Australian startup using blockchain in agriculture to solve developing world farmers' low incomes.
Updated: Oct 31, 2019
This interview between David Davies, CEO of AgUnity and Emilia Picco, Managing Editor of Disruptor Daily is part of Disruptor Daily new Blockchain In Agriculture series, where they interview the world's leading thought leaders on the front lines of the intersections between blockchain and agriculture.
In this interview Emilia speaks with David Davies, CEO and founder of AgUnity, to understand how AgUnity is using blockchain to transform the agriculture business, and what the future of the industry holds.
1. What’s the story behind AgUnity? Why and how did you begin?
David Davies: In early 2016 my co-founder John and I happened to attend a FinTech event in London and John entered into a hackathon for which the theme was FinTech for Good. In all honesty, we just wanted to win a prize from Singularly University, and so challenged ourselves to come up with the most ambitious, world-changing idea we could. Our idea was a way to meaningfully help the 1 billion poorest farmers in the world. The people are so poor that nobody had specifically focused on building something for them. I mean there are lots of apps that the poor farmers ‘could' use but they are not designed to solve problems from their perspective.
Another issue is that commercial ventures always focus on how to make a solution profitable, so they don't focus enough on solving a real problem which is what we did without being constrained by how to make money from the poor. Finally, most companies and developers have no perspective of what it's really like to BE poor, so they never really address the right problems for lack of true understanding. Over the weekend of the hackathon, we started to realize that we'd inadvertently stumbled onto an idea that could be world-changing. After we won, both Gates foundation and UNICEF confirmed that it was unique and potentially huge.
In the following months as we built further on the idea we realized that not only Gates and UNICEF but virtually EVERY major NGO simply loved the idea and wanted to support and work with us. It also became clear that we had approached a global issue in a way that was completely new and original. When we explain to any westerner or anyone that's never experienced severe poverty it takes a while to grasp what AgUnity App does. As It is a problem that was solved in Australia before most of our grandparents were born. But it is the single major issue that's holding back the very poor of the world. A lack of Trust. We take this for granted but it's vital for effective cooperation, and without cooperation, small farmers are on the wrong end of economies of scale. In everything they do because they are so small scale it costs them more, is more difficult and returns less than larger farms. And the combination of many inefficiencies adds up more than we (who've never been poor) can ever imagine. The solution is to get 50-100 farmers together to collaborate and share but a lack of clear records and TRUST stops them from doing that.
AgUnity App is the simplest use of blockchain, it's really a record-keeping system that works smartphone to smartphone and writes to the blockchain so it can never be altered. But the power of that simple process and its ability to transform groups of individual farmers into an effective collaboration or cooperative should not be underestimated.
We've increased farmers' income by 3x just within one season, simply by enabling cooperation and trust. The Kenya (Wheat) and Bougainville (PNG) (Cocoa) studies have shown very similar results, surprising for us as well as the NGOs that have been working there for decades. The simple matter of trust leading to cooperation and sharing resources has delivered more gains in a single season than decades of other more expensive projects. Everyone was trying to apply modern ideas before addressing the most fundamental thing that we took for granted. We were lucky early on to get the backing of a Billionaire philanthropist from HK, and we are hopeful another middle eastern Billionaire will invest in the current round. That believe in the grand vision and mission. Both these people are backing us in our vision to become the standard global platform for the smallholding farmers of the world. We're playing for way more than sheep stations because we've found a way to meaningfully change the lives of millions for the better. Now that we've seen first hand what AgUnity App can achieve, we are morally obligated to use it to help as many of the poor as quickly as possible.
2. Please describe your use case and how AgUnity uses blockchain:
David Davies: Our solution is to enable trust between farmers and co-operatives by providing a smartphone and our blockchain app to farmers in the developing world. This app enables farmers to easily record all transactions in an immutable ledger and to plan better, buy and sell together and cooperate to share resources. In our pilot projects in Kenya and Bougainville, we increased farmer incomes by on average 3x from a single season to the next. The AgUnity App subsequently becomes the exclusive platform on which all their finances are managed, and we provide access to goods and services such as solar lighting, from which AgUnity earns a royalty (effectively becoming their eBay or Amazon).
It’s true that we could have built a standard database for the documentation of farmer’s transactions with farming co-operatives / other third-party partners. However, the issue we’re tackling is around a lack of trust between a farmer and a co-op, so we would effectively be asking them to trust in the same system that typically leads to corruption and graft, except that they have to trust AgUnity who they know even less well than their existing partners. The use of a blockchain enables us to explain to farmers that once a transaction is agreed to by both parties, no one, not the farmer, not the co-op, not even AgUnity can ever change this record. It also provides an additional layer of security to ensure these transactions cannot be hacked by third parties who may wish to transfer receipts from the farmers to themselves. So in short, no, we couldn’t do what we do without the use of a blockchain!
3. Could you share a specific customer/user that benefits from what you offer? What has your service done for them?
David Davies: Over 500 million smallholder farmers earn their income from Agriculture, yet up to 50% of a farmer's crop value ‘vanishes' between harvest and sale. Huge inefficiencies in planning and a lack of access to proper farming resources results in poor harvests, spoilage of crops and poor prices at the point of sale. Farming cooperatives are the most effective and equitable way to increase farmer's incomes by overcoming these inefficiencies, however poor record-keeping and a lack of transparency often results in corruption and graft.
We have a target market of hundreds of millions of small-scale farmers in the world. These are typically farming families that live of a few acres of land and living on a few dollars a day. The majority of these farmers live in Africa, Asia, and the Pacific and these are the regions we've targeted in our first pilots. This market is characterized by low levels of financial inclusion, with many targeted farmers not having a bank account or digital identity. There are also very low levels of literacy and restricted access to affordable financing and loan mechanisms. These farmers typically struggle in negotiating sales of their crops to the market unless they are involved in a co-operative, and in many instances, they are completely unaware of the end-sale price of their crops as compared with other farmers/crops, and with little training or guidance on choosing what and how to farm.
By helping farmers to work together in cooperatives and collaborating with other charities and initiatives, we have been able to increase farmer income 2x to 3x in a single season and make a profound social impact on rural communities. This increase in income is achieved because the solution enables the farmers to trust each other and cooperate better as a group rather than doing everything individually. The smart contract that assures transparency and governance in all data records is game-changing in the establishment of sound social capital.
AgUnity is also a pathway to financial inclusion for many of the poorest people on earth. In many cases, we provide farmers with their first relevant connection to the digital world, while providing them with a soft introduction to other services like microfinance, mobile banking, digital cash, and online commerce. Transparent information and having direct access to their own data, farmers have powerful anchorage for them to campaign and mobilize pertinent products and services (e.g. by using their harvest records as proof of diligence for credit application, by using knowledge on current market price to better negotiate price with their off-takers, or by mobilizing collective input supply purchases, farmers get substantial discounts on products and services).
Increasing operational performance of cooperative, with reliable and sound measuring and evaluating the impact of agricultural efforts vis-a-vis its socio-environmental impact, would be key in assuring sustainable agricultural practice. The combination of potential digital identity, land registry function and transparent value chain would push for more environmentally equitable agricultural practice. While currently not within our innovation scope, in the future, collaboration with third party alliance focusing on biophysical models recording can also be established to enrich our understanding of the agricultural practices’ environmental impact.
4. What other blockchain use cases in the agriculture industry are you excited about?
David Davies: Blockchain in the supply chain industry is another area that is both exciting and remarkable. While AgUnity focuses on AgTech solution for smallholder farmers, Axsari has served more developed market’s clientele:
‘MyOrigins’ provides traceability for merino wool growers through the entire lifecycle from the birth of a sheep to harvest of wool.
MineLedger is an emerging blockchain platform for the artisanal mining industry, where precious metals and gems can be traced on a blockchain and have their provenance proved for ethical purchasing.
EscaVox is a supply chain tracking and SaaS company providing the hardware and platform to collect, share, analyse and trade data related to food. Customers are participants at all stages of the chain in the food ecosystem, from producers, logistics companies, distributors and retailers, investors and financiers, insurers, accreditation, service providers, and consumers.
5. Where will AgUnity be in 5 years?
David Davies: Ultimately our goal is to become the standard platform of trust for the 1.5 billion people who rely on smallholder farming as their primary means of income. These are some of the poorest and most vulnerable people on the planet, and with the ever-increasing effects of global warming they are likely to be further exposed to difficulties and extreme situations. We believe we can connect a large portion of the ‘developed’ world with farmers in emerging economies through partnerships and our app, and that we are ultimately tackling a core issue in society that if not dealt with, little further development can be attained (i.e. trust and cooperation). Like the above, creating more trust and cooperation between the hundreds of millions of lowest-income farmers in the world can only achieve a ‘greater good’ outcome locally and globally. There is huge potential for impact in these communities, and by harnessing the convergence of three technologies not previously seen before in human history (telecommunications coverage, low-cost smartphones, and distributed-ledger technology aka blockchain), AgUnity is in an incredibly advanced position to change the lives of farmers in a way not previously possible.
About Emilia Picco
Emilia is the Managing Editor of Disruptor Daily and has been with the team for over two years now. She has a deep passion for technologies that will reshape our world and has interviewed many of the world's leading thought leaders. She lives in Argentina and as expected, is a wine lover.
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