.

This onion season, for example, farmers who tapped Agro-DigitalPH before the season started were able to sell at P31 to P35 per kilo versus the P22-P28 regular pricing in the market.

In the past year, Agro-Digital PH’s partners generated P31 million in gross sales from producing around 1,200 tons of goods.

The platform has enabled sales of about P15,000 to P20,000 a week for smaller cooperatives and as high as P400,000 weekly for the early adopters.

Agro-Digital PH’s business model also includes teaching farmers how to produce high-quality agricultural goods, create price tiers and conduct post-harvest activities, among others.

“If we want real change to happen, then we need to get our farmers really on board, to empower them. We can’t just keep them as producers so that some other people can take advantage of them,” he says.

When farmers are educated and upskilled, that’s where real progress comes from, Sison notes.

“For me, it’s (the) revenge of smallholders, so to speak, or at least trying to claim equal footing with other players in the ecosystem.”

Making inroads

The startup has set “ambitious targets” to expand its footprint in the country. It aims to boost the number of registered active members to 400,000 in five years’ time from about 3,600 at present.

Once such critical mass is attained, it is estimated to create at least $1 billion worth of activity in the platform, which means each registered farmer will earn more than P10,000 a month, Sison calculates. This is seen to make a lot of difference in farmers’ lives, given that food products in the province are cheap.

Agro-DigitalPH, whose partners are mostly located in the Bicol region and Calabarzon (Cavite-Laguna-Rizal-Batangas-Quezon), wants to introduce the system to more farmers across the archipelago, although the COVID-19 pandemic has made it difficult to reach out to more partners in the Visayas and Mindanao.

“Currently, we’re just limited to Luzon primarily because of the lockdown but we’ve recently introduced our platform to some areas in Visayas and Mindanao,” says Sison. The startup has tapped organized groups in Ilocos Region, Central Luzon (mostly in Nueva Ecija) and the Cordillera Administrative Region.

Agro-DigitalPH will focus on organic farming. It plans to collaborate with the National Organic Agriculture Board to organize and consolidate organic farmers to enable them to produce at scale and have them certified.

Likewise, the startup will work on organic feeds and agricultural exports this year, beginning with vegetables and fruits.

“We are also working with some cooperatives who are doing non-food (crops), mainly for fibers, but it’s only small-scale,” Sison says.

For instance, the platform is trying to bag contracts in the international market for cotton producers. “That’s really where the money is,” he adds.

“We want to make a difference in people’s households’ income. We’re strong believers that if you are economically emancipated…and most of our partners are in the countryside, you generate economic activity (and) then you raise the standard of living,” Sison says.

“I believe the prosperity comes from really developing the countryside and not exactly putting more money where these institutional buyers are already in: the cities.”