Amid increasing farm distress, a US-based company has set up a subsidiary in India and plans to tie-up with banks and financial institutions to help them with the farmers’ credit-scores, based on data collected from satellites, remote sensing and Artificial Intelligence (AI) in an attempt to reduce the farmers’ woes and banks’ burden.
“I come from a farmers’ family of Bhilari village, Moradabad district, Uttar Pradesh, and know that most of issues related to the farmers’ inability to repay their loans in time are linked to the data-deficit,” Ruchit Garg, Founder-CEO of the Freemont-based Harvesting Inc, California, told BusinessLine on Wednesday, from Amsterdam.
The financial technology social enterprise is already working with coffee farmers in Uganda under the World Bank banner to design their credit score for Pride, Uganda’s leading Microfinancing Institute.
Besides, Harvesting is working on projects in Brazil, Tanzania, Kenya and Turkey and seeking interest from financial institutions in Nigeria, Zambia, Nepal and Myanmar.
Targeting small farmers
Garg said the farmers with small landholdings are like micro entrepreneurs who need access to capital. “Nearly 500 million small farmers around the world, who feed 80 per cent of human race, need $450 billion as loans. But only 3 per cent of their need is actually met. As a Silicon Valley’s technology company, we want to connect these farmers with finance and make their financial inclusion easier.”
Harvesting set up a subsidiary in Bengaluru this month and has a registered office in Chandigarh for logistics purposes. “We are currently discussing with major banks and financial institutions for a tie-up to share actionable data with them,” he said. The company also plans to create a dedicated farmer’s KYC database to ease the loan process.
The company, incorporated in May 2016 as a for-profit start-up, is facilitating agri-financing process as an interface between financial institutions and farmers by providing a credit score on the latter, which is currently missing from the entire loan value chain extended to farmers, specially in emerging economies, as they do not have a credit history.
Credit score on satellite data
It uses remote sensing data from NASA and EU Space Agency satellites and combines it with AI-backed algorithms to derive a credit score, thus helping financial institutions to arrive at a data-driven decision.
Harvesting has built an Agricultural Intelligence Engine (AIE) as its core technology, which applies big data analytics and uses remote sensing satellite images and Machine Learning (ML) to design farmers’ credit score and provide data points to financial institutions. It utilises AI remote sensing tools to bridge the data gap for farm credit in emerging markets.
It has developed global crop identification analytics and metrics to understand productivity and growth (such as vegetation cover, water stress, and diseases). Combined with geo-spatial factors (e.g. climate, topography), historical financial data, value-chain data (e.g. buyer contracts), and transaction data (e.g. MNO records), Harvesting has developed three complementary products to help financial institutions finance smallholder farmers: Credit Risk Scoring, Farmlands Monitoring and Land Records Monitoring.
ML-based profiles
He said the reason nearly 50,000 farmers marched to Mumbai recently was because they could not repay the loans and many were denied loans from formal financial institutions, forcing them into the arms of loans sharks. “The fact that banks continue to shy away from giving loans to farmers is because they do not have any data to make a decision to accept or reject a loan request”, he added.
Harvesting, with its predictive ML algorithms, has created a product for financial institutions to provide them specific farm land data by putting in farmer’s survey ID. “It will give them a snapshot of the land, its yield capacity and types of crops that can be cultivated, thus making it more efficient for banks to disburse loans.”
The risks and costs to financial institutions for serving these markets are high, and are exacerbated by information asymmetries. Financial institutions are unable to design and deliver better services to smallholder farmers because they lack the data that can inform them about the agricultural and financial lives of farmers. “Harvesting, through its technology and data intelligence, aims to be a facilitator for financial inclusion for farmers.”
Funding
Harvesting has recently partnered with World Bank’s Consultative Group to Assist the Poor (CGAP) to develop new credit scoring mechanism in Ugandato improve their access to loans.
The start-up, which raised a small angel round last year, has received a grant from Catalyst Fund, an initiative supported by the Bill and Melinda Gates Foundation and JP Morgan Chase Co, as a fiscally-sponsored project of Rockefeller Philanthropy Advisors. It is planning to raise a large seed round this year.
Garg, a serial entrepreneur, founded this second global start-up, after selling off 9Slides, an online learning company for growing businesses, to Limeade in 2015. He has worked for Microsoft at its Headquarters at Redmond, WA, and also in Hyderabad for years.