Support small farmers in LATAM

Detailed problem statement.

Agriculture is an important source of work in Latin America, particularly in rural areas where 54.6 percent of the labor force is involved in agricultural production. This region represents an important source of food on a world scale: it generates 13.6 percent of total agricultural exports.

It is estimated that, by 2050, the world population will increase by more than two billion inhabitants. Population growth, accompanied by changes in consumption habits driven by urbanization and a growing middle class, means that global agricultural production will need to be 50 percent higher in 2050 than the 2012 figures to meet demand.[1] 

Such an increase in production must take place in the context of climate change and unsustainable exploitation of land and other natural resources, such as fresh water. 

The small farmers also face large short- and long-term financing gaps, both in their agricultural financial needs and in their non-agricultural needs. Access to credit provided by formal financial institutions requires an economic identity that most small farmers do not have.

In Latin America, the agricultural sector has made large productivity gains in the last two decades. However, these gains have been uneven and have been concentrated mainly in Brazil and Uruguay. Countries such as Bolivia, Guatemala, Nicaragua, Honduras, El Salvador and Peru report lower levels of productivity, due in large part to the predominance of subsistence agriculture.

Regional variations in Latin America are not only found in productivity, but also extend to financial inclusion. Across the region, just over half (55 percent) of adults in 2017 had an account at a bank, another financial institution, or a mobile money account.[2] 

Low levels of financial inclusion prevent farmers from accessing the capital they need to acquire assets and upgrade their equipment to reduce productivity gaps and increase their income.

The importance of small farmers for the agricultural sector in Latin America.

The Food and Agriculture Organization of the United Nations (FAO) estimates that there are 16.6 million smallholder farms throughout Latin America, in which approximately 60 million people live and work.[3]

Almost 60 percent of all small farmers in Latin America are considered subsistence farmers. In countries like El Salvador, Nicaragua and Colombia, the percentage of small farmers considered subsistence farmers exceeds 70 percent. It is no coincidence that countries with a higher incidence of subsistence agriculture also have higher rates of rural poverty.

The role of women in agriculture.

The participation of men and women in the agricultural sector in Latin America is very different. While 62.1 percent of the rural male workforce works in agriculture, 40.8 percent of the rural female workforce is employed in this sector.[4]

Accessing jobs in the agricultural sector is not the only challenge facing rural women in Latin America. They also find it much more difficult to own land and gain access to other agricultural assets. Generally, female-owned farms are smaller and located in less coveted areas, with limited access to productivity-enhancing tools.[3]

The impact of all these factors makes it difficult for women to access financial services, such as credit and insurance, perpetuating the cycle of poverty for women in rural areas.

Detailed Solution.

The growth of the agricultural sector is essential, not only for the subsistence of farmers, but also to boost economic growth in general in rural areas. According to the World Bank, growth in the agricultural sector is two to three times more effective in reducing poverty than equivalent growth in other sectors, such as mining, manufacturing, and services.[5] 

Two of the main ways to boost the growth of the agricultural sector are: higher levels of productivity and greater financial inclusión.

To achieve high levels of productivity, greater financial inclusion, access to markets and education. We propose to build a network of small farmers where they have the following benefits:

• Technical assistance from a team of expert agronomists, from sowing to harvest, going through all the critical milestones of the crop, ensuring its quality.

• Smart farming solutions, such as sensors, drones, satellites and other agricultural assets to  generate and transmit data about a crop to improve productivity and yield.

• Financial services such as credits and loans, input financing, credit rating, crowdfunding, insurance, digital wallet, savings, etc.

• Access to education that ranges from proper growing techniques and the correct use of new equipment to technological and financial education.

• Traceability solution within the agricultural supply chain.

• A marketing solution to reduce intermediation and create export opportunities.

 Technical Assistance,  Let's go step by step.

Step 1: Select what to grow.

We must understand the demand and plan accordingly. For this we analyze the data that consumers show us, what they buy, how much and how often. For new consumers we look at global consumer trends and share these findings with our farmers to be more certain of what to grow and in what quantity.

Step 2: Deciding where to grow.

Latin America is a region characterized by its richness in natural resources with different topographies and climates suitable for a wide variety of crops.

Our team of agronomists analyze which types of crops go best with different farmers based on certain attributes such as previous crop quality, yields, technology, resources and experience of the farmer. Once the farms and farmers have been selected, the agronomy team engages in a mutual-benefit dialogue with farmers. Here, both parties discuss costs, estimated yield, challenges, prep work, quality requirements, scheduled site-checks, fair prices, and much more. Only once both parties shake hands on all of the above, does the work begin.

Step 3: From sowing to harvest.

The team advises the producer on which seeds to use and the different inputs, farmers can obtain these inputs at a better price with our supplier partners.

Each crop has critical milestones during its growth, these milestones determine if the fruit will be of top quality or not. That is why the team visits the farmer during these critical milestones to ensure production quality.

Good harvesting begins with on-ground monitoring and assessment right before the harvest. We take this very seriously, especially when working with first-time farmers.

The produce is checked for many things, including color, shape, length, weight, etc and is classified accordingly.

Smart farming solutions.

The most common problems associated with low productivity are due to the lack of environmental control of crops, from climatic factors, control of pests and diseases, to the inefficient use of resources such as water and soil.

The concept of smart farming refers to the use of sensors, drones, satellites and other agricultural assets to generate and transmit data on a specific crop, animal or practice to support agricultural activities. Smart farming solutions rely on connectivity between IoT-enabled devices to optimize production processes and growing conditions while minimizing costs and saving resources.

Within this network of farmers we plan together with our team of agronomists the implementation of smart farming solutions, we are going to use these tools for the following:

• Monitor the growth and advancement of crops.

• Quickly detect pests and other stressors.

• Improve internal controls; achieve complete visibility of people, processes and production in real time.

• Improve decision making.

• Eliminate unnecessary expenses and improve margins

• Apply best practices through shared knowledge.

Financial inclusión.

The proposed solution includes services provided directly to small farmers, such as digital payments for agriculture,as well as derivative services that support credits for agriculture (eg: financing of inputs), savings (eg: digital wallets designed to support certain activities in the agricultural sector) and insurance coverage.

Using Cardano's BlockChain technology we will create data sets with information about farmers, crop sales transaction data and payment information, among others, to help solution providers better understand the financial footprint of farmers, making it more viable to extend its products, such as insurance coverage, credits and loans, to small farmers in remote areas.

We also want to encourage the participation of the Cardano community within this solution through crowfunding. Cardano's blockchain technology is a key enabler of crowdfunding as it improves transparency and security for both investors and farmers. It also simplifies the transfer of funds from investors, who, for the most part, are located in urban areas or in other countries, to farmers, located in rural areas.

Access to education and training on how to use technology in general.

The lack of education in small farmers also affects productivity, performance and their lifestyle. If we intend to implement technological tools we must understand that the adoption of these tools requires time, effort and discipline.

Our solution proposes in addition to including agricultural training, also include technological training, we must create our platform thinking about ease of use and the needs of our farmers. We know that it is a process that will take time but we believe that with the help of the community the adoption process can be much easier and more efficient.

For the implementation of these technological training modules, a group of our team will visit the farmers so that, together with the agronomist team, the technological adoption will be easier for them to carry out. Using sensor technology also requires training and technical knowledge, sensors installed in smallholder fields can be easily damaged or moved, limiting their effectiveness. In conclusion, the technology adoption process will be carried out by our care team and the team of agronomists, so the farmer will feel more confident.

Traceability solution.

We propose a digital sourcing tool that incorporates the traceability function in part, this is because both the US and the EU, large importers of agricultural products, have tightened regulations on food imports in recent years, which made traceability a priority for us who want to export farmers' crops to these markets. Consumers in both developed and emerging economies have become increasingly interested in where their food comes from, especially since the beginning of the COVID-19 pandemic.

To implement agricultural traceability in our solution, we will work together with Emurgo, specifically with its product called "TRACE" that will serve as support in the development of our platform, the EMURGO team are excited to join the project once it is approved.

Many consumers are not aware of the origin of the products they consume. As health food stores gain traction and demand for fresh, healthy products, blockchain promises a way to help consumers enjoy and understand the farm-to-table journey.

In addition to providing a superior experience to end consumers, blockchain facilitates supply chain management and can increase efficiency and visibility in the product life cycle. Farmers, packagers, logistics providers and retailers can all benefit from increased transparency and communications.

A few advantages of blockchain in agriculture include.

• Increasing value of products by providing a superior customer experience.

• Real-time supply chain audits and insights.

• Increased efficiency with greater supply chain visibility.

• Integration with IoT devices to ensure quality control, compliance, and minimized recall damage.

 Companies in the food and beverage industry are always seeking ways to increase efficiency, reduce costs, and provide greater value to customers. As blockchain can provide an increase in supply chain efficiency while offering end consumers with trustworthy information about the provenance of the products they buy, many enterprises are turning to blockchain as a potential solution. Other benefits include:

• A way to communicate sustainable business practices with end consumers.

• A transparent trail of events from farm to table.

• Verifiable certifications by third party providers (i.e. GMO-free verified).

• Reduction in risk and scale of recalls and supply chain interruptions.

Marketing solution.

Thanks to the technical assistance of our team of agronomists, the implementation of smart farming technology, access to financing, access to education and the traceability solution through cardano's blockchain technology, our farmers will considerably improve the quality and traceability of their crops, they will also be able to produce fruits and vegetables free of contaminants and under sustainable practices.

All these factors help farmers to create export opportunities, since their crops are of high quality and meet high import standards, mainly from European and Asian countries.

Our marketing solution is based on creating a food brand from Latin American producers, this brand will be called "Living Roots" and represents the needs and interests of our farmers. In the future we want to sell our products under this brand in the main export markets such as the United States, Europe and Asia.

The products under this brand will be food of the highest quality, clean or free of contaminants, obtained under sustainable, transparent practices and following a fair trade model for our farmers. Consumers will know exactly where their food comes from and who produces it thanks to traceability.

We are going to implement a tipping system so that anyone in the world who consumes our products can give back to the Latin American farmer and appreciate the effort they make every day. 

Market.

Fruit exports have seen particularly strong growth in recent years, as the Andean countries position themselves as the largest suppliers to European and North American countries during the northern hemisphere's low season.

The Latin American region exported around USD 250,000 million in agricultural products in 2017, which represented a quarter of the region's total exports.[6]

This region represents an important source of food worldwide: it generates 13.6 percent of total agricultural exports.[4]

While agricultural export markets in countries such as Brazil and Mexico are large, the importance of agriculture to overall export value is not as significant as in some smaller Latin American markets. In Ecuador and Guatemala, for example, agriculture represents more than half of total exports, and in Uruguay, more than three-quarters.The agricultural sector in Latin America is promising and came to be seen as the "next breadbasket in the world." [7]

However, to fulfill this promise, significant improvements in productivity will be needed, especially in small-scale agriculture. We are confident that our proposed solution can play a fundamental role in driving these improvements.

Who we are?

We are "Living Roots" a Latin America Startup with one goal:

Build and agricultural network, work together with farmers, growing clean and sustainable food ensuring high quality, traceability and availability for people in the world.

We complete the pre-incubation process in Startup mexico. Startup mexico is the leading organization in Mexico in promoting innovation, entrepreneurial culture and economic development both locally and internationally.

CEO and founder

Cristian Jair Rojas Velez originally from the state of Tlaxcala, Mexico.

Relevant Experience:

As Industrial Engineer, I know how to design, measure and control production systems and logistics processes. I have experience in experiment design applied to agricultural systems especially in greenhouses.

As Farmer I had been worked with my father, growing food in my local community since I was child, We have experience growing tomato under control enviroments. 

As an entrepreneur, I only have the vision to help the growth of rural areas in Mexico and Latin America by promoting sustainable practices, fair trade and honesty at work.

ROAD MAP

First 6 months once funding is received.

Pilot Test.

Description:

In this pilot test we will work with a small farmer from the town of El Carmen Tequexquitla located in the state of Tlaxcala in Mexico.

This farmer plans to grow tomatoes under a greenhouse, we will provide technical assistance, financing of some inputs, technological education and the purchase of his harvest at a fair price.

Technical Assistance:

This greenhouse was just installed a few weeks ago, talking to the farmer he tells us that he has no experience growing tomatoes under a greenhouse since his previous experience is with open field corn crops but he has decided to invest in this greenhouse to improve his income.

We will work hand in hand with an expert agronomist from the Autonomous University of Chapingo in Mexico.

We will align ourselves with a work carried out by the department of phytotechnics of this university where the yield of tomatoes under greenhouse was studied taking into consideration variables such as:

• The tomato variety.

• The population density of the plants. and

• Blunting levels

You can see the full article in the following link: https://doi.org/10.5154/r.rchsh.2017.01.003

Under this method, the agronomist will assist the farmer in all cultivation processes and techniques, from sowing to harvest, taking into account even the smallest detail to guarantee the quality of the crop.

In the future it is planned to add this assistance function as part of the digital platform, for the moment the visits will be physical, and the feedback will be by text messages, calls or video calls.

Financing:

The study carried out by the Autonomous University of Chapingo considers using the hydroponic technique as a cultivation method, this technique has shown better yields and better use of vital resources such as water and soil.

Typically the hydroponics technique represents high installation costs that the farmer cannot currently afford.

We will provide financing for some necessary inputs for the installation and cultivation, in this case the financed inputs would be:

• Coconut fiber slabs, these are tablets of short fiber and coconut powder, sieved, washed, sterilized and packed in the form of sheets for immediate use in hydroponics.

• Saladette type indeterminate tomato seeds.

The farmer will provide the irrigation system, the nutritional solution, the labor, among other inputs.

Technological training and the purchase of his harvest.

Once grown and harvested, the tomato is ready for sale. We are committed to buying the entire production at a fair price, that is, a much higher price than what intermediaries normally pay to farmers.

The purchase of this harvest will be carried out through our digital platform, the process will be as follows:

1. We will collect the harvested tomato, we will weigh it, we will test it for quality checks. The quality and quantity of tomato will be registered on the blockchain-based platform.

2. From these inputs, a smart contract on the platform will issue a digital title for the delivered tomatoes to the farmer. Thus the farmer could prove ownership of the crop asset, even thought it is in physical possesion of us.

3. The digital title will be flagged for payment after 7 business days, once that period elapsed, two transfers will happen simultaneously: the ttile will be transfer to us, and the requisite amount of money will be transfer to the farmer, This transaction will be supported by COTI PAY[8], which is a payment processor that will be integrated into our platform.

There will be a technological training and assistance at all times to the farmer. It will be explained in detail how this technology works and the benefits it brings to both him and us.

Development of a first prototype or MVP of the platform based on the Cardano BlockChain.

Once the funds have been received, we will start working with the EMURGO team on the development of a first prototype of the platform, with the following characteristics:

• Smart contracts with the ability to issue digital titles that represent the harvested crop.

• Transfer ownership of assets between the farmer and us.

• Share immutable asset records with customised stakeholder views.

• Integrate the COTI PAY payment processor.

From 6 to 12 months.

Create the network of small farmers.

Once the first stage has been successfully passed, we will have evidence of the work and the quality of tomato that was obtained during the pilot test, as well as the efficiency of the digital platform.

The next step will be to start working with more farmers, we will visit farmers in the State of Puebla in Mexico, in this state there are 800 hectares of greenhouse tomatoes. We are going to focus on 4 municipalities: Aquixtla, Tetela de Ocampo, Tecamachalco and Tochtepec, which represent 43.5% of the tomato greenhouse surface in the state of Puebla.

In this area there are 338 producers of which a large percentage have low levels of technological management and equipment, which translates into very low productivity and quality of their crops.

If you wish, you can read the complete article on the technological characterization of the tomato production units under greenhouse in the state of Puebla, Mexico. Published in the Mexican journal of agricultural sciences.

Link: https://doi.org/10.29312/remexca.v11i5.2010

Continue with technical assistance and training on the use of new technologies.

It will work in the same way in the production of tomatoes always with the assistance of the team of agronomists.

Workshops will be created in these communities where small producers will be taught about the use and benefits of modern technologies. These workshops will be given by people from our team, where farmers will be taught how to use the platform and other technological tools.

Add functions to the digital platform.

After the first prototype we will start adding more features to the platform, which include:

• The traceability solution from the Emurgo team.

• Creation of economic identity of farmers.

First export of tomatoes to the European market.

We will look for tomato importing partners mainly in the United Kingdom, to export the harvest of our farmers, the export will be carried out in a traditional way, in the future we plan to add blockchain technology to solve some deficiencies in the export and import processes.

SUCCESS METRICS OR KPIs.

For 0 to 6 months.

• Fully functional greenhouse operating under the hydroponic technique.
• Tomato greenhouse yield of at least 18 kg / square meter. *
• The MVP of the platform working with the planned features.

* This yield represents 20% more than the average in the state of Puebla and almost double that of producers with a low technological management index.

For 6 to 12 months.

• Add 30 small farmers to the network.
• A correct handling of the platform by this farmers.
• Improve farmers' yields by at least 25%.
• Export at least 30% of the crops harvested from these farmers.

COST BREAKDOWN

Agronomist fees in pilot test : $ 500

Input financing for the greenhouse:

600 Coconut fiber slabs & 3k tomato seeds: $2500

Emurgo Developers:

Quantity: 2

Hourly Rate: $10

Hours per month: 100

Months: 6

Total: $12,000

*We estimate only 6 months and 2 developers for the MPV, we need to verify it with EMURGO.

CEO Salary and functions:

• Recruit the agronomist team.
• Work and lead the greenhouse operation in the pilot test.
• Go out to find a market for the first harvest.
• Work with the emurgo team on the design of the MVP.
• Visit small farmers for the creation of the agricultural network.
• Train staff for technology education workshops.
• Contact uk tomato importers and establish business relationships.
• Legally constitute the startup.
• Build the company strategy.

* I ask for this salary given the situation of being full time in this project added to not having a job (I work only as a farmer) and covering basic needs of my family.

Hours per month: 160

Salary per month: $500

Months: 6

Total: $3,000

Incorporation expenses, visits to farmers, trademark registration, operating costs, export permits: $2000

GRAND TOTAL: $20,000

References:

[1] https://repositorio.iica.int/bitstream/handle/11324/8214/BVE19040295i.pdf;jsessionid=4A7D4E2DC522BF6175306F02EE073AB6?sequence=2

 [2] https://globalfindex.worldbank.org/

 [3] https://www.fao.org/3/i3788s/i3788s.pdf

 [4] http://atlas.iica.int/alc/agricola

 [5] https://www.sciencedirect.com/science/article/pii/S0305750X1830175X

 [6] https://timeseries.wto.org/

 [7] https://publications.iadb.org/publications/english/document/The-Next-Global-Breadbasket-How-Latin-America-Can-Feed-the-World-A-Call-to-Action-for-Addressing-Challenges--Developing-Solutions.pdf

Population densities and blunting levels for contrasting varieties of greenhouse tomatoes: https://doi.org/10.5154/r.rchsh.2017.01.003

 [8] https://coti.io/coti-pay