Financial technologies have become increasingly popular and necessary in many industries today. Digitizing transactions and other financial services makes processes more streamlined, efficient and profitable. Integrating agriculture financial technologies, or Agri-fintech is changing the way things have been done and providing many benefits to agribusinesses. McKinsey & Company reported in 2022 that 60% of farmers still use cash as the main method of payment. This statistic shows the need for more education on how Agri-fintech can unlock financial access for farmers. Some examples of Agri-fintech include digital payments, mobile banking, online lending, crowdfunding, insurance and more. These financial solutions bring many benefits to the industry, so let’s explore some of these services and how they are helping agribusinesses and farmers.
Digital Payments
Sending and receiving payments digitally allows farmers to track their transactions, and access money quicker and more securely. The transition to digital payments will likely be gradual since farmers have relied on cash or checks, but digital payments will enhance farm operations greatly. Digital payments increase financial inclusion by giving smaller farms more opportunities to compete, sell to and purchase from larger agribusiness in the industry. Companies that provide this service to farmers and ag retailers note other benefits including mitigating fraud, providing proof of delivery and improving customer farmer relationships.
Online Marketplaces
Most agriculture transactions take place offline, but this is changing with the integration of online marketplaces. Shopping online has been instrumental in the growth of many companies in other industries, but now agribusinesses are recognizing the benefit and need for this technology. Online marketplaces increase transparency and make transactions more equitable for all stakeholders. Buying and selling on digital platforms is improving prices for farmers, broadening access, increasing profits and improving overall efficiency for farmers, retailers and agribusinesses.
Online Lending
It is no secret that it generally takes a lot of money to successfully operate a farm, and farmers often rely on loans and funding to see their operations through. Agri-fintech companies offering online lending are making it easier for farmers to access the funds they need. This is especially beneficial to smaller farmers who typically have a harder time securing loans. Mobile based loans, and the use of data analytics to access credit offered by Agri-tech companies are allowing more farmers to access the funds needed to keep their operations going. These Agri-fintech online lending companies can also provide other financial services such as financial planning and resource management tools which further benefits the farmer’s future financial decisions.
Final Thoughts
Agri-fintech is expected to continue growing and helping farmers and agribusinesses improve financial operations. Digital payments, online marketplaces and online lending are just three of the many ways Agri-fintech is unlocking financial access for farmers. Agriculture experts recognize the need to increase yields and improve efficiency on farms. Agri-fintech is part of that solution by improving financial solutions, providing transparency across markets and providing farmers with the finances they need to continue growing food, fuel and fiber.
