Alternate Data To Enable High Volume, Low Value Lending To Farmers

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The days when money implied cold, hard cash are long gone – the developed world now revolves around cards and credit, particularly the latter.

Think of the convenient and congenial options that are available to an urban citizen today. If you run out of balance on your phone, then your telecom operator offers you talk-time on credit that you can pay back later. Or your preferred cab aggregator offers a hassle-free ‘ride now, pay later’ facility.

These are not complex financial transactions – they are simple, convenient ways in which these companies are doing business while offering their customers what they require when they need it the most. This has resulted in a customer base that is more agreeable of debt and credit systems, leading to better returns for the company.

Now put yourself in the rural scenario in a developing country – do farmers have access to such easy credit? Are business organizations formulating innovative ways to service the agricultural community with high volume, low-value crop loans?

Even though there is some effort going into helping farmers get loans, most financial organizations are not yet completely sold on the idea of providing farmers with easy credit due to a perceived lack of value and/or returns.

From a socioeconomic perspective, this sector is in dire straits because the foot soldiers of agriculture are not getting the kind of financial aid that they need from market-compliant financial institutions. As a result, the farmers fall prey to unscrupulous money lenders who charge exorbitant interest without adding value to the agri-ecosystem.

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The misconception that investment and innovation in the rural sector are not as financially viable as it is in the urban is absolutely incorrect. With the world population soaring to 9.7 billion in 2050, food production needs to be boosted by 70% according to the Food and Agriculture Organization of the United Nations.

This is a fact that the world is slowly aligning itself to, which implies that more investment, innovation, development, and growth in the rural sector are needed to ensure financial inclusion for the under-served smallholder farmers. There is huge commercial potential for a product that can fund the working capital needs of a farmer and still be profitable by servicing high volume and low-value lending.

There are a few hurdles that we need to navigate first though. The lack of comprehensive data about the farmer, plot, and yield is one commonly cited factor. This leads to a higher cost of a physical audit for rural loan lending and servicing, as well as the uncertainty of repayment.

This is where Cropin steps in to provide the technological boost that one would need to make such low-value, high-volume crop loans feasible. SmartRisk is one of our flagship products that equip Banks, NBFCs (non-banking financial companies), and other lending institution with comprehensive ag-alternative data.

SmartRisk is an AI-led decision intelligence solution that utilizes proprietary machine learning algorithms, satellite imagery, and weather forecast to provide historical and real-time insights at a plot level.

The farm-level data insights, obtained from Cropin’s solution, can be a direct input to a financial product, which is aimed at providing easy crop loans to farmers. Also, monitoring farmer portfolios post lending with real-time insights on farming activity will significantly reduce the physical effort and cost of audits.

 

Real-time insights for smarter decision making

The other salient features include crop health monitoring and early-warning disease alert, crop advisory to support successful harvest, triggers on crop maturity/harvest, and efficient planning features for team farm visits.

Banks and non-banking financial institutions can count on SmartRisk to provide them with the information that they need to embark on a commercially successful journey in the rural sector.

On the end-user front, easy credit can help farmers in the day-to-day operational expenditures and also help him to invest in right practices/inputs for better yield

Agriculture is an essential sector, but limited access to credit and resources in the current scenario has made it unattractive for the farmers and the coming generation to continue farming. But, with all players making a steady income and being supported by financial institutions, the entire landscape of the rural sector can be changed for the better.

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SmartRisk Is an AI-powered crop analytics platform that uses deep learning to provide risk mitigation & forecasting intelligence based on historical data, weather insights, and ground truth data captured from the field

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