Technology, big data and ‘army of startups’ to boost value of Thai agriculture
Agriculture has long formed the foundation of Thailand’s economy. However, in recent years Thai farm produce has seen only small increases in value, when compared with competitors. Significantly, farmers and farming procedures in Thailand have failed to keep abreast of rapid changes in digital technologies.
The Digital Economy Promotion Agency (DEPA) has responsibility for building confidence and understanding among small farmers regarding technology in agriculture, and helping them to adopt it for their maximum benefit.
Outlining a new strategy for increasing the use of digital technology on Thailand’s innumerable small farms, DEPA President Associate Professor Dr. Nuttapon Nimmanphatcharin says small farmers must learn what technologies can be used and when and how they should be used to harvest agricultural products that best meet the demands and behavior of customers.
“Over the past few years, we have had ‘Quick Win’ measures to build confidence in small farmers and make them understand technology better. This can be regarded as a mistake of the past,” he says.
It is not good enough simply to tell farmers that this or that technology is good for them, as this will bring no real benefits to farmers. Instead, he says, the government’s duty is to give farmers better access to services.
Turning its back on the ‘past mistakes’, the DEPA has adopted a new strategy. An “army” of agritech startups has been formed to approach small farmers in all parts of the country and work closely with them. Among the startups are those providing farm drones and automatic watering devices.
“Over the past few years, at least 5,000 [small farmers] have used services provided by these startups,” Nuttapon says.
Technology adoption is an investment that carries some risk, at least involving the cost of devices using Internet of Things (IoT) technology. DEPA is cushioning the risk by subsidizing up to half of the cost for small farmers who adopt new farming technology. In addition they will be invited to cooperate with startups in order to gain an education in the use of agricultural technology.
“The main objective is to build trust and confidence. Second, we absorb the risk of adopting new technology. And third, we let [farmers] make the decisions by themselves,” the DEPA chief says.
For instance, if a startup offers to sell a device to a farmer for Bt20,000, the technology may cost her just half of that. The DEPA helps by checking the details of the deal, but the decision is made by the farmer herself.
Nuttapon says the DEPA’s role involves matching the service provider and the farmer, who has to learn how to choose technology. In the case of an error that makes either the service or the product unsatisfactory, the farmer involved may decide to turn to a new service provider.
“This is what DEPA has been doing over the past two to three years,” he says.
Data is the key to technology use
After small farmers become aware of the importance of digital technologies and adopt them on their farms, the next step for DEPA involves the management of big data. The agency is creating a database which will be used for analysis, processing and evaluation for the benefit of small farmers.
Nuttapon says data management is vital for an agricultural industry that is supported by technology. The data are collected by both state- and private-sector organizations, and the DEPA will apply them in services for farmers.
For instance, when given information about demand for chillies at a particular time of year, about the costs, the volume of water needed and the weather, farmers can decide whether they should grow them. “They are also informed that they should grow something else if they want to make bigger profits,” he adds.
In a similar use of information, office workers and business people moderate the risks of running a business. Even if their business is not making a lot of money, the owner will opt to continue if the information points out that the market is still growing. Small Thai farmers may access information that offers them more choices in growing crops and helps to ensure a sustainable income.
Nuttapon says that agricultural big data is the first “layer” of information being gathered by the DEPA. “We have data from the government sector — that is, the Ministry of Agriculture and Cooperatives. Then, we look to the public sector for additional information.”
The first layer includes information from weather stations that measure PM2.5 particulate matter, air quality and water.
“We have the Meteorological Department, but we are looking for sources of precise predictions for farming areas. We are working with a company that makes weather forecasts based on data from nine satellites. With precise information about plantation areas, soil, weather, water and air within a three-kilometre radius, farmers can have access to more accurate data,” the DEPA chief says.
Adding government data to their own experience, local farmers can make better decisions, but they may lack information about market demand, and this constitutes the “upper layer” of data, he says.
“We have to find out about demand in both domestic and export markets, such as what kinds of farm produce are in demand in different seasons, and what qualities are demanded by different groups of consumers when they are buying their products.”
For example, some people may want spicy chillies, while others prefer the non-spicy type. As for durian, some consumers prefer flesh that is crunchy outside but soft inside, while others look for opposite qualities.
“These data involve seasonal consumer behavior that intersects with the cultivation season and the weather. They provide Thai farmers with more choices,” he says.
In addition to data on the weather and consumer behavior, the next set of data required by small farmers involves distribution channels. Nuttapon points out that it takes time to collect all of this knowledge, but it is vital for a major industry like agriculture.
Encouraging startups to offer digital services for farming
In addition to building confidence and collecting big data that benefits small farmers, the DEPA is also providing support to new startups with an interest in commercial applications of digital services and big data, and the potential for development. DEPA takes care of half of the risk burden.
“This means that you do not invest 100 per cent. Young entreneurs may find it difficult to get bank loans, and the risk is too high to invest savings or salary. This way, you have the state as your buddy,” Nuttapon says.
“Startups that do big data will find it convenient to attract service business and deal with the Agriculture Ministry because they have the state as a buddy. Also, it is easier to serve farmers when the DEPA is focused on transforming them. [The startups] will get more customers,” he says.
Instead of just providing funds with no follow-up, the DEPA’s main goal is to make a platform of agricultural big data more accessible to farmers. This is the next step after introducing new agricultural technologies and IoT devices, such as drones for cultivation, to Thai farmers. The database will include information about the weather, water supplies and markets that can help farmers to plan for cultivation, harvesting and sale of their crops. This could prevent the problem of surplus produce and falling crop prices – issues that are prevalent in Thailand and often led to protests by farmers.
“To achieve that goal, data are essential,” Nuttapon says. “The government alone cannot offer good services with regular updates. We believe that startups have good services, such as weather forecasting and farming big data. To get more customers, they must regularly improve and offer updated and accurate data.”
The DEPA President believes these things can contribute to national development, based on pooled ideas in a sustainable system. “With this approach, I believe that Thailand will survive through the change to a digital economy,” he says.
Founding Thailand’s digitally-driven agricultural industry
The DEPA hopes that seven to eight million farming households will enter a new agricultural era through digital transformation. To achieve this, the agency has been building a database that can be utilized for public benefit.
The most important information in the database involves weather and crop cultivation. Next, it’s information about farm produce and demand, consumer analysis plus logistics, and e-commerce distribution channels.
Nuttapon gives as an example the famous Malaysian durian variety, Musang King. If Thai durian growers want to compete against Musang King, they need to acquire information regarding prices, consumer behavior, growing methods and control of output.
“This is a change in knowledge — one that introduces Thai farmers to digitizing themselves and the industry,” he says.
Data analytics can help Thai farmers to learn about the behavior of prospective consumers, such as their favorite sellers. With analysis of such information, they can determine when and how to grow their crops, when and how to sell them and through which channels.
In the case of the high-priced Musang King, the question may be how to increase the value of Thai Mon Thong durian to equal that of Musang King, Nuttapon says.
The Malaysian durian is mushy, while the flesh of the Thai variety is crunchy outside but soft inside. Most consumers seem to prefer durian with mushy flesh, so Thai exporters should be aware of this fact in order to meet demand, the DEPA chief says. Thai durian growers may also add a label specifying the degree of their fruit’s ripeness to meet the preferences of different consumer groups.
“This is to give the idea that this kind of information reveals consumer behavior. If you continue to sell things that go against consumer behavior, you will be at a disadvantage,” Nuttapon says.
In China, farmers have started creating stories for their fruit and other farm produce. “With their smartphones, Chinese farmers perform live broadcasts, telling stories about their apples, peaches and milk. In this way, the farmers can get rid of the need to reach their consumers physically.”
In DEPA’s view, this kind of change to platforms can be aided by technology, in terms of trade, crop cultivation and harvesting, as well as adding to the product’s value by creating stories or content.
The DEPA admits that it is unable to do what needs to be done throughout the country. Rather, it is dealing with matters one by one, because the full mission would require a massive budget and a large workforce.
“The important task now is not about encouraging people to adopt technology. Rather, it is about making them aware that data is an important factor,” Nuttapon says.
The DEPA’s vision calls for the Thai agricultural industry to change from physical to non-physical and from individual products into platforms. This requires high bargaining power on the part of farmers, who need to adapt themselves.
“Farmers have to adapt to the use of smartphones and stay competitive on these platforms so that they can be ahead in the competition,” Nuttapon concludes.