Agricultural Value Added Services (Agri VAS): Market Entry Toolkit Authors: Amol Jadhav, Natalia Pshenichnaya and Fiona Smith, GSMA mAgri Programme. Contents

3—4 Introduction

5—9 Chapter 1 Market Opportunity

10—16 Chapter 2 Market Assessment and User Needs

17—21 Chapter 3 Marketing

22—30 Chapter 4 Service Design

31—38 Chapter 5 Commercial Model and Business Case for Agri VAS

39 Glossary GSMA — mAgri Programme 3 Market Entry Toolkit - Agri VAS

Introduction

The furious growth of mobile in developing countries, and rural regions in particular, presents a landmark opportunity to deliver critical, information-based agricultural services to rural poor smallholder farmers. There are over 2.3 billion people living in poverty and the majority earn their primary livelihood from small farms in developing countries. The yields of these farmers, especially those in sub-Saharan Africa, typically represent a fifth of those in the developed world. There is a raft of reasons for this, one of which is a lack of access to relevant and actionable agricultural information. Yet this problem is eminently superable. The right information, absorbed and applied correctly, can double or triple productivity in many of these households. Mobile is the leapfrog technology that allows us to complement existing extension efforts by stepping up and meeting this information need.

About the Authors This document was written by members of the GSMA mAgri Programme. The GSM Association represents the interests of mobile operators worldwide and within this, the GSMA Development Fund works to identify opportunities in emerging markets for social, economic and environmental impact through mobile services.

In partnership with USAID and the Bill and Melinda Gates Foundation (BMGF) the GSMA has recently launched the mFarmer Initiative to support mobile operators and agricultural partners in Sub-Saharan Africa and India in creating commercially viable and scalable mobile information services to benefit over 2 million smallholder farmers. For more information on the initiative and challenge fund please contact [email protected] GSMA — mAgri Programme 4 Market Entry Toolkit - Agri VAS

There are no hard and fast rules to follow Mobile Network Operators (MNOs) and when building an Agricultural Value Added Agriculture Organisation Partnerships: 1 Service (Agri VAS). This document does MNOs face the task of growing average not provide a blueprint, nor act as a guarantor revenue per user (ARPU) and market share of success. Those Agri VAS deployments in rural areas. In a congested marketplace, that have achieved success have often done they seek to find ways to differentiate within so through clever adaptation to their a commoditised industry. Agricultural environment. Replicating them elsewhere extension organisations face the challenge of would be to remove a crucial piece of the servicing geographically dispersed farmers jigsaw. However, from the GSMA mAgri while lacking scalable service infrastructure. Programme’s involvement in Agri VAS deployments in Asia and Africa, and from The challenges, therefore, that MNOs and market research on best practice amongst agricultural extension organisations face are existing service providers, it is possible to complimentary in nature. Agricultural discern similarities in the challenges faced, and organisations can help MNOs differentiate by responses to those challenges, from which we targeting rural farmers with their services, can learn. This document represents augmenting their relevance, attraction and current best practice in dealing with them and quality. MNOs can help agricultural is primarily addressed to Mobile Network organisations rapidly scale services and reach Operators (MNOs), other service providers, distant farmers via their network and and agricultural organisations who are looking distribution infrastructure. This forms the to partner and launch Agri VAS. basics of a partnership model for Agri VAS.

A significant trend is the complimentary The purpose of this document is to help key benefits emerging from partnership models. players recognise, understand - and act upon Due to the scalability and reach of mobile - the opportunities in the mobile agriculture networks, partnership models are emerging sector. We begin by defining the sheer size of between mobile operators and agriculture this market. organisations in developing mobile solutions for agriculture. Fiona Smith | Director, GSMA Development Fund mAgri Programme.

Agricultural Value Added Services form part of the rural VAS portfolio for mobile network operators and VAS providers. A Value Added Service is a non-core service of a mobile operator. The term can be used to refer to all services beyond standard voice-calls. VAS are supplied either in-house by the MNO themselves, or by a third party VAS provider. GSMA — mAgri Programme 5 Market Entry Toolkit - Agri VAS

Chapter 1 Market Opportunity

Agricultural Value Added Services (Agri VAS) present a considerable business opportunity due to the enormous potential user base in developing countries. The farming sector in these countries often suffers from chronically low productivity. Lack of information acts upon productivity and income levels like a glass ceiling. However, with increasing teledensity in the developing world, the mobile channel is uniquely positioned to address the information needs of farmers – an intervention that can help increase their income and yield. By delivering relevant, actionable content, providers of mobile services for agriculture can offer a valuable and sustainable product. In order to appreciate fully the business opportunity for Agri VAS, it’s important to identify certain key variables in the market place – typically mobile penetration levels, user base and agricultural productivity trends. GSMA — mAgri Programme Chapter 1 6 Market Entry Toolkit - Agri VAS Market Opportunity

The Potential User Base for Agri VAS It’s important to understand the sheer size India work in agriculture – this forms 52% of the agricultural sector in the target markets of India’s work force. In Sub-Saharan Africa, (Figure 1.1). In developing countries the the agricultural sector is the largest employer majority of the labour force works in the too. In many of the African countries, over 80% agricultural sector. This population of the work force is employed here – and a constitutes the potential user base for significant proportion of these are women. Agri VAS. Almost 250 million people in

Figure 1.1: Agricultural Sector Size

15% 32% 24%

49% 51% 44%

85% 32% 68%

GDP – Ethiopia Labour Force – Ethiopia Agriculture Industry Agricultural Labour Force GDP – Ghana Labour Force – Ghana Other Industries Other Labour Force Agriculture Industry Other Labour Force

GDP (Purchasing Power Parity): Labour Force in Agriculture: Other Industries Female Agricultural Workers $85.71 Billion 33.96 Million Workers GDP (Purchasing Power Parity): Male Agricultural Workers $39.64 Billion Labour Force in Agriculture: 6.13 Million Workers

18% 23%

11% 25%

48% 52%

64%

82% 77%

GDP – India Labour Force – India GDP – Kenya Labour Force – Kenya Agriculture Industry Agricultural Labour Force Agriculture Industry Other Labour Force Other Industries Other Labour Force Other Industries Female Agricultural Workers

GDP (Purchasing Power Parity): Labour Force in Agriculture: GDP (Purchasing Power Parity): Male Agricultural Workers $4.20 Trillion 237.88 Million Workers $66.22 Billion Labour Force in Agriculture: 14.03 Million Workers

Source: The World Bank and CIA The World Factbook GSMA — mAgri Programme Chapter 1 7 Market Entry Toolkit - Agri VAS Market Opportunity

31% 10% 20% 37% 34% 43%

56% 63% 37% 69%

GDP – Malawi Labour Force – Malawi GDP – Mali Labour Force – Mali Agriculture Industry Other Labour Force Agriculture Industry Other Labour Force Other Industries Female Agricultural Workers Other Industries Female Agricultural Workers

GDP (Purchasing Power Parity): Male Agricultural Workers GDP (Purchasing Power Parity): Male Agricultural Workers $13.05 Billion $16.24 Billion Labour Force in Agriculture: Labour Force in Agriculture: 5.68 Million Workers 3.02 Million Workers

31% 33% 19% 22% 30%

42%

39% 69% 67% 48%

GDP – Mozambique Labour Force – Mozambique GDP – Nigeria Labour Force – Nigeria Agriculture Industry Other Labour Force Agriculture Industry Other Labour Force Other Industries Female Agricultural Workers Other Industries Female Agricultural Workers

GDP (Purchasing Power Parity): Male Agricultural Workers GDP (Purchasing Power Parity): Male Agricultural Workers $21.87 Billion $374.34 Billion Labour Force in Agriculture: Labour Force in Agriculture: 8.91 Million Workers 34.98 Million Workers

Source: The World Bank and CIA The World Factbook GSMA — mAgri Programme Chapter 1 8 Market Entry Toolkit - Agri VAS Market Opportunity

29% 10% 34% 20% 27% 24%

63% 66% 56% 71%

GDP – Rwanda Labour Force – Rwanda GDP – Tanzania Labour Force – Tanzania Agriculture Industry Other Labour Force Agriculture Industry Other Labour Force Other Industries Female Agricultural Workers Other Industries Female Agricultural Workers

GDP (Purchasing Power Parity): Male Agricultural Workers GDP (Purchasing Power Parity): Male Agricultural Workers $12.27 Billion $62.23 Billion Labour Force in Agriculture: Labour Force in Agriculture: 4.47 Million Workers 17.11 Million Workers

22% 25%

18% 16% 15% 27%

55% 69% 75% 78%

GDP – Uganda Labour Force – Uganda GDP – Zambia Labour Force – Zambia Agriculture Industry Other Labour Force Agriculture Industry Other Labour Force Other Industries Female Agricultural Workers Other Industries Female Agricultural Workers

GDP (Purchasing Power Parity): Male Agricultural Workers GDP (Purchasing Power Parity): Male Agricultural Workers $42.21 Billion $20.04 Billion Labour Force in Agriculture: Labour Force in Agriculture: 11.59 Million Workers 4.09 Million Workers

Source: The World Bank and CIA The World Factbook

The Growth of Mobile However, despite the enormous number of Access to mobile phones is growing people working in agriculture, productivity dramatically in developing countries, especially from this sector is disproportionally low. It is in rural areas. Since most urban areas are not unusual for outputs to be two thirds lower approaching or have surpassed 100% than those in developed economies. Often, teledensity, it is the remote rural regions that the figures are lower even than this. A raft represent the largest untapped market of of sub-Saharan countries regularly produces potential users. Mobile network operators yields that are 80% smaller than those in are addressing this and rural penetration rates the USA and UK (Figure 1.2). Given that are climbing very quickly. Estimates of total agriculture accounts for around 30% of a subscriptions in the developing world now typical sub-Saharan countries’ GDP, the scope exceed 4 billion and with shared access almost for exponential GDP growth due to optimised every poor person on the planet can tap the farming practices is significant. benefits of these networks. In Ghana, for instance, the overall mobile penetration reached 2 GSMA Wireless International 78% by the third quarter of 2011.2 GSMA — mAgri Programme Chapter 1 9 Market Entry Toolkit - Agri VAS Market Opportunity

Figure 1.2: Cereal Productivity Gap 7,500

7,000

6,500

6,000

5,500

5,000

4,500

4,000

3,500

3,000

2,500

2,000 Cereal Yeald (kg per Hectare of Harvested Land) Cereal Yeald

1,500

1,000

500

0 UK USA Mali India China Keny a Ghana Nigeria Malawi Zambia Ethiopia anzania Uganda Rwanda T

Data Source: World Bank Mozambique

Figure 1.3: Market Potential for Agri VAS.

Rwanda Uganda 100% Mozambique Tanzania

EEthiopiathiopia 80%

NigNigeriaeria Malawi Zambia Mali 60% Kenya Ghana 40%

20% Higher Potential Proportion of Workforce in Agriculture Proportion of Workforce for Agri VAS Bubble Size = Farming Population

0% 0% 5% 10%15% 20% 25% 30%35% Rural Mobile Penetration Source: The World Bank and CIA The World Factbook

Indeed, in the race to gain market share among reliable agricultural information for agrarian rural subscribers, the pricing wars have largely workers. Analysis can be conducted to been played out and operators are increasingly understand the potential market size for an turning to other, more innovative ways to Agri VAS. In figure 1.3, the size of the bubble differentiate themselves from their competitors. depicts the farming population plotted against Agri VAS presents a compelling opportunity the percentile proportion of workforce in to meet this need. agriculture (Y axis) and the rural mobile penetration (X axis). The ubiquity of mobile phones means that they are ideally placed to act as information channels for farmers. Mobile services, in many instances, are the first and only source of GSMA — mAgri Programme 10 Market Entry Toolkit - Agri VAS

Chapter 2 Market Assessment and User Needs

The framework below outlines the components to consider when designing an Agri VAS, from understanding the customer at the outset (Ch. 2), marketing the service (Ch. 3), service design (Ch. 4) and finally, the underlying business model (Ch. 5).

Market Assessment & User Needs Socio-Cultural- Agricultural Economic Factors Cycle

Marketing

Understanding Reaching the the Customer Customer

Hi... Service Design Designing for Formats Content Customer Needs and Channels Process

Commercial Model & $ Business Case Revenue Streams CAPEX/OPEX GSMA — mAgri Programme Chapter 2 11 Market Entry Toolkit - Agri VAS Market Assessments and User Needs

Consumer Market Segments At the design stage of any new product Market segmentation is vital to understand the or service, it is critical to understand the various categories of consumers in the target user’s needs and to identify the unique market, and ensuring the product or service is demographics that exist within the target relevant to them. For rural smallholder farmers, market. This is especially crucial for Agri it may be most useful to focus segmentation on VAS as base of pyramid users tend not to agro-ecological zones, crop, language, gender, be surveyed extensively. The danger posed and attitude (especially proclivity to change). by a lack of understanding of the target market is significant and can make or break a 1. Language/Culture deployment, leading to products and services The boundaries of a language and a region’s that serve no immediate user requirement; geo-political boundaries are often one and a solution in search of a problem. We advise the same. However, this is not the case prospective service providers to focus their everywhere and care must be taken to efforts on the following key activities. identify the language(s) spoken in a market segment during the service’s design phase. 1. Consumer Market Segments Segmentation The service must be delivered in the local of the market is a crucial keystone of product language and provide information relevant to design. Each demarcation may well have that geography’s agro-climatic characteristics, unique problems and needs. Identifying which determine the crops that can be grown these is a logical first step. there. Cultures in different geographies may 2. Market Research Once segmentation has well focus on specific types of crop or have occurred, methodical market research and developed specialised methods of cultivating analysis need to be conducted for each. them. Knowing these local traditions is a 3. Agriculture Cycle Consideration should be prerequisite for making information services given to the fact that a farmer’s activities are pertinent and actionable. almost entirely governed by the overarching super-structure of the agricultural cycle. 2. Agro-ecological Zone At different points in this cycle (planning, In larger territories, a market segment may planting, growing, harvesting or selling) straddle more than one agro-ecological zone. the farmer will have a uniquely different set These zones present a unique set of challenges of information needs. The Agri VAS must to a farmer and it is not uncommon for a maize fulfil these. cultivation technique to work well in one zone and fail in another. Even if the market segment inhabits a single zone, care must be taken to ensure that the service designers are aware of the information needs specific to that zone. This will be of particular importance where content generation is concerned. GSMA — mAgri Programme Chapter 2 12 Market Entry Toolkit - Agri VAS Market Assessments and User Needs

3. Gender assistance of others. Adopts new techniques To promote equal access and utility to both after others have proved they work. genders, it is important to understand the 3. Independents Generally savvy, open to new perceptions of gender and the role that they information but not particularly engaged play in agricultural activities. It is a fact that the with farming. Will follow best practice greater proportion of agricultural labour falls to but would never try new methods by women, and yet, women tend to earn less than themselves. their male counterparts and, generally, have 4. Frustrated Escapist Trying to make the best less control over the business decisions taken fist of farming but would change jobs if the 3 on the farm. This divide remains significant , opportunity arose. although indications in Bangladesh suggest4 5. Traditionalist Enjoys farming but does not it is closing there, at least, as populations seek out new methods and is resistant to of male migrant workers move around the change. country leaving womenfolk at the helm of the agrarian businesses. The same phenomenon 6. Trapped Does not enjoy farming and sees no occurs when male workers decamp to urban future it. Hopes children do not have to farm areas in search of jobs. as a career.

Gender and cultural sensitivities should be For example, by identifying attitudinal borne in mind during the design, content segments, marketing agents can target initial generation and marketing phases of a product messages on ‘Competent Optimists’ with launch. Grameen Foundation found, through the aim of getting them to influence the their Community Knowledge Worker (CKW) ‘Contented Dependents’ and ‘Independents’. Initiative in Uganda, that female farmers were Agents can avoid wasting time and resources much more receptive to receiving assistance targeting ‘Traditionalists’ or the ‘Trapped’ from female CKWs. This new information was until the service reaches critical mass, and the obviously extremely valuable to them in their new technique(s) attain orthodoxy. As usage efforts to make the CKW programme equally matures across each segment, marketing accessible and useful to both genders. messages can be adapted, and made more efficient. Though attitudinal segmentation – 4. Attitudinal Factors by nature – is a complex task, the following steps seem to represent a logical approach: Psychological or attitudinal segmentation deals with identifying groups of farmers who share 1. Scope Survey a sample population to identify similar attitudes towards farming and external psychological/attitudinal segment members. interventions. Understanding and identifying 2. Segment Segment identifiers can be attitudinal segments can provide powerful uncovered by finding common traits/ insights into how marketing messages should characteristics (Contented Optimists, be customised to maximise impact. or, from a marketing perspective ‘early adopters’, tend to focus on cash crops while A recent study5 by TNS Research International Traditionalists focus on staple crops). in Tanzania shed valuable light upon the make- 3. Assign These identifiers can then be used up of that country’s agrarian market as well as more broadly and applied to segment the offering useful attitudinal demarcations entire population (ie. we can assume that within it. those who focus on cash crops can be grouped as early adopters while staple Their findings suggest six broad distinctions crop farmers are Traditionalists). within the mind-sets of farmers, ranging from 4. Correlate Map these findings against ‘Competent Optimists’, to, at the opposite end other indicators such as region or district. of the scale, those who are ‘Trapped’ in farming For instance, the TNS RI study discovered and wish to leave. that 47% of farmers in the Iringa region of Tanzania were Competent Optimists We summarise their categorisations below, , (suggesting a high uptake of a new product however it must be noted that these segments or idea) whereas in Singida only 7% were are not wholly distinct from one another and Competent Optimists and 34% were there will be some overlap: Traditionalists (suggesting a correspondingly 1. Competent Optimists 3 Food and Agriculture Organisation of Seeks information low uptake). By cross-referencing the the UN http://www.fao.org/sd/fsdirect/ and networks well with others. Enjoys fbdirect/FSP001.htm segments in this way, a valuable picture 4 Innovations in Rural Extension: Case farming, is open to new techniques and begins to emerge which will inform Studies in Bangladesh, CABI Publishing, quick to try them out. April 2005 decisions about which areas to focus on 5 Listening to the Farmer Voice: 2. Contented Dependents Has a very positive when promoting the service to ensure Overlaying macro-segmentation with micro-level data on farmer needs and attitude towards farming but needs the maximum uptake. attitudes. – TNS Research International, March 2011. GSMA — mAgri Programme Chapter 2 13 Market Entry Toolkit - Agri VAS Market Assessments and User Needs

Market Research when designing and marketing new services. Once the market has been segmented using Radio programmes, newspapers, oral tradition, the parameters outlined above, systematic extension workers and word of mouth are research must be conducted in order to some of the typical information vehicles for understand the users’ activities and needs. remote, rural farmers. When conducting the research, care should Usage Case be taken to cross-tag each data set according If the farming community knows to the attitudinal segments identified during and trusts particular radio programmes, the initial segmentation process. it makes sense to partner with the radio show producers and leverage them as a Our research and findings suggest focusing delivery channel for Agri VAS. Furthermore, on the following key components:6 complementing existing communications channels with up-to-date agricultural 1. Crop Types and Varieties information is an efficient way to fill the knowledge gap. This partnership can also play Understanding the agriculture focus and crop a role in marketing the Agri VAS and earning varieties grown (along with their associated the faith and loyalty of the target market. seasons) will help determine which information services to provide. 4. Finances

Usage Case It may be useful first to select Many rural smallholder farmers are both poor crops that the project team has the most data and caught up in the poverty cycle. Thus, and experience working with. Then, from they may have an ultra-low (or non-existent) these crops, further prioritise based on willingness to pay for Agri VAS. Efforts their prevalence within the target market. should be made to investigate their income Alternatively, start with a select few crops sources and spending behaviours. A lot more and develop deeply impactful, successful work needs to be carried out to understand information services on those crops before the farmers’ ability or willingness to pay for growing the service portfolio by introducing particular products and services. However, additional crops as time and expertise allow. limited-scope market surveys that we have seen suggest that farmers are willing to pay for 2. Farming Techniques information they deem to be relevant, helpful and actionable, for example agri-specific, Specific farming techniques vary by farming localised weather forecasts that could impact culture, crop type and agro-ecological zone. growth or yield during the farming cycle. It is important to understand farming communities’ existing in order to identify Usage Case In the likely event that some target areas for improvement. farmers (poor rural smallholders) will be Usage Case unwilling and unable to pay for an Agri VAS, If a community already benefits it will be incumbent on the service provider from a specialised, unique method of pest to secure revenue from other sources, namely control that is proven and effective, advising other actors in the agricultural value chain them on alternative pesticides available on who benefit from farmers having access to the the market may not be seen as useful. In this Agri VAS. These alternative revenue streams case, it may be preferable to work with local can come from MFIs and insurers who wish organisations to learn their methods and to penetrate and transact business in the rural incorporate them in the content management markets, contract farming companies who system for Agri VAS. The storehouse of global want to increase the reach and quality of their agricultural knowledge is still growing and a extension services, as well as input suppliers/ successful Agri VAS will seek to broaden its dealers. Further details on these B2B revenue own knowledge as well as disseminate it. models can be found in Chapter 5. These new learnings can then be shared with other farming communities who face similar pest problems. 6 Although this document focuses mainly on crop farming, 3. Existing Information Sources it is important to conduct market research on other agricultural There is usually a complex web of information practices including livestock, service providers available to farmers although fisheries and agro-forestry. the degree to which farmers have access to this information will vary. Understanding what More detailed information on sources of information your target farmers are farming practices, agriculture currently using and forming partnerships with extension and the agriculture life cycle is available at http:// other information service providers can help www.g-fras.org/en/ or http:// www.meas-extension.org/home/ Packaging, Harvesting Storing & Transport

Growing Selling

Planting Planning

GSMA — mAgri Programme Chapter 2 14 Market Entry Toolkit - Agri VAS Market Assessments and User Needs

Packaging, Harvesting Storing & Transport

5. Gender Any Agri VAS targeting rural smallholder Growing Crop Selling Planting Harvesting farmers in less developed countries must be Planning and Growing and Selling proactive in catering to the female populations. Indeed, due to the inescapable fact that the majority of farm work is undertaken by women and that women are slowly assuming more Before the farmers begin to plant crops, they Market must first decide which crops to grow in this control over farming decisions, understandingInformation Planting Planning their cultural environment and informationand Access cycle. In order to make this decision, a farmer needs is crucial. must consider a range of factors including the demand and market price of specific crops, Successful Agri VAS must: the cost of that crops‘ inputs, seasonal weather expectations and other crops to be grown on ■■ Carry out marketing/sales campaigns the same plot. specifically targeting women. Inputs ■■ Packaging, Design aspects Harvestingof the service specificallyStoring Access to finance can also play a vital role for the agriculture roles and functions& Transport most in crop planning. Farmers caught up in the women typically play. poverty cycle lack proper resources to invest ■■ Ensure face-to-face interaction with women in quality inputs, thereby affecting long-term (by outreach workers, distributorsFarming or field planning and reducing yields, productivity agents) is conducted sensitively andAdvisory in and ultimately income. This cascades into next accordanceGrowing with local custom. Sellingyear’s crop planning and continues the cycle.

Women do the majority of food production, processing and preparation in developing Financial nations. Although women produce 60-80%Services of the food in the developing world, they earn Planting Crop Planning Planting Harvesting 22% less than their male counterparts,Planning have and Growing and Selling less access to resources and receive only 5% of extension services.7 These facts highlight a clear failure in the market to provide Agri VAS Once the land has been prepared and inputs whereMarket they are needed most. Weather Information sourced, the farmer plants his/her seeds or Theand Agricultural Access Cycle seedlings and begins monitoring and caring for the crop. If plants encounter any disease or pest The need for agricultural and marketing infestation the farmer must quickly diagnose information amongst rural and farmer the problem and implement an appropriate communities is part of a broader need for solution before the crop is lost. At this stage, diverseInputs information including health, natural assistance with pest or phytopathology issues is resource management, and community services required, along with an understanding of which information as off-farm income activities are pesticide to use and how and where to go about often integrated with farm production. sourcing them.

The information needs of farmers are diverseFarming due to the fact that mono-cropping is uncommonAdvisory amongst smallholders. In order to Cropmake best use of their resourcesPlanting available and Harvesting Planningminimize risk, farmers tend to diversifyand Growing by and Selling planting multiple crops and keeping livestock.

Farmers’Financial needs are governed by their progress Services When crops are ready for harvesting, farmers Market through the agricultural cycle and change decide where, with whom and how to sell Information over the course of the year. It’s important to and Access their crops. In order to reach a successful sale, understand that the cycle is dependent upon the farmer will require access to accurate, local growing seasons and will therefore vary up-to-date market prices to make the best from region to region. Consequently, although decision possible for the business. Issues of the focus areas we suggest below are broadly transportation may also arise which a well- typical,Weather their implementation period may well Inputs designed Agri VAS should bear in mind. vary by agro-ecology zone. Information about storage procedures and costing are also in demand.

7 Food and Agriculture Organisation of the UN http://www.fao.org/sd/fsdirect/ Farmingfbdirect/FSP001.htm Advisory

Financial Services

Weather GSMA — mAgri Programme Chapter 2 15 Market Entry Toolkit - Agri VAS Market Assessments and User Needs

Information Needs During the Agricultural Cycle The following chart lists examples of possible information topics farmers may need at each stage of the crop agriculture cycle.

Packaging, Harvesting Storing & Transport

Growing Selling

Planting Planning

Crop Planting Harvesting Planning and Growing and Selling

Market Information and Access

Inputs

Farming Advisory

Financial Services

Weather GSMA — mAgri Programme Chapter 2 16 Market Entry Toolkit - Agri VAS Market Assessments and User Needs

Planning Planting and Growing Harvesting, Post Harvesting and Selling - Accurate and competitive - Expected crop demand. market pricing. Market - Potential price fluctuations. - Potential price fluctuations. Information - Cost and availability of - Cost and availability and Access transport of inputs. of transport to market. - Market contacts. - Marketing, sales or negotiation tips.

- Seeds/fertiliser availability, - Pesticides. - Availability, cost and location prices and location. of storage services. Inputs - Instruction for self-storage.

- Crop and seed selection. - Techniques to protect - What is the best time and - Land preparation. against and prevent method of harvesting. Farming disease and pest infestation. Advisory - Diagnose and treat disease and pest infestation.

- Loans and insurance - Loan availability - Savings account rates availability, rates and rates for and availability. Financial and contacts. non-farming activities. Services

- Long term - Short-term weather - Weather forecast and weather forecast. forecast. For example, implication for storage. Weather - Implication of local to know when to plant. agro-environment.

Collecting the Data Typical methods for developing this Collecting this information can be quite market intelligence include surveying challenging and at times (depending on your sample populations in the field, organising level of resources) impractical. Working with focus groups and desk-bound research agriculture organisations or NGOs who already of the demographic. have data in these areas or have the capacity to conduct extensive field research and sampling can help to expedite this process.

Planning Planting and Growing Harvesting, Post Harvesting and Selling - Accurate and competitive - Expected crop demand. market pricing. Market - Potential price fluctuations. - Potential price fluctuations. Information - Cost and availability of - Cost and availability and Access transport of inputs. of transport to market. - Market contacts. - Marketing, sales or negotiation tips.

- Seeds/fertiliser availability, - Pesticides. - Availability, cost and location prices and location. of storage services. Inputs - Instruction for self-storage.

- Crop and seed selection. - Techniques to protect - What is the best time and - Land preparation. against and prevent method of harvesting. Farming disease and pest infestation. Advisory - Diagnose and treat disease and pest infestation.

- Loans and insurance - Loan availability - Savings account rates availability, rates and rates for and availability. Financial and contacts. non-farming activities. Services

- Long term - Short-term weather - Weather forecast and weather forecast. forecast. For example, implication for storage. Weather - Implication of local to know when to plant. agro-environment. GSMA — mAgri Programme 17 Market Entry Toolkit - Agri VAS

Chapter 3 Marketing

Customer Socio-Cultural- Agricultural Economic Factors Cycle

Marketing

Understanding Reaching the the Customer Customer

Service Design Designing for Formats Content Customer Needs and Channels Process

Business $ Model Revenue Streams CAPEX/OPEX GSMA — mAgri Programme Chapter 3 18 Market Entry Toolkit - Agri VAS Marketing

When introducing new products and services, ■■ Qualitative research (backed up by the role of marketing is twofold and serves to: quantitative data) should provide the basis 1. Understand the consumer and their for customer segmentation; information changing information needs (continuously needs mapping, language preference, level incorporating new insight into the of technical capability, channels, formats marketing strategy and service design). and frequency of information delivery. ■ 2. Drive consumer demand through advertising, ■ What are the on-going methods of sales and optimised distribution. collecting the information on customer needs? How will the customer feedback This section briefly reviews consumer needs be incorporated to make sure that changing and then examines the marketing process in information needs are reflected within more depth. the service design?

Understanding the Customer Reaching the Customer A thorough understanding of the consumer’s The Customer Journey unmet needs and requirements is critical to The complexity of the adoption process designing relevant products and services. (along with the requisite tools and methods of facilitation) can be mapped out with the Some things to consider before embarking help of a customer journey framework. Based on designing the service and marketing on findings from GSMA experience with campaigns include: ■ Agri VAS deployments in Kenya and India, ■ Are there potential partner organisations and from research conducted on current best with on-the ground expertise that can practice in mobile for agriculture space, this provide insights into customer behaviour framework provides a simplified tool for and help to shape the marketing strategy? structuring a marketing strategy for Agri VAS:

The Customer Journey

Aware Understand Try Regular Use

■ Low Media Consumption. ■ Communicate: ■ Modify Consumer ■ Engage Users. ■ Illiteracy, Language etc. ‘What’, ‘How’, ‘Why’ Behaviour. ■ Personalise Service. ■ Low Distribution Reach. of Agricultural VAS. ■ Gain Trust. ■ Address Broader Needs. Challenge

■ Existing Brand Equity. ■ Simple Procedures. ■ Cost of Trial. ■ User Profiling. ■ Local Media. ■ Face-to-Face. ■ Accessibility. ■ Service Rendering. ■ Local Events/Meets. ■ ■ ■ Focus Align Incentives to Comparative Benefits. Complimentary Needs. ■ Agricultural Cycle. Communication. ■ Innovation Access.

Above-the-Line & Below-the-line Experiential Experiential Direct ■ Posters. ■ Partner Agents. ■ Discounted Trials. ■ Free (push) Information Messages. ■ Radio & TV Spots. ■ Canopy Events. ■ Agricultural Cycle ■ Interactivity. ■ Mobile Van Promos. ■ Experts. Based Trials. ■ Feedback Drives. ■ Village Events. ■ Peers/Family. ■ Agricultural Events. Leverage Partner Networks Marketing Tactics Align Planning and Execution with Agricultural Cycle

Following the steps of the customer from “unawareness” to “regular use” helps identify and understand bottlenecks within the adoption process. Each bottleneck needs to be addressed with relevant marketing activities designed to bring the customer to the next stage.

Examples of poster campaigns by M-Kilimo (Kenya) and IKSL (India) GSMA — mAgri Programme Chapter 3 19 Market Entry Toolkit - Agri VAS Marketing

A. Awareness phase the product and influence adjacent segments, Any proposed Agri VAS is likely to constitute gaining crucial market penetration. For the a new concept to target consumers. Therefore, service’s value proposition to be clearly expect initial awareness of the brand or value communicated, it is vital to have field agents proposition to be extremely low. Further who can demonstrate the product in action. complicating the awareness stage are the low These are (relatively) more costly as they rely levels of media consumption and literacy upon face-to-face interaction and therefore rates in rural areas, making print advertising require a trained sales force of mobile field ineffective or redundant. staff. However, they have proved to be much more effective at successfully explaining the Things to consider in the awareness product to new customers and demonstrating phase include: its value than traditional channels. ■■ Does the service have a strong, relevant, It may be useful to explore partnerships with memorable brand that is sensitive to the existing networks of field extension workers. local culture and aesthetics of the target An agricultural organisation, network of market? We know of at least one Agri cooperatives or an NGO may have existing VAS whose visual marketing had to be channels of communication to farming ‘translated’ from developed world-designed communities which already benefit from high collateral into something more adapted levels of access and trust with the audience for the visual traditions of its target and can be leveraged for such campaigns. audience after an initial rejection of its A more thorough understanding of a product’s advertising campaign. workings and value will also prevent customer ■ ■ Leveraging the existing brand of the churn and in this sense, experiential activity is MNO or agricultural partner organisations good not only for customer acquisition but also in rural areas may allow the service to for repeated usage. build awareness and establish credibility in a swift, cost-efficient way, providing the MNO’s brand is well-received in that community. ■■ How will the brand be visible to consumers? For regions with low literacy levels, these advertising messages need to be intuitively understood and should not be dependent purely upon text. Rather, image-based marketing channels should focus on trying to capture the value proposition of the product in simple, visual terms using people who are representative of the target market. ■■ Radio normally has the highest penetration rate among available media channels. Explore the possibility of collaborating with existing agriculture-related radio programmes to reduce the cost of airtime and optimise efficacy.

B. Understand Phase Moving customers from awareness of the Canopy marketing activity undertaken by IKSL field agent to local farmers. service to understanding the value proposition of the service is a complicated process and one best served, we find, by using experiential marketing techniques.

Attitudinal segmentation suggests that only a minority of any given market have a proclivity to take up new techniques and ideas. These people then become powerful exponents of GSMA — mAgri Programme Chapter 3 20 Market Entry Toolkit - Agri VAS Marketing

C. Trial Phase Example Experiential marketing techniques are When mobile inputs insurance service, Kilimo important when it comes to encouraging Salama in Kenya, opened a customer care customers to try the service. The focus should call-centre to support their insurance services, be on minimising the cost-barrier of service farmers seized upon the opportunity to call trials for prospective users and ensuring service in with a raft of generic agriculture questions. trials are easily available in the rural areas. This demand for agricultural tips and best- practice information was not anticipated by Scheduling focused trial campaigns to coincide Kilimo Salama. However, they quickly saw with the phases of the agricultural cycle might the opportunity to expand the scope of their increase the effectiveness. For instance, right offering to include these types of service and before harvesting, a marketing drive focused reinforce their value and convenience to their on the Agri VAS offering of up-to-date market customer base. information and access, coupled with a free trial and registration offer, could demonstrate In this sense, a comprehensive customer the relevance and value of the service and drive relationship management (CRM) system customer acquisition. that captures customer data and feedback would help service providers understand D. Regular Usage how subscribers are using the services. Clearer insight into usage patterns and There is a crucial difference between buying an understanding of the user’s in-demand a service or product and having one sold to information needs will enable the service you that is often over-looked at product to remain useful and relevant. This will launch. In the case of the former, the customer have a concomitant and positive effect recognises the potential benefits, comprehends on usage frequency. how to use it and acts upon this understanding. The latter case tends to result in a service being bought but not used. Indeed, converting ‘fallow’ customers to regular users is a big challenge for the majority of Agri VAS providers. Absolute numbers of subscribers do not necessarily indicate the actual demand for the service. Indeed, it’s not uncommon for regular users to constitute less than 10% of a total subscriber database.

Regular usage comes after trust is built and value to the end user is demonstrated. Once the service is able to solve a particular issue for the user, they are more likely to come back and re-use the service. GSMA — mAgri Programme Chapter 3 21 Market Entry Toolkit - Agri VAS Marketing

Additional Drivers of a Successful Partners/Roles Marketing Campaign ■■ Working with partners who have already established trustworthy relationships with Trust farming communities allows the Agri VAS ■■ Trust is difficult to build. Farmers will to benefit from these pre-extant positive only begin to trust a service after seeing it relationships with the end user. resolve real life issues. It may take multiple ■■ There is no need to invest in assets that interactions of this nature to prove that the can be leveraged through partnerships. service is trustworthy. Scan the market: are there available ■■ Trust is easy to break. Even a single negative distribution networks, strong consumer experience can erode previously established brands to leverage, established on-the- trust, especially if it results in farm losses ground, face-to-face networks to use? and impacts livelihood. Similarly the trust in the service’s name could be ruined Gender Inclusion if it’s used for aggressive or unrelated ■■ Women make up the majority of the advertisement and sales of other products. agricultural labour force in many ■ ■ Partners of the Agri VAS (and their brands) developing countries. How do planned also have a direct impact on the marketing strategies incorporate female development and maintenance of trust. farmers? Female agents, female imagery Farmers have limited ability to differentiate and voice used in marketing messages help between services provided by different reach out to, and include, women. partners under the same initiative, ■■ Men are often the decision makers in a as overall perception is blended. farming household. How do planned It’s important to ensure all stakeholders marketing strategies educate male farmers are committed to work to maintain and on the value of the service to women? nurture consumer trust. ■■ Explore the ecosystem: which partners could market and distribute the service to women farmers? What networks of female farmers exist and could be leveraged for marketing and distribution? GSMA — mAgri Programme 22 Market Entry Toolkit - Agri VAS

Chapter 4 Service Design

Customer Socio-Cultural- Agricultural Economic Factors Cycle

Marketing

Understanding Reaching the the Customer Customer

Hi... Service Design Designing for Formats Content Customer Needs and Channels Process

Business $ Model Revenue Streams CAPEX/OPEX GSMA — mAgri Programme Chapter 4 23 Market Entry Toolkit - Agri VAS Service Design

Characteristics of Successful Service Design on information when it’s reliable, feasible Irrespective of the nature of the target market, and trustworthy. Reliability of the service a successful Agri VAS design will always is achieved through robust service delivery endeavour to provide information that is and accurate information provided. Quality timely, actionable and relevant - (TAR): assurance processes need to be in place to ensure this. ■■ Timely In order to satisfy the challenge of ■ providing users with the information they ■ Relevant Information needs to be relevant to need when they need it, consideration the farmer’s location, climatic zone, current must be given over to appropriate delivery position in the agricultural cycle, income channels. Services designed in an “on- level, farming activity and native language. demand”, or “pull” fashion, for example To make sure that the service is valuable call-centres with advertised opening and usable, it must be customised to meet hours, are well-placed to serve ad hoc user farmers’ local needs and translated to local needs as they emerge. They also reduce languages. a technological barrier to adoption since they only require a customer to be able Co-creative Approach to Design to use a telephone to dial in. Conversely, those services designed around ‘Push’ Understanding all the needs and requirements architectures should poll their target of farmers and designing sophisticated mobile communities to identify which time is best services is a difficult undertaking. Thus, a co- for services to be delivered. A contingent operative approach to design can help ensure benefit to Push services are that the the service maintains focus on and relevancy to information relayed can be consumed at the farmer. Co-creation is a design methodology, a time of the user’s choosing and can be which incorporates the consumer in the design replayed to others. process. This includes iterative designs shared with consumer focus groups, prototyping ■ Actionable ■ The advice or information with consumers and pilots, all incorporating delivered has value when it can be acted feedback. Additionally, live Agri VAS should upon. This means that the methodologies include an on-going, hard-wired feedback and tools expounded by the information loop to ensure the changing needs of farmers services should be locally available and are reflected in the revised service design and practical. Farmers are more likely to act further product development.

Components of service models The following diagram depicts the service design process. Further below is a detailed explanation of each stage beginning with delivery, (working from left to right).

Agriculture-Related Information Flow

Farmers Delivery Content Aggregation Agriculture Agriculture Management Content Types Content Sources

n Communicate: n Manage: n Localisation n Weather n Research Functionality, Channels, Mechanism Formats n Translation n Livestock n Agro-input Providers n Transmit n Storage of n Re-validation n Crops content: CRM, n NGOs n Human CMS Database n Formatting n Finance Component n Progressive

Feedback Loop – Intermediary n Human Interface n Market Farmers (Call Centre, Information Mediation) n Government n Inputs Agencies

Feedback Loop Feedback Loop

Quality Assurance Partners Roles IT Systems GSMA — mAgri Programme Chapter 4 24 Market Entry Toolkit - Agri VAS Service Design

1. Delivery Mediation Communication In the case that Agri VAS are too technologically advanced, or expensive, This is the layer that faces the user. When the ‘last mile’ of service delivery may need working on this component, it may be useful to be more closely managed. Exclusion from to consider various use cases of the service and the service will occur when it is: in particular how the user will interact with ■ the device. ■ Accessible from advanced or smartphones only. Examples of use cases are: ■■ Targeting regions with low mobile 1. Information requests. penetration or ownership rates. 2. Asking specific questions. ■■ Not provided in the local language. 3. Receiving information and answers. ■■ Dependent on text in areas of low literacy rates. Key considerations: ■■ Out of the financial reach of the farmer ■■ What is the handset functionality required or dependent on cost sharing models. to access the service? What are the technological functions of the user’s phone? In each of these cases, a mediator is required ■■ Could the service be accessible from the to ensure ‘last mile’ delivery. The role of the most basic handset available on the market? mediator is to fill the gap between the factors ■■ What are the user’s preferred channels of of exclusivity and the excluded consumer. communication - text or voice? Building and maintaining the network of ■■ What language does the user speak? mediators and agents to provide this ‘last mile’ How comfortable is the user with written of service delivery needs careful planning and information? continuous management. ■■ What is the user willingness and ability to Example pay for the service? Grameen Foundation’s Community Transmission Knowledge Worker (CKW) project in Uganda relies on their network of on-the-ground The ability to transmit the information that operate Android-based smartphones to to the end users’ devices depends on the retrieve information on farmer’s requests, network quality in critical areas. Although translate them and explain them back to the 3G is a regular standard in urban areas, and farmer during face-to-face consulting visits. affordability of smartphones is improving, the Community knowledge workers operate target customer for the Agri VAS is still facing as individual micro-entrepreneurs within a the realities of remote areas and doesn’t benefit franchise model, with monitoring, support from technological advantages of developed and supervision from the service provider. areas. Service design should incorporate the (See more at http://www.grameenfoundation. answers to a range of questions: applab.org/section/community-knowledge- ■■ What is the availability of the data network worker-project). in the target area? ■■ What is the quality of the network? What is the working standard? Is it sufficient to retrieve data-based services? ■■ What is the data service pricing model? How does it fit with user’s ability to pay and the revenue model? GSMA — mAgri Programme Chapter 4 25 Market Entry Toolkit - Agri VAS Service Design

Key considerations for the design of balancing these two attributes (high-scale and mediation components: customisation) is best done through a mix and ■■ An incentive system for mediators/field match of different channels within a single agents can help to motivate them to deliver service design. a high quality of service. Incentive systems can also mitigate the effects of agent churn Voice, SMS and data communication are the which can afflict Agri VAS deployments. main media for delivering information to mobile users. The selection of media will be ■■ A minimum level of education and/or determined by the nature of the information to experience needs to be applied to determine be transmitted and the audience. For example, the eligibility and qualification of agents. simple weather information can be delivered Continuing education and training must via SMS, but detailed advice on crops would also be in place to increase the quality of not be, due to the message’s length limitations. agents and customer service. With regards to the audience, literacy levels ■ ■ Quality assurance practices must also need to be taken into consideration when extend and include the mediator/ choosing communication channels. field agents. The complexity of the information service Partnerships and Roles is another critical factor to consider when Possible ways of creating a network of ‘last selecting media to use. Farmers’ questions mile’ mediators include: could be classified into two broad categories: ■■ ■■ Build from scratch This option is timely ‘What’ type queries asking for standard and expensive, however it confers full information, e.g. weather, prices, input ownership and control over the network. supplier contacts etc. ■■ ■■ Build with a partner organisation An existing ‘How’ type queries can be further organisation’s asset can be leveraged, classified as: such as existing distribution network or • Asking about standard practices, e.g. Community Phones operators. In this case, how to take a sample for a soil test. additional investments are only needed • Asking about specific issues that need in selecting from, and educating, existing further assessment. agents up to the required level of proficiency. The ‘What’ type queries, regarding ■ ■ Leverage existing partner network A partner’s standard practices and data collection, network, such as existing private or public lend themselves best to automated mobile extension agents may be the best option. services. Alternatively, ‘How’ type queries This may be cheaper and faster to may need solutions ranging from voice implement, however, this requires a high (helpline), or demonstrations. level of trust and commitment between the partner and the Agri VAS provider. Example Agricultural tips delivered via voice message 2. Content Management System (CMS) are a priority format used by IKSL in India. Management The use of voice overcomes low literacy level and automates information distribution for This stage in the service delivery process deals the millions of subscribers. In the event that with how information is managed, processed a user has specific problems or questions, and redirected. Decisions on channels and they can access agricultural experts via the formats for information distribution should farmer helpline. be based on user preferences as well as the potential for scale and automation. While technology allows high-scale customisation, GSMA — mAgri Programme Chapter 4 26 Market Entry Toolkit - Agri VAS Service Design

Suitability for Delivering Content: High Low Voice In Person USSD SMS (Face-to-Face) Call Center IVRVoice Message

Weather

Crop / Livestock Advice

Market Data

Financial Information

Flexibility of Content (Customisation, Quality) High Low

Scalability Low High

Store Service providers must also decide whether to Agri VAS should maintain a database for leverage push or pull models or structure both both agricultural content and user profiles in complementary ways. Push services allow and queries. service providers to establish an on-going presence and thus command a higher degree The content database houses the agricultural of loyalty. Alternatively, pull models allow for data queried by service requests. The software more specific queries and two-way interactions solutions would vary depending on the service leading to more valuable information exchange. needs and complexity. However it should The combination of both functionalities can always allow quick access and navigation, leverage the positive qualities of each resulting categorisation, tagging and monitoring, as well in a more robust service (high-scale automation as support multiple formats of information. and individualised services). The customer relationship management (CRM) Key considerations when designing the system stores information about users and information management process: their requests as well as information received ■■ Is it a mass (more suitable for automated via the service. A comprehensive CRM SMS) or a niche service (farmer helpline)? system allows for a detailed segmentation and data collection, which leads to a better ■■ What is the future scale of the service and understanding of the customer needs and, what channels could maintain it? eventually, a more targeted offering. Additional ■ ■ What is the balance between customisation revenue opportunities exist in the sales of the and automation of an information dataset to third party stakeholders. distribution process; how is it going to be achieved? Important factors to consider when designing the databases: ■■ Scalability of the database with increased numbers of users and complexity of the service. ■■ Integration with the data sources and distribution platforms. GSMA — mAgri Programme Chapter 4 27 Market Entry Toolkit - Agri VAS Service Design

Interpret Partners and Roles Not all types of information are suitable for Considering their existing infrastructure and automated delivery. A helpline component readily available platforms, MNOs are best allows Agri VAS to bypass the literacy barrier positioned to manage the technical components while providing more comprehensive, of the service. However, in some instances, customised, and, consequently, impactful it makes sense for the content provider to services. To develop such helpline services, undertake a role of managing and interpreting helpline agents will need content management the content, as well as collecting user profiles. systems containing full fact-sheets on agricultural information. For agricultural 3. Aggregation advisory on pests and diseases, however, Aggregation of agricultural information is additional decision support tools need to be one of the main bottlenecks for many service developed. The quality of any given helpline providers. Although there are numerous service is highly dependent on the operators’ sources of information, their formats are not level of expertise and knowledge. Factsheets always suitable for distribution via mobile simply back-up the advice provided, but can networks. Thus the role of an aggregator is a rarely be used without interpretation or case- challenging one, as the MNO remains a gate- by-case adjustments to farmer’s situation. keeper of both the information and of access to The operators must be in a position to think the end user. on their feet and adapt their knowledge to the particular questions put to them. Localisation Example For information to be valuable, it must be localised to the environment, geography and M-Kilimo, a pilot helpline service run other conditions. The complexity of the by Kenyan call-centre KenCall, employed agricultural sector, even within one country agricultural experts that hold a minimum may require localisation at the sub-region level of a bachelor’s degree in agriculture and at (dependent upon the agro-climactic zones). least two years of field experience. Farmers, typically, have a range of information needs Translation and the team was recruited to cover this spectrum bandwidth. Thus, M-Kilimo could Translation of content into local languages provide advice on horticulture, aquaculture, can be expensive, but is necessary to provide climatology, pests, plant disease, animal customised offerings. At the same time if husbandry, agricultural engineering, information requires additional manipulation market advice, and environmental and or interpretation, it could be handled by the veterinary issues. agent in each particular case.

Requests for all sorts of expert advice may Formatting come from farmers even when the information Once information is identified, it has to be required is not part of the value proposition. reformatted according to the delivery channels Trust in the service, if established properly, chosen. Short or full information pieces, eventually leads to a demand for other types of voice or text based, need to be recorded and information beyond the service’s initial scope. categorised.

Key considerations when establishing Re-validation a helpline component: Content coming from reliable sources is ■ ■ The qualifications of agricultural experts considered valid when received. However, after are crucial, and should ideally be it is manipulated, to be localised, translated or augmented by field experience. reformatted, it needs to be re-validated by an ■■ Having highly qualified experts as agricultural expert organisation. a front-line support is expensive, and this OPEX might be mitigated by establishing a Partners and Roles second and third line of support for highly An independent content provider, that works complex queries that can be accessed on an across multiple mobile networks, might take ad hoc basis. the aggreregation role. At the same time MNOs see the value in investing in an aggregation component to maintain ownership over the valuable asset. GSMA — mAgri Programme Chapter 4 28 Market Entry Toolkit - Agri VAS Service Design

Example Example 1 HandyGo in India is an experienced content IKSL service in India has partnered with the provider with expertise in sourcing and CABI agricultural consultancy to develop their aggregating a variety of content for mobile management process whereby they source an channels. HandyGo aggregates content from aggregate content from multiple high-quality dozens of sources and prepares it for mobile sources across India. CABI also manage the distribution. The company works across quality assurance process. multiple mobile networks, capitalising on assets developed in-house. Example 2 CKW Uganda works with dozens of content 4. Source partners, who provide the agricultural data, Most Agri VAS will begin with a limited while AppLab aggregates and formats the scope and then broaden from there. Focusing content in-house in accordance with the content on a few crops will make development designed format. and management easier at the start. When selecting content areas, it may be useful to Another method of sourcing content is the keep in mind the agricultural life cycle (for peer-to-peer model. This involves farmers the crops you are focusing on) and match the reviewing and endorsing or rejecting pieces content accordingly. Please see the Agricultural of advice. The main challenge with user- Lifecycle diagram on page 11 and 12. generated content however is the quality assurance process that is needed to maintain ■■ Plan the quality of the information disseminated. – Market price and demand forecasts. – Seasonal weather forecasts. Gender Inclusion – Advise on crop and seed selection. To ensure equal access and utility of Agri ■■ Buy Inputs VAS to women farmers, their specific – Input availability and prices (seeds, needs and barriers must be considered. fertiliser, equipment, etc.) Specifically, service designers should consider ■■ Plant women-specific needs related to the type of – Short-term weather forecast. commodities and tasks they are involved – General advise on the focus crops. in. For example, the type of content, content – Soil preparation. formatting, as well as gender split within a – Pest management. human component of service design. – Fertilising. – Irrigation. Key questions to consider when designing a service with equitable access: ■■ Harvest ■■ – When to harvest. What is the gender split between the – Updated market price and demand agents/ mediators/helpline experts? forecast. How does this influence the gender split – Storage. among users? ■■ ■■ Sell/Market Do the collected farmer profiles offer – Advise on processing. any insight into female user preferences – Transportation availability and prices. and how these might best be served? – Live market prices. ■■ What are the women-specific services and content for the service model? Partners and Roles Is women specific content tagged accordingly? Given the complexities and varieties of local ■ agricultural environments, finding a reliable ■ What are the potential partners from whom and thorough source of localised agriculture to source the women-centric content? data can be difficult. It may be valuable to ■■ How often is the female voice used for incorporate established and experienced the provision of information? agriculture partners responsible for the population and quality assurance of the agricultural database (agricultural institutions, NGOs, universities, research entities, meteorological department). GSMA — mAgri Programme Chapter 4 29 Market Entry Toolkit - Agri VAS Service Design

Example 1: CKW Uganda recognised that ■■ Usability of the information in relation using female community workers increases the to its format, language, channel (can number of female farmers that subscribe to and the farmers understand and act upon use the service, as women farmers find it more the information received?) comfortable to speak to female agents. ■■ Timeliness of information delivered. ■■ Quality of all types of human interaction Example 2: IKSL created a gender strategy with the customer under the service to help increase women’s use of the IKSL model, levels of proficiency of the human service. It included measuring male and component (how do different agents effect female usage, identifying and delivering the service adoption?) women-centric agriculture content and ■ marketing and distributing via existing ■ Scientific accuracy, relevance and diversity women’s agriculture groups. of both new and existing content. ■■ The changing information needs of farmers Quality Assurance Summary and the relevance of the existing content Maintaining a high degree of service quality database. requires transparent targets for each of the ■■ Adoption indicators for the services within service components as well as the regular the portfolio offered, and how they change monitoring of each component. over time.

Quality assurance should assess and monitor: Additionally, developing (or investing in) a ■ Accessibility ■ technological constraints for Quality Dashboard which indicates the key the user to access the information service quality metrics, targets and their timeliness is (coverage, phone functionality, etc.) a useful tool to incorporate for the on-going ■■ Accessibility how long does it take the user assurance process. to access the information he needs?

Providing weather forecasts to stations, as stakeholders reliant on this type small-holder farmers of data sometimes find it easier to build their own capacity for collecting and analysing One of the most crucial types of information the weather information, than to work with required by small-holder farmers in existing providers. This approach is well developing countries is accurate, relevant illustrated by the Kilimo Salama service that and localised weather forecasts. Unfortunately, provides crop-insurance services via mobile to this is also among the most challenging to small-holders in Kenya. Heavily dependent on provide. Here, we take a look at some of the quality weather data, Kilimo Salama has built drivers and challenges around this topic from 30 meteorological stations of their own. Even a service design point of view. with the availability of independent weather Accuracy recordings, the interpretation of the data and actual forecasting is still an issue as it has to be Accuracy of the weather forecast is an area performed by a credible institution. of the most concern for service providers, as the wrong information could mislead the Another challenge in providing weather farmer into undertaking harmful activities forecasts to small-holder farmers lies in which may damage the inputs as well as ensuring they are localised and relevant. Where existing crops. One of the reasons for the the topographical characteristics of the region low accuracy of weather forecasts is a lack are highly diverse, the climatic conditions of of meteorological stations in the developing two locations separated by as little as 50km countries. Kenya, for example, with a total could be significantly different. To provide a area of more than 580.000 sq km, has only 33 useful forecast, the service provider should meteorological stations operated by the Kenyan store the information about the exact location 8 Meteorological Department (KMD) that are of the farm. Although relatively easy to collect used for developing the official country-wide by smartphones with GPS functionality, this weather forecast. information is difficult to collate on a large scale, as most of the small-holders own very The geographical spectrum of data available is basic phones. Community Knowledge Worker not sufficient to provide relevant and accurate Uganda uses roving knowledge managers weather predictions for most of Kenya’s rural operating the android devices to geo-locate areas due to its disparate topography. Still, the the users of the service. This collection of KMD is the main source of weather data in the geo-location data can easily be gathered 8 Kenya Metrological Department Kenya, partly because it provides government during the user registration process, especially http://www.meteo.go.ke/customer/ sanctioned information. At the same time if done via call-centre functionality. Using the farmer/stations.html most of the countries in sub-Saharan Africa closest market centre, or a village with known 9 http://searchengineland.com/ also have non-government operated weather GPS coordinates, might be the best possible cell-phone-triangulation-accuracy- is-all-over-the-map-14790 GSMA — mAgri Programme Chapter 4 30 Market Entry Toolkit - Agri VAS Service Design

approximation to each individual farm’s chosen delivery channel as well as address coordinates if the farm itself is without the usability requirements. Interpreting the known coordinates. weather forecast is important, as small-holder farmers often wouldn’t be aware of the Offering a choice of weather forecasts for one meaning of well-accepted weather condition of the large market centres, is another option metrics, such as precipitation chances or if other methods of subscription are used such humidity percentage. The end user may not as USSD or paper-form. However this would even be familiar with a Celsius temperature impact the relevancy of the forecast provided. scale. The interpretation of number-based Despite these challenges of accurately locating metrics into understandable categories can add the farms, it’s important to note that MNOs value and usability to the forecast. If SMS is have a technical capacity to locate each of the chosen as a main channel for weather forecast network’s subscribers with a triangulation distribution, service provider will have to face method, using the information about the the challenge of matching the length of the location of the three closest to the user base forecast within the 160 character restriction. stations.9 The question of whether MNOs will choose, or be permitted, to start using this data Below is an example of interpretational to provide relevant (agricultural) information forecasts for the SMS channel: services to their users, or keep it to theirselves, ■■ ENG  Week starting 25 October. On average remains moot. warm during the day (22C), and very cold at night (14C). Little chance of rain (49% Given that forecasts don’t appear to be chance), wind is normal (3 km/h). predictable with much accuracy beyond a few ■■ Swahili Wiki mpya Oktoba 25. Joto wakati days at most, it is even more difficult to deliver wa mchana (28C), na baridi wakati wa a reliable piece of information to the farmer. usiku (17C) Kuna nafasi ndogo ya mvua However, doing so is critical as climate change (42% nafasi) upepo wa kawaida (2kmh). is putting a high pressure on the small-holders, as seasons don’t follow the traditional rhythm any longer. The interpretation of the number-based metrics would vary between the regions, Recent findings show that five days is the as there is a perceptional difference. It is most reasonable length of a forecast, giving a particularly important to translate the farmer some opportunity for planning, but not forecast to the local language(s), and in case compromising the accuracy of the information of a low literacy level among the customer provided. base, vocalise the message and manage its distribution via voice-based channels such Seasonal vs short-term forecast as IVR or outbound voice messages. Given the low accuracy of week-long forecasts, The next step in the provision of an it seems counterintuitive to suggest that it interpreted weather forecast is to combine may be possible to provide forecasts for an it with agronomic advice. The effects on crops entire season. However there are models based of certain weather patterns can be mitigated on a different source of predictability than by appropriate and timely farming actions. weather forecasting, models that assess the IKSL service in India provides contextual likelihood of certain climate conditions. For agro-climatic information for several states, sub-Saharan Africa, such seasonal forecasts and was found to be highly beneficial to the are being developed by Regional Climate farmers. For example, consistent hot weather Outlook Forums (RCOFs). Ironically the main combined with high humidity encourages challenge for RCFOs is in distributing their pests and fungal development. An agricultural seasonal forecasts, as they have to reach the university is best placed to process the weather end user to make a quantifiable difference in information and create the relevant, actionable the agriculture sector. One of the initiatives advice about pest-prevention techniques. that try to disseminate seasonal forecasts to the farmers is RANET (Radio and Internet for the Forecast providers Communication of Hydro-Meteorological and Climate Related Information) that uses digital There are lots of independent forecast radio technology as its primary distribution providers that develop predictions based on channel. comprehensive modeling systems. Among those providing forecasts for sub-Saharan Formatting Africa, some are already working with mobile and radio services to deliver forecast Once the weather information is sourced and information to smallholders including aWhere, the users of the information are identified and Foreca, and IGNITIA. located, there is still a challenge of interpreting the forecast and formatting it to suit the GSMA — mAgri Programme 31 Market Entry Toolkit - Agri VAS

Chapter 5 Commercial Model and Business Case for Agri VAS

Customer Socio-Cultural- Agricultural Economic Factors Cycle

Marketing

Understanding Reaching the the Customer Customer

Hi... Service Design Designing for Formats Content Customer Needs and Channels Process

Business $ Model Revenue Streams CAPEX/OPEX GSMA — mAgri Programme Chapter 5 32 Market Entry Toolkit - Agri VAS Commercial Model and Business Case for Agri VAS

The Need for a Commercial Model Agri VAS should be set up with a long-term To ensure financial sustainability and commercial and financial model in mind. commercial viability of Agri VAS, it is crucial to: Although many Agri VAS will leverage ‘seed’ 1. Develop reliable revenue streams with which funding for their initial piloting and start-up to offset operational costs. phases, it is important to avoid the ensuing 2. strictures of donor dependence by adhering to Provide critical partners with a unique value a viable, sustainable business case. proposition and a clear rational for their continued support.

This sections aims to give Agri VAS providers the tools and knowledge necessary to develop their services within financially sustainable models.

Agri VAS Profit Model The following diagram charts possible direct revenue streams, indirect benefits to MNOs and cost drivers. Micro Finance

Contract Farming

Agricultural Content Micro Insurance Customer Relationship Management (CRM) Government Content Management System (CMS) IT System Development Contract Sales (Volume) Analytics & Reporting Tool

Service Platform Advertising Selling Data Furniture Physical Space Market Research Surveys Workstations B2B

IT Staff Staff CAPEX Call Rates Administrative Pull Subscriptions Push Distribution Network/Infrastructure Direct B2C

$ $ Administrative Management Costs Revenue

Ag Specialists Agri VAS Staff Profit Model Marketing and Sales

Content Management

IT Systems Maintenance

Marketing, Distribution and Sales Churn

Market Research Indirect ARPU

G&A Subs and Market Share OPEX (Value Proposition to MNO) GSMA — mAgri Programme Chapter 5 33 Market Entry Toolkit - Agri VAS Commercial Model and Business Case for Agri VAS

Revenue Model Considerations B2B Revenue Models Direct Revenue B2C (Business to Consumers) Two approaches were taken in analysing B2B Most Agri VAS collect payment directly from revenue streams. The first was to examine the the consumer via monthly subscriptions or agricultural value chain and determine what a pay-per-use model. These fees are usually other actors would gain significant, indirect deducted from the subscriber’s pre-paid value from Agri VAS and be willing to pay for account (billed through the MNO) while it. This leads us to a variety of contract sales revenue is shared according to content and outsourcing opportunities. The second partnership agreements. approach was to study what unique assets and resources Agri VAS develop which we can be leveraged into other products and When designing Agri VAS, it is important to services outside the scope of our target market consider the consumer’s ATP and WTP (ability (smallholder farmers). By shaping these assets and willingness to pay). Unfortunately, very and resources to fulfil other unmet market little data exists in support of rural consumer’s needs, Agri VAS can generate alternative ability and willingness to pay for mobile VAS sources of direct revenue. This is discussed or other forms of extension services. Thus we towards the end of the section. must use other methods to determine how best to collect revenue from farmers (the pricing architecture) while maintaining a degree of Contract Sales flexibility to collect revenue from other sources. Contract Sales are bulk purchases or subscriptions ordered by an organisation on An early model, which has achieved notable behalf of a particular community of farmers. success, is the ‘freemium’ model used by IKSL. Other actors in the agricultural value chain Farmers pay standard pricing for a ‘Green may be willing to pay for Contract Sales if SIM’. In return, they receive five, free, localised presented with a compelling value proposition voice messages each day. Users can also access or a clearly defined ROI. Agribusiness Firms, the farmer helpline to get answers to specific Micro Insurers and Government Agencies are questions. For these calls, farmers are charged at examples of such value chain actors who would the standard call rate. benefit from increased agriculture output and productivity and may be willing to pay for Agri By leveraging the complimentary nature of VAS for their farming partners. the push/pull model, IKSL uses the proceeds from premium services (pull) to offset some of 1. Agribusiness Firms the costs of free services (push). In this manner, IKSL can reach and impact more farmers. Large Agribusinesses rely on contract farming to source critical raw materials, which they process into finished goods (Nile Breweries - Another important factor to consider in the beer, Mukwano Industries - cooking oil, Tilda case of IKSL is the value proposition they bring Limited - rice, etc.) By ensuring their suppliers to their partnership with Bharti Airtel. This is (farmers) have the best possible information to The Business explored in detail in the section “ manage their business and crops, there could be Case for MNOs” a case for them (Agribusiness Firms) to benefit from the farmer’s increased productivity, Although a rural farmer’s ability or willingness product quality and lower costs of production. to pay is uncertain, charging a modest fee may They may be a source of contract sales whereby be useful to establish credibility and prevent they purchase bulk subscriptions for their abuse. Because these modest fees will not be a contract farmers. Many large Agribusiness source of meaningful revenue, Agri VAS should firms already invest in traditional agriculture be designed with alternative revenue streams extension activities and may be qualified (B2B) independent of the farmers. prospects for Agri VAS. GSMA — mAgri Programme Chapter 5 34 Market Entry Toolkit - Agri VAS Commercial Model and Business Case for Agri VAS

Example Out-Sourced Services 1. Agribusiness firm buys bulk subscription Government Agencies to Agri VAS for their contract farmers. As government extension relates to public 2. Contracted farmers use Agri VAS information that may not be of immediate to improve crop yield and quality. interest to farmers, such as soil and water 3. Agribusiness firm’s supply source has conservation, governments may use the Agri increased in both quality and quantity VAS platform to push out such information (higher quality raw materials and more to farmers. options which to purchase from). 4. Financial burden can be shared Governments currently offering agriculture between the Agribusiness firm and the extension services may be willing to outsource contracted farmers. parts (or all) of their program. Existing Government extension services are typically under-resourced, mobile networks can Critical to Value Proposition There is a real need provide a more cost effective channel to to prove an ROI to the Agribusiness firm (for provide agriculture extension services to instance the increase in yields leads to other these rural farmers. cost reductions in their manufacturing process/ supply chain) or demonstrate increased efficiency for their agriculture extension budget. Governments wanting markedly to improve the reach of their extension services may be willing to outsource parts of their services to, or partner 2. Micro Insurers with, an Agri VAS provider. Micro Insurance firms are beginning to offer crop or drought insurance to farmers. In order Example to reduce the risk of crop failures (the likelihood 1. An existing government extension of paying claims) Micro Insurance firms may be programme possesses a great deal of locally willing to provide their clients with information relevant and critical agriculture knowledge, services bundled into their premiums. but lacks the capacity to serve a geographically diverse constituency. Example 2. Extension workers are under-utilised 1. Micr o Insurance firm sells crop insurance because they spend more policy to a farmer bundled with Agri VAS. time on administrative tasks and travelling 2. Farmer benefits by increasing yields and than they do working with farmers. produce quality and reducing the likelihood 3. The Agri VAS provider proposes a of crop failure. government partnership whereby 3. Micro Insurance firm benefits by reduced government extension workers and occurrence of crop failure claims. knowledge is fed through the Agri VAS platform to scale up service offerings. 4.  Critical to Value Proposition Need to tie Government extension workers are able to information services to a reduction in crop spend more time assisting farmers through failures and claims. the Agri VAS delivery platform, and only needing to travel to visit farmers facing extreme cases. It is important to remember that when selling 5. The Government saves money by or positioning Contract Sales, it’s vital to have a eliminating the majority of travel costs solid ROI or business case for an organisation to and can reposition those funds towards participate. They need to have a clear idea as to provisioning the Agri VAS delivery platform. the size and magnitude of the value they stand to receive. Critical to Value Proposition Agri VAS should be viewed as being complimentary to existing face-to-face interventions. It is imperative not to alienate existing stakeholders (Government extension employees). It is also necessary to tie cost savings to the amount invested in using the Agri VAS delivery platform. The extension workers can either be employed by the Agri VAS or use the service to obtain additional expert advice when in the field with farmers. GSMA — mAgri Programme Chapter 5 35 Market Entry Toolkit - Agri VAS Commercial Model and Business Case for Agri VAS

Alternative Sources of Direct Revenue Successful Agri VAS are expected to develop Given these findings, Agri VAS suppliers a level of trusted brand recognition and should explore the possibility of working with a relationship with rural farming communities producers of agricultural inputs, banks or on a large scale. This unique asset can be Consumer packaged Goods (CPG) companies leveraged to provide services to organisations who have an interest in connecting with rural wanting to connect with or learn about the rural users and who purvey services or information, farming sector. which those users would find beneficial. Currently, not many platforms exist to reach 1. Advertising and Public Service out to this market on a large scale. However, an Announcements: Agri VAS platform may well have the resources to satisfy this need. The vast sub-Saharan African mobile advertising market has yet to be explored fully. Example 1 Research by advertising firm InMobi10 suggests that the market is characterised by a high 1. By tracking and logging farmer behaviour, demand for mobile advertising that exceeds the Agri VAS develops enough intelligence to that of Europe and the United States. predict when a subset of farmers may need to replenish certain supplies (fertiliser, seeds, We summarise their findings below: pesticides, etc.) 2. ■■ 69% of Africans are ‘very’ or ‘somewhat An agricultural input supplier needs to comfortable’ with mobile advertising. distribute its marketing message to its This figure is world-leading and in advance target market (farmers in need of fertiliser). of the US and Europe (at only 61%). 3. An agriculture input supplier pays to Consequently, African publishers have a send a targeted advertisement to the significant opportunity to capitalise on subset of farmers who are within the target this consumer interest in mobile. market and who are expected to replenish Early movers will secure a sizeable their supplies. competitive advantage over their rivals. ■■ Typically, men are more accepting of mobile Example 2 ads (76%) than women (63%). However, 1. The Agri VAS collects demographic African women remain more receptive data on subscribers and their families. than their peers in America or Europe. 2. Mobile is an empowering tool conferring A healthcare NGO plans an immunisation manifold benefits to women including the event for children of particular ages in ability to connect more widely with their rural communities. peers, friends and families and conferring 3. A healthcare NGO pays to distribute this significant increases in personal security notification toAgri VAS subscribers with and business opportunities. children within the age range. ■■ Users see “helping me find new information” as the primary value-add Critical to Value Proposition: The more targeted of (45%) of mobile advertising. and more personalised the advertising is, the ■■ In exchange for mobile advertisements more value it is for the farmer and the more on their phone, consumers prefer a relevant effective it will be for the advertiser. message (57%) over 10% savings on the phone bill (55%) or free content (49%). 2. Data Collection and Market Research Sales Advertisers, therefore, need to offer Research organisations, government agencies, genuine value in the content of their NGOs and corporations require specific and mobile advertising. Free content or unique sets of data to support their decision- discount campaigns will not suffice. making. Gathering timely and customised data can be expensive, time consuming or simply impractical. An Agri VAS may have the tools and resources in place to collect such data with less time and financial requirements.

10 In Mobi research “A Global Consumer View of Mobile Advertising: Africa Results” is available at http:// www.inmobi.com/wp-content/ uploads/2010/11/InMobi_Consumer_ Mobile_Ad_Effectiveness_Africa_ Nov_2010.pdf GSMA — mAgri Programme Chapter 5 36 Market Entry Toolkit - Agri VAS Commercial Model and Business Case for Agri VAS

Example Indirect Commercial Value 1. A CPG Company needs to conduct We expect successful Agri VAS to provide some market research surveys to feed into the of the following indirect commercial benefits to development of a new product for the rural an MNO: market and its accompanying advertising 1. Reduction in churn campaign (income levels, willingness to pay, An Agri VAS product offering provides a desires and preferences, etc.) real differentiator to the MNO’s SIM card in 2. An Agri VAS has a large enough sample a crowded market place. It therefore gives size (in the CPG Company’s target market/ the customer a real reason to select it over demographic) ready and willing to be the other VAS-less SIMS. MTN’s Ugandan Mobile subject of market research activities. Money product exemplifies this perfectly as it 3. Agri VAS carries out the market demonstrated a significant drop in churn rate research surveys on behalf of the from 4.5% to 0.2%. An Agri VAS is likely to CPG company. have a similar impact on churn; a phenomenon a. Based on their intimate understanding that will excite significant interest for most of the rural market, Agri VAS providers MNOs engaged in the race to saturated rural could add value by assisting the CPG teledensity. Company in designing the market research survey. 2. Increased market share and ‘sticky’ SIMs Farmers who previously had little reason By thinking creatively about how its specialist (aside from price) to select one MNO over access to, and understanding of, these remote, another are now able to identify a very good underserved and (often) ignored market one in the shape of an Agri VAS. A service segments can be leveraged, an Agri VAS designed specifically for farmers significantly can open up additional income streams by differentiates one MNO from the rest and offers partnering with other businesses who are a compelling reason for farmers to select this looking to penetrate this territory. MNO over others and, in the case of users with multiple SIMS, use it more frequently. The Business Case for MNOs Because a typical MNO’s existing infrastructure 3. ARPU uplift (increased share of wallet) reaches deeply into rural villages, their platform Drawing on another synergy from mobile is best positioned to launch and scale Agri VAS. money, 44% of mobile money users in the Non-MNOs seeking to launch Agri VAS should Philippines carry multiple SIMs. 68% of consider a strategic partnership with an MNO. them report using their mobile money SIM The right partnership can be an attractive as their primary SIM. Further, it stands to opportunity to reach rapid scale. reason that if Agri VAS are successful and farmer’s productivity and incomes increase, In order to get the most value from the MNO their willingness and ability to pay for mobile and make best use of its scale, it is critical to services increase as well. provide it with a clear business rational for their support beyond philanthropy or CSR. Rural Market Strategy The more Agri VAS are aligned with the MNO’s core business and strategy, the more As farmers benefit from Agri VAS (improved willing an MNO is likely to be to resource yield, quality and incomes) so their incomes rise such a partnership. and they become more attractive consumers to MNOs. Having an established relationship (via the Agri VAS) provides the MNO with a Since the farmer’s willingness to pay is competitive advantage over other operators. uncertain and limited, this cannot be relied upon to provide significant revenue for the Agri VAS or the MNO. Instead, value will be The agricultural industry’s connection to realised by focusing on longer-term objectives, finance presents an opportunity to tie mobile which support the realisation of an MNO’s money services to Agri VAS. Farmers need rural extension strategy. access to financing, especially the sending and receiving of payments. This presents MNOs with a great opportunity to offer mobile money services to Agri VAS subscribers simultaneously. Also, GSMA mAgri Programme 11 For more details, please see the pilots in India and Kenya both experienced mAgri Programme’s case study on IKSL by downloading from farmers requesting health care information services for family members. Therefore, we see http://www.gsmworld.com/ documents/iksl-case-study-v2.pdf an opportunity for MNO’s to build a portfolio GSMA — mAgri Programme Chapter 5 37 Market Entry Toolkit - Agri VAS Commercial Model and Business Case for Agri VAS

Elements of OPEX of services that span the industry verticals Typical Operating Expenditures include (mobile health, mobile money, mobile learning the following: and mobile agriculture) and offer real value to ■■ Staff. base of pyramid users. • Agriculture specialists. Cost Model Considerations • Marketing and sales staff. Along with researching revenue streams, it’s • IT staff. important to understand the main drivers of cost in order to measure and manage them. • Administrative staff. Capital Expenditures (CAPEX), and Operating ■■ Content aggregation, maintenance Expenditures (OPEX) typically constitute the and quality assurance. two main cost pillars within an Agri VAS and ■■ IT System Maintenance. there are a number of ways to mitigate them. ■■ Marketing and Sales.

■■ Training. CAPEX ■■ Market Research. Most start-up and fixed costs can be classified as ■■ General and Administrative. Capital Expenditures. The role of ‘soft’ funding and grants are to cover some of these costs with the aim of giving standard operations a chance Minimising OPEX to become financially sustainable. By working with partners who possess existing resources, it’s possible to reduce or eliminate Elements of CAPEX: the need to invest in certain OPEX categories. Agricultural organisations may already have a ■■ IT System Development. network of field extension workers who could • CRM. be trained in marketing and selling Agri VAS • Content database. once the shared benefits are explained. Indeed • Analytics and reporting systems and this was the route taken by India’s successful tools. IKSL service who partnered with IFFCO (the Indian Farmers Fertiliser Cooperative Limited), ■■ Physical Space. the largest farmers’ co-operative, in order to • Furniture. leverage their enormous membership, access • Workstations. to (and trust of) the target market and 11 ■■ Service Platform. distribution outlets. Alternatively, an MNO’s network of sales agents and village phone Minimising CAPEX operators could also be leveraged for the distribution of Agri VAS. Some elements of CAPEX can be minimised or even eliminated through certain partnerships or The obvious benefit of partnering with a mobile in-kind contributions. network operator to deliver Agri VAS is that it already possesses the infrastructure necessary Many software companies offer free or highly for effectively reaching the target market. This subsidised software licenses to non-profit infrastructure not only greatly enhances the organisations. Having a non-profit partner reach of the service but also acts to drive down apply for such programs will help the Agri VAS CAPEX and mitigates against the financial provider to qualify. risks involved in the launch of new services. Similarly, an MNO’s call centres, billing and Partnering with organisations that possess a revenue collection facilities - not to mention the high level of capacity and resources can also bearer channel and ownership of short-codes help lower the costs of other expenses. - are all highly desirable from an Agri VAS perspective, and could be critical in helping OPEX that service achieve sustainable growth. It is expected that most, or all, operating expenses will be offset by revenue. These are formed of those costs not classified as capital expenditure. It’s also important to anticipate how operating expenses will increase with operations. There is an ineluctable and consonant uplift in operating expenditure as the business and customer base grows. This factor must be designed into the service’s budget. GSMA — mAgri Programme Chapter 5 38 Market Entry Toolkit - Agri VAS Commercial Model and Business Case for Agri VAS

mAgri Glossary

Agricultural Input Dealer CAPEX Organization producing and/or distributing Capital Expenditure. agricultural inputs (fertilizers, seeds, pesticides, agricultural equipment, etc.) CMS Content Management System. Agri-business CRM Denotes the collective business activities that are performed from farm to fork. It covers the Customer Relationship Management. supply of agricultural inputs, the production and transformation of agricultural products GSMA and their distribution to final consumers. GSM Association. The GSMA represents the interests of mobile operators Agricultural Content Dashboard worldwide. Spanning 219 countries, the Free agricultural and health content database GSMA unites nearly 800 of the world’s in development by ACE Icon Group and mobile operators, as well as more than 200 Professor Phil Parker under a grant from the companies in the broader mobile ecosystem, Bill and Melinda Gates Foundation. including handset makers, software companies, equipment providers, Internet companies, and Agricultural Crop Cycle media and entertainment organisations. The GSMA also produces industry-leading events The annual cycle of activities related to the such as the Mobile World Congress and Mobile growth and harvest of a crop. These activities Asia Congress. include loosening the soil, seeding, special watering, moving plants when they grow LDC bigger, and harvesting, among others. Less Developed Country.

Agricultural VAS MEL Agricultural Value Added Services. Monitoring Evaluation and Learning.

Agriculture Extension Organisation mFarmer Initiative Organization responsible for developing GSMA Development Fund initiative to and delivering extension services. stimulate the development of high-scale, high-impact Agri VAS. Agriculture Extension The dissemination of expert agricultural MFI knowledge and practice. Microfinance Institution.

Agriculture Extension Worker MNO Professionals in the extension system Mobile Network Operator. responsible for developing and delivering extension services. NGO Non-Governmental Organisation. ARPU Average Revenue Per User. OPEX Operating Expenditure. ATP Ability to Pay. Pull Service Mobile services ‘pulled’ by the subscriber, B2B specifically queried and requested. Business to Business. Push Service B2C Automated mobile services ‘pushed’ or Business to Consumer. broadcasted after an initial subscription by the user. BMGF Bill and Melinda Gates Foundation. GSMA — mAgri Programme Glossary 39 Market Entry Toolkit - Agri VAS

QA Acknowledgments Quality assurance. IKSL: Mr Srinivasan Dr. G.C. Shrotriya VAS Mr Sudhakar Value-added Service. Manish Trehan WTP IKSL (airtel)

Willingness to pay. Sharbendu Banerjee CABI South Asia References The World Bank. 2011. Rikin Gandhi http://data.worldbank.org/ Digital Green

GSMA. GSMA Wireless Intelligence. 2011. Sudhanshu Jain HandyGo CIA - The World Factbook. 2011 https://www.cia.gov/library/publications Sonali Craddock /the-world-factbook/ HandyGo

Food and Agriculture Organisation Rajeev Ranjan of the United Nations HandyGo http://www.fao.org/sd/fsdirect/fbdirect/ FSP001.htm Natesh B.V Nokia Innovations in Rural Extension: Case Studies in Bangladesh, CABI Publishing, April 2005 Julian Guth available at http://www.share4dev.info/ffsnet/ Tigo Millicom documents/3493.pdf Nik Nesbitt A Global Consumer View of Mobile KenCall Advertising: Africa Results, InMobi, November 2010 available at http://www.inmobi.com/ Sean Krepp wp-content/uploads/2010/11/InMobi_ Grameen Foundation Consumer_Mobile_Ad_Effectiveness_Africa_ Nov_2010.pdf Laura Crow Vodafone Group Listening to the Farmer Voice: Overlaying macro-segmentation with micro-level data Photography on farmer needs and attitudes, TNS Research Burness Communications International, March 2011. Adrian Fisk Tobin Jones Kenya Metrological Department: http://www. meteo.go.ke/customer/farmer/stations.html

Authors GSMA Development Fund: Amol Jadhav, Natalia Pshenichnaya, Fiona Smith

Contributors GSMA Development Fund: Jack Westhead, Victoria Clause, Nicola D’Elia University of Cambridge Judge Business School: Sergey Kulikov, Satoshi Awamura, Sharifah Bakar Ali, Gaurav Choudhary, Karsten Eiserbeck GSMA Head Office Seventh Floor, 5 New Street Square, New Fetter Lane, London EC4A 3BF UK Tel: +44 (0)207 356 0600 www.gsma.com/mfarmer [email protected]

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