True prosperity will be found in the embrace of the digital economy. These farmers prove it

In India, farmer Saravanan Madhavan digitally connects with buyers to sell his crops. Payments are credited to his account the same day. It’s a welcome departure from how other farmers like him get paid: often late and only partially.

Buyer Ramesh Kumar once trekked through fields to find farmers. Now, technology helps him locate and purchase the exact produce he needs at the best price, saving him time and money on travel.

For farmers, and especially smallholders like Madhavan who account for 86% of India’s agrarian economy, the digitization they have embraced in recent years has been transformational.

More farmers have signed on to platforms like Farm Pass, which are helping millions in remote areas of India and Africa access fair prices and credit to grow their businesses. With these types of platforms, farmers have access to more buyers, empowering them to negotiate the best price for their produce.

With digitization, farmers pay and get paid digitally, and a digital record of their transactions means they have the financial history they need to apply for loans to finance and grow their businesses. They’re no longer price takers; they’re price makers.

Scaling these types of life-changing digitization programmes is critical given the potential for their far-reaching global economic impact. Agriculture accounts for 4% of global GDP, totalling nearly $4.5 trillion, and employs more than a quarter of the global workforce.

Meanwhile, more than 608 million smallholder farmers produce about a third of the world's food. Yet for many people, farming no longer guarantees a sustainable livelihood. Some 65% of poor working adults make a living through agriculture.

There are a few significant obstacles to both building and operating these types of programmes and platforms at scale in rural areas across the world.

The consequences of not addressing these hurdles are dire — more farmers would persist living in poverty and ultimately move away from farming if their livelihood is no longer sustainable. Fewer farmers globally would only add to the world’s significant food scarcity challenges.

The first obstacle is a lack of viable agent networks on the ground to service rural and frequently offline communities. All the digital infrastructure in the world can’t help people if it doesn’t reach them. For example, agents provide cash-in and cash-out points for digital payments at the last mile, where ATMs are sparse.

Agents also bring digital services, like Farm Pass, to the farmgate, helping farmers to request credit or input services and find buyers, without needing their own phone. These agent networks not only enable rural commerce and help farmers and their families, but they also provide much-needed employment in countries across Asia and Africa.

A second hurdle to scaling these digital platforms is low levels of technical expertise on the ground when it comes to managing and operating digital programs. Agent networks and other staff in-country need the know-how to be able to quickly and seamlessly troubleshoot their own problems when they arise. When these critical skills are lacking, consumer and merchant day-to-day transactions suffer.

Third, rigid on-soil regulations that specify data must be hosted locally substantially raise the cost of entry, set-up, and operation in the market for digital services companies. For many companies, this high entry cost — up to and including the creation and management of in-country processing centres — combined with ongoing expenses, completely shuts them out of bringing digital technology to marginalized communities where margins are already very slim.

Empowering entrepreneurs and small businesses across the globe to embrace the digital economy can help foster inclusive, sustainable economic growth. But making impact at scale for farmers, in particular, will require immediate and meaningful engagement and collaboration across the private, public and non-profit sectors.

At Mastercard, we know from experience that there is power in partnership. That’s why we look to align our efforts with organizations like Heifer International, which is the latest addition to the Farm Pass network.

In working together, we’ll bring Mastercard’s digital solutions to the smallholder farmers that Heifer International serves, enhancing the impact we might otherwise have by working alone.

To overcome the hurdles and bring digitization to more smallholder farmers around the world, more resources are needed to build out agent networks and to educate and equip local staff with the needed technical expertise.

Governments can help by taking a growth-minded approach to on-soil regulations or allowing infrastructure that’s shared by multiple markets. Foundations and donors can participate, too, by assisting with funding. For example, they could fund digital skilling programmes and help stand up local agent networks.

As progress is made, more farmers will be able to do business in new markets, find more customers, earn greater profits, optimize their operations, and bolster their resilience in times of crisis — including in the face of worsening consequences of climate change.

The charge to stakeholders across sectors is to take action to enable this embrace of the digital economy sooner rather than later.