Agri 2: SAP Rural Sourcing Management – by Christian Merz
One of the most outstanding projects we have driven is using the so called “
SAP Rural Sourcing Management” . So I invited the father of the ‘solution’ to gove us insight on the background of it, the pain points of our clients which it can help to heal etc…
“By 2050, there will be 9.3 billion people on the globe, two billion more than in 2012. This growth will come almost exclusively from developing countries, making them the markets of the future. Food production will need to rise by 50% by 2030 to meet growing demand.
Globally, more than 500 million smallholder farms produce about 80% of the food consumed in Asia and sub-Saharan Africa today. For some crops, such as coffee and cocoa, most of the globe’s production capacity is owned by smallholders. In the cocoa sector, 90% of world production comes from 5.5 million smallholders.
Global trade standards are requiring increasing levels of transparency, a trend driven by consumer demands to know where products come from and how they have been produced. A study across eight countries including Brazil, China and India showed that these product characteristics are important to more than half of consumers. Fair trade sales are expected to reach US$9 billion in 2012 and US$20 billion to US$25 billion by 2020. The global organic food market is projected to have a value of US$88 billion in 2015, which would represent an increase of 48% since 2010. In addition, a wealth of other standards related to the social and environmental aspects of production are being used both as consumer marketing tools and for quality and safety management.
National and regional trade regulations, global trade standards as well as retailers and their consumers require that the production of food and other products be documented and controlled for quality at each and every step. For agribusiness, food, cosmetics and pharmaceutical companies, as well as any others involved in buying agricultural products, it is no longer enough simply to procure products on the open market. Instead, smallholders need to be fully integrated into these global value chains – a task that requires coordinated efforts among all stakeholders. In particular governments and the public sector are key drivers for national and international agricultural initiatives.
SAP Rural Sourcing Management is an integrated, cloud based solution in its pre-commercial stage combining mobile and desktop access to track produce from farm to factory. Through the introduction of mobile business applications, farmer groups and cooperatives can run their business in a structured, effective and efficient way by getting rid of an error prone, time and effort consuming paper based administration.
Smartphone, tablet and laptop based applications support the governance of farmer cooperatives (e.g. memberships and financials); operative business process support (e.g. bulk selling to buyers) and analytics and certification (e.g. for fair-trade or organic specialty markets). Specific functionalities within the system include farmer registration, prices broadcasted to smartphones, buying and loading via phones, notification panels, a device synchronization monitor, transactional analytics and GIS-Backdrop (Geographical Information System).
The technology supports farmers with access to profitable markets so they can increase their income. Established players — such as processors, buyers, exporters and multi-nationals sourcing companies — profit from enhanced transparency and reliability when conducting business with the farmers. They can now plan and forecast more accurately.
Thus the following value propositions apply to producer organizations and enterprises:
- transactional overview in an electronic format
- realtime and accurate planning & forecasting
- increased farmer loyality
- utilizing SMS mass communication for agricultural extension services (e.g. market information, agricultural advice, alerts etc.)
- efficient book keeping
- traceability of produce
- quality controlling
- trust provision
- data provisioning (e.g. to certifiers, exporters, retailers etc.)
- data accuracy
The solution could feasibly be adopted by other rural farming countries because of all of its notable achievements:
- Successful real-life piloting of the system by reaching more than 23,000 smallholder farmer producers.
- More than 36,000 recorded business transactions using mobile phones in buying stations and warehouses across 15 pilots in Ghana, Burkina Faso, Cote d’Ivoire, Benin and Uganda — with a system adoption rate of greater than 90 percent.
- Proven system availability and stability overcoming challenging technical conditions in rural Africa.
- Proven suitability of the system across 5 different cash crops attracting the interest of small-scale producer organizations, processors, buyers, importers and retailers as well as certifiers.
- Applicability of the system to organized and non-organized farmers in English, French and Luganda language versions.
- Proven easy deployment to prospective customers indicated by the decreasing time-to-pilot durations.
Ultimately, the greatest innovation is that existing economic activities among farmer groups have become more sustainable. This not only boosts local economic activity but also improves the socio-economic situation for a vast number of under-serviced rural inhabitants.
Thus the solution could be a blueprint for national initiatives driven by the public sector in order to incubate the agricultural sector gaining wealth for their people. Smallholder farming plays an enormous role in food security and deserves dedicated solutions that support the producers in their daily business. SAP Rural Sourcing Management is a starting point and there is more to come…”