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Phase: Ideas Missions: Access to Financial Resources

AgriCoin

Implement an ecosystem for the management of an agriculture supply chain based on virtual currency, information sharing by SMS and Co-Ops.

Photo of Craig Gray
23 8

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EXPLAIN YOUR IDEA

See attached - I'm sorry I didn't have enough time to do a user experience map - and my drawing skills are horrid

WHO BENEFITS?

Farmers - they're enabled to do what they do best without the risk of having to sell their crop, borrow money, farm with no knowledge of the seasonal shifts Families of Farmers - they are given more stability, they are incentivised to go to school Society - the local ecosystem functions much better, less corruption, easier flow of capital and less crime. Education is boosted. More agricultural jobs. Macroeconomy - food supply chains are boosted. More money in the system. less corruption.

WHERE WILL YOUR IDEA BE IMPLEMENTED?

Any developing country - africa would seem to be the most obvious choice given: Peasant farmers Corruption Lack of access to banking facilities

ARE YOU IMPLEMENTING IN AN ELIGIBLE COUNTRY?

  • This idea is meant to inspire - I hope someone else takes it on!

EXPERTISE IN SECTOR

  • I’ve worked in a sector related to my idea for over a year

EXPERIENCE IN IMPLEMENTATION COUNTRY(IES)

  • Yes, for more than one year.

I would say that we're addressing all 4 of the missions in the objective with this approach - unfortunately I can't select them all. 

Its difficult to think of the future when you're too busy trying to put out the fires of today. This is to say that cash, for people who either don't have bank accounts or have bank accounts but live in an unpredictable environment, is the only lifeline. If it is there to use, it will be used for something critical or it will be taken by someone who knows that it is there. The next growing season is a distant thought in the back of the mind of a small scale farmer in contrast to the current weather, feeding his/her family, finding help on the farm, protecting the family and the farm from outside threats.

The aim of the virtual currency is to decouple the farmer's livelihood from their day-to-day emergencies. 

In teaching them to exchange currency electronically you also have a side effect of enabling a 2-way information channel. 

Thus - if you address the problem in 6 stages, you should simplify the entire process for the most vulnerable members of the supply chain:

  1. Financial Resources - Remove cash from the equation - Implement a payment system for the exchange of virtual currency via mobile phones. This currency is virtual, traceable and costs nothing to process transactions. More importantly, this cash is released at key milestones and can only spent in certain places - i.e. Seed supply, agricultural equipment, water supply. I would guess that every farmer has at least a basic mobile phone that can be used as an account. If the phone is taken, the virtual currency remains available for the owner to access. Equally, every transaction is traceable using the virtual currency so any misuse can easily be spotted and halted.
  2. Capital- With the risk of money being misappropriated reduced, you can either manage the distribution of grants or issue micro loans to the farmer that he/she can use to prepare themselves for the upcoming growing season. This loan would be interest free and would smooth the cashflow of the farmer. Again, crucially - this currency would only be accepted in certain locations.
  3. Access to Information - Now that the farmer is connected and has an adequate source of funds to prepare for the upcoming growing season, you could use the same technology to inform the farmer of inclement weather and allow for 2 way communication between the farmer and you. For example - if you have a number of smaller 'peasant' farmers, each contributing a small share to a co-op, you could understand the yield that was coming by asking the farmer weekly for an update. 
  4. Access to Markets- You could incentivise the farmer by giving him/her a bonus every time they report their projected yield and an additional bonus if they deliver as promised. This allows you to manage your supply chain and ensure that crop can be sold on efficiently. With enough mass in the co-op you have access to wider markets selling the crop with more command over the price and the confidence of your buyers given the new informed nature of your supply chain. Indeed, larger multinationals are reluctant to buy from smaller scale farming operations because they have no visibility or confidence in the security and stability of the supply chain or its adherence to legislation that they have to comply with in their core markets, e.g. Fair-trade. 
  5. Storage & Processing - Operating as a co-op would allow for sharing of resources such as agricultural equipment. This would also allow for the crop to be consolidated and economies of scale to come into effect for investing in processing and storage. More importantly though, the effectiveness of the supply chain would reduce the requirement for storage and processing could be managed on a larger scale. Larger scale buyers would also no be accessible due to both quantities and information around supply chain compliance.
  6. Finally (and most importantly) - in order to improve the wellbeing of the farmers family - you could issue incentives to the farmer to allow them to access additional funding or bonuses depending on what the goal is. For example - I donate to a charity that pays the families of young girls according to the girl's school attendance. The challenge being that in developing countries, often girls are seen as being less equipped to go to school than boys, so in the case of a family who has to decide between sending their daughter to school or sending their son - often the boy would be sent. However if you remove the cost to send the girl to school also, or you inscentivise the family to send both kids to school, it becomes less of a desperate choice. Using these incentives and creating an ecosystem for virtual currency, you could create an additional network that the farmers family are able to spend 'foodcoin' at the local store, or buy fuel using 'fuelcoin'. Co-ops could effectively form communities and invest in schools, infrastructure and become the catalyst for a micro-economic surge. This currency is non-transferable and fraud or exploits can be reversed. 

This inspired (1)

Croople small holders futures
Croople small holders futures

23 comments

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Photo of Hecmar Paz
Team

Sre. Craig Gray, good day was seeking information about the creation and implementation of a project that I undertake and I ran with your idea of a digital currency and I would like to talk about it with your working group to refine and integrate and unite experiences and knowledge, I am from Venezuela, my name is Hecmar peace and work as a veterinarian and specialist in e-commerce. when I can I write to my mail: hecmar3d@gmail.com. Thank you.
Sincerely
Peace Hecmar
Venezuela.

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Photo of Maurizio Bricola
Team

Hi Craig Gray would you like to getting in touch for the next phase? Croople small holders futures got a chance to go through the expert feedback, you might like to think along, you are welcome, just drop us a line. Cheers

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Photo of Craig Gray
Team

Just an update for anyone interested. Ashley King-Bischof and I had a long conversation yesterday. Ashley's project covers a few of the outstanding issues that we need to deal with to make this an end-to-end solution, which is perfect. There are still a number of other pieces that need to be resolved, and the challenge of integration is still there. 

However, on the whole, I think we have good alignment and a great opportunity ahead of us. 

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Photo of Ashley King-Bischof
Team

Craig Gray that was a great talk, indeed. We have farmers who already trade with us, input dealers (seed companies) that want to market to farmers, and banks who want to finance these smallholder farmer activities. AgriCoin is a great idea to reduce transaction costs (mobile money, although popular, is quite expensive in Kenya) and to increase transparency for the entire supply chain (a critical part of our mission at Markit Opportunities for Smallholder Farmers ).

So where can we start? With a small pilot with our farmers. We offer them funding for fertilizer and require they use our SMS platform in order to pay back the loan. We can stay lean with a non-technical prototype as we understand the comfortability of smallholder farmers when they use a system backed by crypto-currency (rather than the current alternatives of banks or telecom mobile wallets). 

Did I miss anything, Craig?

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Photo of Craig Gray
Team

Spot on Ashley King-Bischof . A small, non-technical pilot that allows us to further prove the idea beyond the excellent work that Markit Opportunities for Smallholder Farmers has already done. 

Once we've got the process nailed, we can start to enable it with technology and expand to a larger audience.  

Kedogo Kedogo as they say in Swahili... Little-by-little.

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Photo of Craig Gray
Team

Maurizio Bricola Dave Zinsman Ashley King-Bischof Malcolm Green Guys this idea is already an amalgamation of all of your ideas - I'm going to create a team in the hopes that we can tie this all together and you can all begin to take ownership of this 'idea' and I won't be the single point of failure any longer. 

I don't fully know if the platform gives you control of this 'idea' but it can't hurt :) Looking forward to working with all of you great minds. 

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Photo of Maurizio Bricola
Team

Craig thanks for opening this exploration space, let's see how we can navigate through it :) we are trying to set up a first call this coming Monday at 10:00 Nairobi time. You might want to follow the conversation here Markit Opportunities for Smallholder Farmers Cheers

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Photo of Ashley King-Bischof
Team

Craig Gray it looks like each team can be selected individually, and in that way we can all win! I proposed speaking with Maurizio Bricola first to get a sense of his operations in Kenya - and tell him more about Markit Opportunities for Smallholder Farmers 's pilot. Quick, bilateral conversations may be more helpful both due to timezones and internet bandwidth. 

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Photo of Craig Gray
Team

Ashley King-Bischof great idea. Let's do that!

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Photo of Maurizio Bricola
Team

Craig Gray fabulous idea to have a virtual currency, it is definitely a big challenge to implement it but very worth to be tried out! Croople small holders futures we had a similar idea of providing loans according to milestones, transferring funds in installments according to the submitted updates on the farmer's production plan, we did not though about a virtual currency (voucher) that is indeed a very good way to minimise the risk. 
Ashley King-Bischof and Dave Zinsman I see you are active in Kenya and you focus on the market part of the chain. Which are of Kenya are you currently covering? It would be lovely to have a talk all together to explore how could we add value to each others.
Cheers,
Maurizio 

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Photo of Dave Zinsman
Team

Love the idea Craig Gray ! As the challenge moves forward, you may want to explore opportunities together with the Markit Opportunities for Smallholder Farmers team, which is driving at a similar goal—building technology & micro infrastructure solutions to empower farmers in developing countries. It may be cool for a few teams to quickly formulate a common use case, and move ideas forward around that case to identify how our teams' ideas/products can complement each other. I'm thinking a micro sprint to: A) rally some teams that have similar aims, B) every team gives a short description of a use case and personas C) 15-minute webinar meeting to solidify the case. We can all then move through the challenge with a better idea of how complimentary services might create a continuum of benefit. Are you game?

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Photo of Craig Gray
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Dave Zinsman  Thank you for making the link - I've had a brief read of their project and its right up the alley of what I was thinking for this. Simple, effective and easy enough to implement. I think that we could compliment each other. 

I like the approach, count me in!

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Photo of Ashley King-Bischof
Team

Craig Gray your idea looks super interesting. Technology and ideas are easy, and implementation is difficult. Let's have a chat to discuss how we can work with our farms and agents. Thanks, Dave Zinsman . Will PM you both. 

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Photo of Shane Zhao
Team

Nice connection Dave!

Great to see a conversation starting here Craig and Ashley. I'm looping in another likeminded post in this challenge that's focused building microfinance opportunities for small-scale farmers: Micro Finance Facilities & Education Available To Subsistence Farmers  Perhaps Malcolm Green might have additional insights to add:)

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Photo of Craig Gray
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Thank you Shane Zhao and Hi @Malcolm Green, welcome to the conversation. 

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Photo of Dave Zinsman
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Cool, Craig Gray and Ashley King-Bischof 
Talk soon!

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Photo of Ashley King-Bischof
Team

Thanks Shane Zhao . As a Kiva Fellow I worked with a microfinance institution (MFI) in Cameroon, and I understand the value of education paired with microfinance products. At the moment, our farmers have been asking for more investment information - What are the best seeds to plant? Will I profit if I plant them? Where can I get the best price for them? How can I make sure they are not fake? We work with NGOs that teach basic financial literacy to their farmers and engage Kenyan-based seed producers to help advise farmers on our platform with the best seeds to plant given factors such as: location, weather and markets. 

Our organization also has knowledge of planting information for our main crop, red onions.

Malcolm Green what specific training do you propose? Interested to hear!

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Photo of OpenIDEO
Team

Hi Craig, interesting post! Any chance you could find an image to go along with it? Images help grab attention and tell a story with higher impact. You should be able to use the Edit Contribution button on the top of your post and follow the instructions to add images from there. Looking forward to seeing more of your inspiring insights on OpenIDEO.

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Photo of Craig Gray
Team

OpenIDEO Thank you for the pointer. Done and done.

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Photo of Christophe Parot
Team

Ucoin is a project that perfectly suit your objective :
A project to implement Basic Income through cryptocurrencies. To a free economy.
http://en.ucoin.io/
It is based on the relative theory of money
http://en.trm.creationmonetaire.info/
that is a document that explains what is a free currency and how to implement it.

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Photo of Craig Gray
Team

Thank you for that pointer Christophe Parot  - I was not aware of Ucoin, I especially like that it is more currency weighted than pure blockchain/distributed ledger concepts. Seems like it has excellent potential. I will read into it when I have a moment.

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Photo of Lisa
Team

I think that this is a very interesting idea and I like the idea of making the exchange of money easier and safer.  One concern however, is that you have listed "any developing country" as where this idea should be implemented.  In many rural areas in some African countries (and many other developing countries), for example, people cannot afford cell phones or if they can, the service is limited, so I think that this may be one major hurdle for this idea.

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Photo of Craig Gray
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Lisa - You're absolutely right - my initial thinking was to lower the barrier from 'smartphone' to 'phone', but really there are large swathes of the developing world where even power and basic mobile service are issues. 

There's a case to made for the having an agent who could act as an intermediary, providing the information and relaying this to the farmer. Unfortunately this somewhat eliminates the benefit of having a electronic currency as you now have to rely on other people (and their honesty) to become gatekeepers. 

It's an interesting problem - my initial thought would be that the issue of having a device could be addressed fairly easily using solar charging and the cheapest handsets on the market. Pay-as-you-go service would be ideal as the only costs would be the outgoing texts and they could be subsidized cheaply. 

Security on these devices would be easy to address - except where illiteracy is a concern - which is again highly probable. 

Finally, cell service - this would be a challenge, the cost of rolling out coverage in these areas wouldn't necessarily provide a return for the infrastructure providers. A potential option would be subsidizing the rollout of cell service in these areas, with the value being an increase in trade at a micro level, leading to an overall increase at a macro level. 

There's a net benefit for the businesses that ultimately become consumers of the newly enabled supply chain. Perhaps they would be willing to subsidize some of the cost of providing the infrastructure to these rural areas.

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