March 2021 agricultural “platforms” in a digital era

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A quick guide to reading this report
Although Digital Platforms share these common 
characteristics, they come in a number of diverse 
models. In this report, we explore the hype around 
Digital Platforms in smallholder agriculture and 
analyze why, despite this hype, the emergence 
of Platforms in agriculture continues to lag behind 
other sectors (section 2). We then look at the 
different types of Digital Platforms—in particular, 
diving into digital product and service marketplaces 
to understand their orientation, positioning, and 
business model characteristics (sections 3 and 
4). We pay special attention to the importance of 
networks in building and sustaining scale, a key 
component of serving smallholder farmers. 
Finally, we examine how the emergence of Digital 
Platforms might shape smallholder agricultural 
markets and the broader rural economy (section 
5) and outline key considerations for how, as a 
sector, we should approach the next phase of 
innovation and growth to account for the
opportunities and challenges that Digital
Platforms present (section 6). 
Note: For the remainder of this briefing 
note, “Platforms” will be used to refer 
specifically to “Digital Platforms,”
with both terms used interchangeably.
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2. THE POTENTIAL OF
AGRICULTURAL PLATFORMS
The opportunity to unlock 
smallholder markets
Globally, Digital Platforms have proven capable of 
bringing together hard-to-reach buyers and sellers, 
and facilitating interactions between them in new 
ways. Platforms like Alibaba in Asia, Mercado Libre 
in Latin America, and Amazon worldwide enable 
small- and medium-sized merchants to engage 
in regional or global trade with minimal or even 
no investments in their supply chain. In this way, 
Platforms can optimize the supply and demand
of goods and services, helping markets
reach equilibrium. 
Smallholder agricultural markets have 
certain structural characteristics that present 
significant potential for Platforms to add value. 
The participants in these markets tend to be 
numerous and highly fragmented, particularly in 
the case of smallholder farmers and agricultural 
SMEs. As a result, they are traditionally hard 
to reach and expensive to serve. They also tend 
to know little about other participants in the 
market, creating information asymmetries that 
fuel distrust and constrain natural connections. 
These barriers mean that smallholder agricultural 
markets typically do not clear at all, or do so 
through multiple layers of intermediaries. 
These intermediaries, many of them informal, 
aggregate players, connect various parts of the 
value chain to one another, and increase market 
transparency—but they also raise transaction costs.
To further illustrate these constraints, consider 
the number of smallholder farmers that lack 
access to markets. It is estimated that smallholder 
farmers and supply chain actors across 
developing countries lose an average of 15% of 
their income to food spoilage.
4
Additionally, 
around USD 170 billion of the global demand for 
smallholder farmer finance goes unmet.
5
While 
there is no comprehensive global sizing of the 
demand and supply for lending to agricultural 
SMEs, in sub-Saharan Africa alone the gap is 
estimated at USD 100 billion annually.
6
By digitally enabling direct connections between 
farmers, service providers, and other value chain 
actors, Platforms can help markets overcome some 
of these barriers. Much like farmer cooperatives 
(but on a grander scale), they can aggregate 
disconnected market participants in a single outlet, 
reducing or eliminating expensive middlemen. 
They can also digitize transaction data to help make 
interactions more efficient and increase overall 
market transparency. Thus, Platforms have a high 
potential to disrupt agricultural markets and unlock 
access to key products and services for millions of 
underserved smallholder farmers.
4
The Rockefeller Foundation. “Food Waste & Spoilage Initiative.” 
rockefellerfoundation.org/wp-content/uploads/Food-Waste-and-Spoilage.pdf
.
5
ISF Advisors and Mastercard Foundation Rural and Agricultural Finance Learning Lab (2019). Pathways to Prosperity.
pathways.raflearning.org
/.
6
Ibid.