Issue 2, 2017. April-May

   

THE SILENT REVOLUTION IN GEORGIAN AGRICULTURE

More than half of the population of Georgia is working as smallholder farmers. By using the benefits of the internet, innovative Georgian startups seek to unleash farmers' potential.

Maarten de Boer

Technological innovation in agriculture is nothing new. Handheld tools were the common practice for centuries, until innovation brought fertilizers and tractors. With the arrival of the internet, the future of farming is about to be pushed to another level. The small scale of Georgia's agricultural landscape and the business-friendly climate has made Georgia an experimental playground for so-called "agtech" startups.

Collapse of Agriculture

The fall of the Soviet Union put an end to collective ownership but simultaneously led to land fragmentation and a significant decrease in production.

Even though 53% of the population is currently working in agriculture, the income-share of agriculture in Georgia's GDP is only about 12%. This is partly due to the fact that about 70% of the farms in Georgia have less than 1 hectare of land. The small size of these farms and farmers' lack of access to knowledge, finance and the consumer market are hindering further development.

Silent Revolution

Assistance to smallholder farmers is increasingly offered in an unexpected way: by young, tech-savvy entrepreneurs. Last month, the Georgian startup Traktor released an innovative application for smallholder farmers. "Despite farming being the most common occupation [in Georgia], we noticed that farmers still use outdated methods. We realized that with modern technology, we could easily help them to innovate," Mark van Embden, COO of Traktor, explained.

The startup released an application for Georgian farmers with more than 70 instructional videos about modern agricultural practices. These videos have already been viewed over 600,000 times, a significant amount in a country of 3.7 million people.

The founders of Traktor realized farmers need more than just knowledge. "For farmers, it is also a matter of having access to the right input supplies," CEO Jonne Catshoek adds. For this reason, the application has integrated an online shop. The impact of such an initiative could be tremendous. Smallholders from all over Georgia can now buy a large variety of high-quality agricultural seeds and other inputs for reasonable prices, delivered to their doorstep.

Connecting People

"You have fragmentation of information, fragmentation of land and of value chains. The internet can help to deal with this fragmentation," Hans Gutbrod, one of the initiators of the online platform Magro, tells Investor.ge. "The existing interventions often fail to acknowledge that there are hundreds of thousands of smallholder farmers for whom the classic outreach methods are not the answer. By organizing trainings, you don't reach sustainability, but by making information openly accessible and available online, you do."

Gutbrod and his Georgian partners founded the platform Magro, which connects beekeepers to consumers. "We offer beekeepers a platform to list and sell their honey. We don't take any commission, we just want to make it possible," he said.

"In the future, we also want to provide beekeepers with access to inputs. Beekeepers are scattered throughout Georgia, but their suppliers are not. To illustrate this: for smallholders in rural areas it's hard to find people that will do a design, that will print labels or that supply jars. By bringing people online you make it easier for them to get this kind of supply and sell their product."

Governmental Support

The government is highly interested in initiatives that could help to decrease poverty and professionalize agriculture. Recently, the Georgian startup Agropark was awarded a 90% equity grant by the governmental initiative Startup Georgia. With Agropark's app, people are able to buy land with the press of a button. The price of land will include the cost of agricultural labor and technology (like sensors and portable water pumps). The local farmers work for a fixed salary, a share in the profits and access to technology.

"This is globally the first e-commerce experience of buying land," founder Giorgi Nakashidze says. "And it's risk free for locals. They don't have to pay anything. No upfront cash, just profit share."

"In some countries, the bureaucracy can really get in the way when you are dealing with investments in land. It was reassuring for us that the government is supporting such initiatives. They want to help local communities making more money from their land and from the work that they are putting in," Nakashidze said.

Not the Typical Startup Scene

"The term 'startup' might give you the wrong idea when dealing with agriculture," Gutbrod notes. "When people talk about startups, they are talking about things that scale up rapidly and have a quick impact. With regard to agriculture, people should take an 18-24 month horizon. It needs a lot of engagement and patience. The key is that internet applications are not taking much away from rural people, like Amazon.com does with bookstores. They are making something possible."

The Georgian business community is eager to help these kinds of initiatives to flourish, as the release of Traktor has shown. "We realized that if farmers spend limited time on the internet, we have to bring them to the internet," Mark van Embden mentions. "That's why we are cooperating with telecom operator GeoCel. When farmers subscribe to Traktor, GeoCel will allow them to buy smartphones with a data bundle for just $3 a month."

And with increasing rural internet use, a favorable business climate and a young and educated population, these initiatives only seem to be the beginning.