Click to edit Master title style

Click to edit Master title style ICT Enabled Service Delivery

for Rice Farming A proposal by participants on GIFT’s 30th YLP

Global Food Security & The Role of Rice

• A small increase in global food prices drives millions into extreme poverty.

• Rice is a staple food for more than 3 Billion people (almost half the population)

• More than 90% of rice is produced and consumed in Asia.

• Continued pressure on usage of Fertilizers, Climate Change and Urbanization.

Rice Farming in the Philippines

Agriculture: Agriculture plays a

vital role in the Philippines economy.

• 13.2% of the GDP, 33% of labor

force: 12.27 million people

• Rice production is currently not

sufficient for national

consumption which leads to an

imbalance in the Balance of

Payment. The import content of

rice in 2012 was USD 300 M.

Currently the average rice yield is

3.7t/ha, lower than the world

average due to the ineffective crop

management practices

*8 Philippine Daily Inquirer, ADB urges Philippines to address income inequality, 16 April 2012 *9 Bureau of Agricultural Statistics, Overview of Philippine Agriculture *10 FAO, USDA

International Rice Research Institute (IRRI)

• The International Rice Research Institute (IRRI) is a non-profit independent research and training organization

• IRRI is dedicated to developing new varieties and crop management techniques

• In line with its vision of providing education to the Farmers IRRI launched a platform called the Nutrient Manager for Rice (NMR) to assist farmers in optimising nutrient application

Global Institute for Tomorrow (GIFT)

• IRRI invited GIFT to evaluate commercial viability of the Nutrient Manager for Rice.

• GIFT is a pan-Asian think and do tank dedicated to advancing an understanding of: – Shift of economic power from west to east – Reshaping of global capitalism – Evolving social contract between business, government and civil

sectors

• GIFT asks… what does this mean for Asia and the world?

Profiles of YLP Participants

YLP participants come from corporate sector, with IT and agricultural backgrounds as well

Key Findings on NMR

Benefits: • Reduce fertilizer cost, increased paddy yield

• Tailor made advice for farmer

• Print out service

Challenges • NMR is beneficial but not comprehensive.

Farmers need assistance on Weather, Prices, Post Harvest Techniques to help maximize their value chain

• Low penetration into farming community

• Unfamiliarity with ICT interface

• Lack of hardware capital

• Lack of ICT literacy

• Lack of Post-harvest support

Identifying opportunities & gaps

Proposal to create a New Company that provides a

comprehensive platform to farmers

UNMET NEEDS

• Reducing Pre Harvest Costs

• Increase yield • Improved Post

harvest services • Appropriate

financial services

MARKET TRENDS

• Strong GDP growth

• Smartphone usage increase

• Increased interested in targeted rural marketing

IRRI’s MARKET POSITION

• World Leader in Rice Science

• Opportunities to influence policy (Proposed Policy Influencers)

Introducing the new company

Civil

Public Private •Integrating the objectives of public, private and civil sectors •New approach to delivering IRRI’s world class research •Driver of rural prosperity , Philippino rice self-sufficiency and nation-building

Overview of Farm Saya business model

• Comprehensive information services for farmers

– Nutrient Manager, Rice Crop Manager, Rice Doctor, Knowledge Bank

– Daily weather information

– Market & Pricing info

– Micro-financing

• Business model based on building a large rural subscriber network – Free of charge for farmers

– In the future, premium service will be provided

• Revenue sources

– Commissions from commodity sellers through the network

– Future premium subscription model

– Sales of market data

ICT Platform will extend to more of the rice value chain

How to access and use Nutrient Manager

Web GSM mobile phone Smartphone

Interactive Voice

Response

implementation box

Farmer calls

dedicated number

Smartphone

output

Web output Smartphone

and mobile:

Text output Available in Philippines and

Indonesia

Revenue & Operation Model

Farm Saya provides subscriber network in farming community

Investors

- Non-private - Private - Farmers

Association - Impact

Investor

Knowledge

- IRRI - PhileRice - ICT

Farm Saya

Integrated Platform

Smartphone, PC, Tablet, SMS, Printing material

Extension workers

Direct Channel

Local NGO

Co-op

Farmers

Information

- Fertilizer - Seeds - Daily needs

Farm Saya Organisational structure - highlights

• Unique partnerships are invited for shareholding

– IRRI

– PhilRice

– Farmers associations

– Private sector

– Civil sector

• Equity opportunities will be offered for farmers and farming consultants

Proposal for IRRI to invest in new shareholding partnership

Potential Shareholders

IRRI

PhiliRice

Private sector

Civil sector

Percentage will to be determined.

Farmers

Sales & Marketing Strategy Overview Direct Channel (Sales & Service Agents)

Shareholders

Public Sector/ Gov Orgs

NGOs & Youth Groups

Agri Orgs

Education Institutions

Retail Chains

Religious Communities

Media

Social Networks

Farm Saya

Farmers

Indirect Channels

Farm Saya sales effort will reach and attract a critical

mass of farmers

Introducing Farm Saya Sales & Service Agent (SSA)

SSA’s are clearly differentiated from public sector extension workers: • Promote Farm Saya ICT platform and support delivering info services • Work in best interest of farmers to improve crop management • Highly motivated through private company incentives and potential

employee shareholding options • Well equipped with hardware and well supported with world-class

knowledge resources from IRRI etc

+

Sales & Service Agents present a new model for serving the needs of farmers

Focusing on the young farmers

Farm Saya’s Goals

• Turning farming a more desirable profession choice for younger Filipino generation

• Equipping young farmers with latest Agri-info and best farming practices

Supporting Strategy

• Building up online network for young farmers (e.g. Facebook / Twitter)

• Designate agri-major students as Student Ambassadors; Fund Student Volunteer Groups to conduct village education and registration service

• Publicity effort via local media specifically targeting young generation

Future of rice production depends on next generation of farmers

Additional channels to build network

Direct Channel

Shareholder

Education Institute

Agri Orgs

Public Sector/ Gov Orgs

Religious Communities

Private/Corporate partners

Media

NGO

Retail Chains

Social Networks

-2

0

2

4

6

8

10

0 1 2 3 4 5

Est. Initial Resource Required (Index on the scale of 10)

Year to Start

Note: The bubble sizes represent Est. # of farmers reached/attracted (index on the scale of 10)

Direct sales agent outreach is supplemented by a variety of marketing channels

Farmer subscriber targets

30,000 75,000

150,000

240,000 300,000

360,000

432,000

518,400

622,080

746,496

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

YR1 YR2 YR3 YR4 YR5 YR6 YR7 YR8 YR9 YR10

Subscription Target by Year

Subscription Target to reach 750K users by Year 10

Future Business Partnership Target

Telecom Food & Beverage Companies

Financial services

• Smart • Globe

• Jollibee • San Miguel

• BanKO • Crop Insurance

In additional to subscribing farmer users, Farm Saya will pursue business partnership, and some examples are

Retail Chain Inputs/Equip Companies FMCG

• Seven Eleven • Supermarket

• Seed Companies • Fertilizer Companies • Farming Equipment

Manufacturers

• Nestle • Unilever • Procter & Gamble

Financial Assumptions Key Revenue Streams

1. Commission from Business Partnership Sales through ICT Platform

2. Sales of Customized Data for targeted marketing campaigns

3. Future Premium Model Subscription

Key Costs

1. Labor Cost associated with Sales and Service Agent is primary cost

2. Marketing Cost to reach subscribers

3. IT Development to expand platform

Financial Projection (Base Case)

Revenue increases alongside subscriber increases

(200,000)

0

200,000

400,000

600,000

800,000

1,000,000

(1,000,000)

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

1 2 3 4 5 6 7 8 9 10

(Persons) (1,000 PHP)

Revenue Accumulated Profit No. of Perticipants (RHS)

Scenario Analysis

Scenario Usage Growth Customized

Data (Revenue at Year 2)

Break Even Required Capital

Best

Aggressive growth

USD750k Year 3 USD 4.2M

Base Moderate

growth USD500k Year 5 USD 6M

Worst Weak growth USD250k Year 6 USD 9.5M

Base case shows break even in Year 5 with capital requirement of USD 6M

Sensitivity Analysis

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

1 2 3 4 5 6 7

(1,000 PHP)

Accumulated Profit Accumulated Profit(Best) Accumulated Profit(Worst)

Roll out timeline

Month 1-6

Identify and Engage Key Stakeholders Setup Business Entity Develop Integrated ICT Platform

Month 7-12

Negotiation with Business Partners Test Run Platform Prepare Hiring of Sales and Service Agent Set up Back Office Support

Month 13-24

Hire & train Sales and Service Agent Build up Platform Base Monitor Progress and Obtain Feedback Ongoing Research and Development

Recommendations • Farm Saya proposal allows IRRI to

deliver research to farming community

through an equity-based sustainable

model.

– Investors

– Strong government support

– Farmers as shareholders

• Comprehensive platform with suite of

features in addition to Nutrient Manager

– Weather information

– Post harvest information

• A movement bigger than the farmer

alone!

– Campaign driven, nation building

approach

• Model can be expanded beyond

Philippines

Institutional Recommendations for IRRI Consideration

• IRRI needs to seek private sector partners interested in implementation (commercialization rather than only fundraising for research)

• Use Science & Research to influence public policy & engage key private sector partners

• creating a public policy department and set priorities aligned with IRRI mission and value

– Address Post harvest challenges

– Leverage research & expertise to influence change

It takes a nation to grow rice!

• Greater movement

• Multiple stakeholders

• Communities of farmers linked through a platform – national pride!

• Young generation

• Focus on the importance of the farmer to all of us!

Thank you!