Filipino rice farmers will soon pad their mobile wallets with more than just mobile money: they'll get on-demand farming advice, too.
Though rice is the archipelago's staple food, most smallholder farmers produce less than they consume, and most don't have access to formal financial services, like savings and loans.
Mercy Corps brought together a bank and an agricultural research center to address farmers' needs for advice that will increase their crop yields and profits while also providing better banking options to manage their finances. The partnership offers a tailored suite of services available via mobile phone.
BPI Globe BanKO, the financial partner, was founded in 2011 and is a partner of Mercy Corps. BanKO is the first mobile-based, microfinance-focused wholesale savings bank in the Philippines, and leverages mobile technology to provide financial services to the country’s unbanked. BanKO is working with local microfinance institutions who have wide-ranging direct access to rural smallholder farmers across the island nation.
And the International Rice Research Institute (IRRI), the leading technical center supporting global rice production, is lending its expertise in the development of tailored fertilizer recommendations and crop management techniques.
In a unique twist, to make the product sustainable, the partners set up incentives between each player so that their investments are interdependent. By reaching rural smallholder farmers, an unconventional client base, the partnership hopes to stimulate local economies and be profitable for all business partners.
"This partnership will help rice farmers by combining access to financial services with timely information on the best-bet rice management practices for increasing yield and profit in their fields," says Dr. Roland Buresh, IRRI’s nutrient management expert.
Buresh was also the lead developer of Nutrient Manager, an automated rice fertilizer recommendation tool that has been tested over the past 10 years to successfully increase farmer income per hectare by $100 per crop, on average, and will be included as an app in the suite of mobile-based services.
Something in it for everyone
What makes the BanKO IRRI partnership unique is that the motivations and skills of each player are aligned so that each has an incentive to keep the suite of services running long after Mercy Corps steps away from the role of “facilitator.”
BanKO, playing the role of financial provider, sees the program as not only aligning with its social goals, but also with its commercial goals--boosting its role as the leading bank supporting microfinance institutions in the country. BanKO is providing wholesale financing to local microfinance institutions, which helps local MFI’s expand their lending pool.
Nearly the entire target population of the program traditionally uses cash transactions, meaning the opportunity to expand digital payments to farmers is enormous.
Local MFI loan officers, who will regularly visit farmers to provide and collect financial services, will be trained to use IRRI’s Nutrient Manager tool. The loan officers will use tablets to generate tailored fertilizer recommendations they give to individual farmers.
By using the fertilizer app, farmers have a larger yield and increased savings, mitigating some of their risk as loan recipients.
Lessons turn into new program features
The team is preparing formal research conclusions from data collected during the pilot, and BanKO is already scaling up to provide the services at dozens more local MFI locations. The scaled-up program, which should reach approximately 25,000 farmers by 2014, will include several new approaches prompted by lessons learned in the pilot program.
For example, early lessons show the leap from cash to digital payments was particularly difficult for farmers. To address this issue, short training sessions will be given to loan officers and farmers to reinforce the use and understanding of the new mobile and ATM services.
To give farmers even more in-person support, local microfinance institutions will establish regular “center meetings” where farmers and agents can swap tips and attend trainings. And to expand on its existing functions, the Nutrient Manager app will now be offered on tablets in addition to mobile phones and will include weather, market, and input data.
Future success is highly dependent BanKO’s strong partnerships with local microfinance institutions, who maintains direct links to rural, hard-to-reach farmers. All partners are taking a leap of faith with their shared services model, sharing both profits and clients, in order to reach the unbanked.