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ICT Enabled Service Delivery for Rice Farming

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ICT Enabled Service Delivery for Rice Farming

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Participants on the 30th Global Young Leaders Programme (YLP) responded to International Rice Research Institute (IRRI)’s invitation to make business and strategic recommendations on ways to commercialise its research technology and used IRRI’s Nutrient Manager for Rice as a basis for a business model. Through a combination of classroom-based discussions and onsite visits to local communities, this YLP proposed the establishment of a new company to drive an integrated ICT platform to improve rice crop management and provide farmers with access to credit, farming-related information and services. This platform would give IRRI the opportunity to reach out and significantly impact the socio-economic livelihoods of smallholder farmers, whilst contributing to more environmentally sustainable farming methods.

Participants on the 30th Global Young Leaders Programme (YLP) responded to International Rice Research Institute (IRRI)’s invitation to make business and strategic recommendations on ways to commercialise its research technology and used IRRI’s Nutrient Manager for Rice as a basis for a business model. Through a combination of classroom-based discussions and onsite visits to local communities, this YLP proposed the establishment of a new company to drive an integrated ICT platform to improve rice crop management and provide farmers with access to credit, farming-related information and services. This platform would give IRRI the opportunity to reach out and significantly impact the socio-economic livelihoods of smallholder farmers, whilst contributing to more environmentally sustainable farming methods.

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ICT Enabled Service Delivery for Rice Farming

  1. 1. 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
  2. 2. 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.
  3. 3. 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
  4. 4. 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
  5. 5. 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?
  6. 6. Profiles of YLP Participants YLP participants come from corporate sector, with IT and agricultural backgrounds as well
  7. 7. 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
  8. 8. 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)
  9. 9. 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
  10. 10. 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 phoneSmartphone Interactive Voice Response implementation box Farmer calls dedicated number Smartphone output Web output Smartphone and mobile: Text output Available in Philippines and Indonesia
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. 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
  16. 16. 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
  17. 17. 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
  18. 18. 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
  19. 19. 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
  20. 20. 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)
  21. 21. 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
  22. 22. 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)
  23. 23. 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
  24. 24. 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
  25. 25. 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
  26. 26. 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!
  27. 27. Thank you!

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