In this digital age, farming, especially in developing countries like Vietnam, has maintained a general perception of being an analog, hands-on practice.
Farmers are unfairly viewed as simple folk who toil away under the blazing sun with rudimentary tools to ensure that we have food on our plates without even needing to think about where it comes from. But contrary to popular belief, farmers need data and digital tools just as badly as ride-share drivers tasked with picking you up from a far-flung hẻm.
A variety of crops, including pepper, stand to benefit from improved technology integration. Photo courtesy of International Finance Corporation (IFC).
Tracking fertilizer use and rainfall or identifying potentially dangerous pests are just some of the areas in which digital solutions can help farmers, their customers, and the environment. This is where agtech (agricultural technology) can come in to help. But while this market is valued at about US$20 billion globally, it is in the very early stages in Vietnam.
A segmented sector
According to a 2021 report from the British Chamber of Commerce Vietnam, the country had just 46 agtech companies, even though nearly 30 million people work in the agri-food industry. By following non-digital methods, many farmers overuse pesticides, adding to their production costs while also damaging the land and hurting the quality of their crops. The nation’s agricultural supply chain also lacks transparency, something that could be addressed digitally.
There are some domestic pioneers in the field, including Demeter, MimosaTek, and Naturally Vietnam, while Viettel has backed an agtech platform called NextFarm that has over 1,000 users in Vietnam, Myanmar, Cambodia, and Singapore. But the country has few platforms from which agtech practices and applications can be launched. Enter AgTech Vietnam. Created by the International Finance Corporation (IFC) under the World Bank Group, it aims to bring agtech solutions to smallholder farmers in Vietnam.
Vietnam’s agricultural sector is dominated by smallholder farmers, with the General Statistics Office estimating in 2020 that there are about 10 million such farmers in the country. A smallholder has a small parcel of land, sometimes smaller than 0.5 hectares, and operates on a small scale.
"When I came to Vietnam four years ago, we had this issue with multiple clients who were saying that they wanted to deploy digital solutions to smallholders in their supply chains, but it wasn’t working," said Marta Bogdanic, Senior Operations Officer at IFC. "Farmers would provide information for a little while, but then it would stop, as farmers haven’t observed any direct benefit."
Bogdanic and her team had clients working in the rice, pepper, and coffee industries, so they started looking at these sectors, particularly in the Mekong Delta and the Central Highlands, and realized which part of the food production chain needed to be addressed: the farmers. “We went out and conducted a diagnostic study, basically just asking farmers what they needed,” she said. “Because why would somebody use something if it doesn’t have any value for them?”
"Clients had been trying a top-down approach of telling farmers that if they shared enough information after implementing desired production practices, they could, for example, be certified and then receive premium payments for their crop. “But these premium payments were often all over the place, depending on the company, depending on the relationship with farmers,” Bogdanic said. “Some farmers would get less in payments, others would get more, and it wasn’t very organized.”
While engaging directly with farmers to assess their needs, AgTech Vietnam also brought three agtech companies on board for a three-month pilot acceleration program in which the tech firms would show Vietnamese farmers what their products could do. ListenField, SpiceUp, and Plantix provide mobile-based farm management and advisory services aimed at, among other goals, improving yield quality and quickly detecting crop pests or diseases.
Farmers are introduced to a mobile-based farm management tool. Photo courtesy of International Finance Corporation (IFC).
“We listened to feedback from farmers on what they wanted, and we worked with agri tech startups and a tech developer to develop farming advisory applications to help the farmers,” Bogdanic explained. “Basically, they get notifications that are location-, weather-, and crop cycle-specific to what they need to do. Coffee and pepper are perennial crops, so you know when the flowering starts, and you can evaluate the next steps at the right time. You draw data from an IBM weather service and look at things that are happening in the field, and this enables the provision of these notifications to farmers.”
Of course, convincing people to use a new app and change their process isn’t always easy. Especially when it comes to changing business practices, people need to know that something new will create additional value for them.
The rice problem
Rice farmers, who tend to be older than the pepper and coffee farmers that Bogdanic worked with, were particularly resistant to the introduction of digital apps. But the sector, worth US$3 billion in exports, is hugely important financially and thus, despite the challenges, deserving of attention. The information that farmers can upload, such as the amount of water or fertilizer they were using, has to be linked to a greater network. Being able to share data related to their crops with the companies they sell to allows for easier certification audits for organic status and other systems.
Another major challenge is the structure of Vietnam’s rice market, an even bigger problem than the reluctance among rice farmers to go digital. “The rice supply chain is very fragmented, and there are too many people involved,” Bogdanic said. ““There is a middleman at every step, so a farmer doesn’t sell directly to the end buyer; they sell to somebody who collects and then sells that in bulk to a person with a barge, and then someone aggregates a few barges, and so on.””
As a result, it’s difficult for the end buyer — whether a company or an individual — to know exactly where their rice came from and how it was grown. This lack of verifiable information can have significant impacts on domestic and foreign markets.
Moreover, of the three crops, rice presents by far the greatest potential for improved environmental outcomes, particularly because of how it is cultivated. Though methane doesn’t remain in the atmosphere as long as carbon dioxide, it is a much more potent greenhouse gas, and one created by the most basic way of growing rice: in flooded fields. “Rice emits the most methane of any sub-sector in agriculture, and it’s responsible for about 40% of greenhouse gas emissions in this industry in Vietnam,” Bogdanic explained.
“The Vietnamese government took on this obligation to be net-zero by 2050, and they want to reduce methane emissions by 30% by 2030,” Bogdanic said. “It would be a very nice story if one outcome of this application is for farmers to change their practices based on data to alternate wetting and drying instead of using flooded fields.”
As of now, about 1,800 farmers are using the IFC-backed application, mostly in the coffee and pepper sub-sectors. Millions of people work as farmers in Vietnam, meaning this is a very small start, but Bogdanic believes there is great potential for her work and agtech in general when it comes to farmers and the land they use.
“I am a firm believer in farmers getting paid for the quality of the products that they deliver, rather than just emissions reduction,” she said. “But this is all tied up together if you want people to produce in a more sustainable manner.”
