Empower Smallholder Farmers with Financial Inclusion | Changing the Global Food Chain
Introduction
In this blog, we delve into the innovative solutions offered by tech companies in Jakarta, such as Enter Jara and Hara, aimed at empowering smallholder farmers and revolutionizing the global food supply chain. These initiatives leverage data exchange, blockchain technology, and cloud services to address critical challenges faced by rural farmers in accessing financial support and credit.
Rice: The Engine of the World’s Food Supply
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Rice, corn, and wheat combined feed 80% of the world’s population, with rice alone feeding almost half of humanity, approximately 3.7 billion people.
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Small holder farms, mostly in developing nations, contribute to 60-80% of the world’s food production. These farms are often family-owned and face challenges in accessing financial support.
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Enter Jara, a tech company in Jakarta, has developed a solution to connect rural smallholder farms with banks and distributors using data exchange.
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The HERA process, a global and open blockchain-based data exchange, is the foundation of Enter Jara’s solution. It bridges the gap between small holder farmers and financial institutions.
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Enter Jara’s founders, Reggie and CTO Elam, have created a system that enables access to credit and resources for small holder farmers, contributing to the improvement of their livelihoods.
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By leveraging technology and data, Enter Jara is addressing the critical issue of financial access for small holder farmers, ultimately impacting the global food supply chain.
The Origin of Hara and the Need for Change
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The name ‘Hara’ originates from the Sanskrit language, meaning soil nutrients and elements. The founder, having grown up in a village community, witnessed the happiness of farmer friends but also recognized their need for more independence due to the challenges faced in Indonesia.
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Despite over 50% internet penetration, most official documents such as birth and death certificates in Indonesia are still in paper form. This has hindered access to financial support, credit, and loans for many at the grassroots level.
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Hara aims to create a distinct before and after for farmers, recognizing that being poor is expensive and often leads to informal financial support with high interest rates of up to sixty percent per year. Additionally, farmers often mortgage their crops at low prices, further exacerbating their financial burden.
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The accessibility provided by Hara allows farmers to have a greater financial leeway for their livelihoods. It enables them to be visible in the system, granting access to insurance and a better safety net.
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The lack of proper identification affects an estimated 1.5 billion people globally. By providing a feasible identity and visibility within the system, Hara seeks to grant access to essential services for farmers and their families.
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Field agents are employed to collect data related to land, utilizing GPS for land tagging. This solves the challenge of diverse land measurement practices among farmers in Indonesia, ensuring accurate land measurement through polygonal mapping.
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The data collection also involves information about crops, fertilizers used, yields, and sales. Hara faces the challenge of scaling this data collection while incentivizing field agents, who are not employees but rather voluntary contributors in the villages.
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The incentive mechanism ensures that both the data collectors and farmers benefit from the revenue generated. This encourages the field agents to become data entrepreneurs, contributing to the success and scalability of Hara.
Overview of Deco’s Data Ecosystem
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Deco’s data ecosystem comprises four key stakeholders: data providers, data buyers, data qualifiers, and value-added services.
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Data providers include farmers, database companies, and satellite companies who share their data with Deco’s applications.
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Data buyers consist of banks, insurance companies, and retailers who require access to the data within Deco’s system.
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Data qualifiers are individuals who verify and validate the quality of the data, ensuring its accuracy and reliability.
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Value-added services are entities that can access the data and develop additional services based on the information available within Deco’s ecosystem.
Cloud Technology and Its Impact on Business Development
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The use of cloud technology has enabled the transformation of a platform into a space for developing applications and selling data to buyers.
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Cloud technology has been instrumental in allowing businesses to focus on their core activities and worry less about security and scalability issues.
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The adoption of cloud technology has facilitated smoother sales processes, particularly for technology-driven companies, by providing a proven and mature technological infrastructure for potential partners to rely on.
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The project, which initially started in one village, has now scaled up to 117 villages and engaged 10,000 farmers. This model is not limited to Indonesia but is also relevant for other developing countries with a large number of smallholder farmers, such as Thailand and Uganda.
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The technology involves a complex system with multiple components. One of the key components is blockchain, which records transactions in an immutable fashion and handles token transactions within the ecosystem.
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Token transactions are used to incentivize farmers and record their transactions, as millions of farmers need to receive money automatically at the same time. This involves complex multi-party transactions, which are automated through the blockchain component.
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To scale rapidly, the data is stored in the cloud, providing flexibility in using blockchain for recording transactions without storing the information. This allows for easier storage of encrypted data while maintaining immutable records through blockchain.
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Additionally, the technology includes analytic services for processing and analyzing the large volume of data generated within the ecosystem.
Complexity of Blockchain Technology in Analytic Services
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The complexity of blockchain technology arises from the need for extensive image processing for applications and fraud detection.
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Analytic services play a crucial role in ensuring the scalability and security of blockchain technology.
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Security layers are essential in blockchain, considering the multitude of components that require secure measures.
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The use of blockchains in a distributed ledger format, including in cloud environments, adds to the complexity of security.
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The technology is based on a decentralized fashion across various fields, but it also involves running blockchain components within the cloud.
Conclusion
The integration of technology, data exchange, and blockchain solutions is revolutionizing the landscape for smallholder farmers in Jakarta. Initiatives by Enter Jara and Hara are not only addressing financial inclusion but also impacting the global food supply chain. The resilience and innovation shown by these companies pave the way for a future where technology plays a crucial role in uplifting the livelihoods of rural farmers.