March 2021 agricultural “platforms” in a digital era

FOREWORD
Matt Shakhovskoy
Senior Advisor 
ISF Advisors
William Saab
Senior Manager 
ISF Advisors
Clara Colina
Program Manager 
RAF Learning Lab
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EXECUTIVE SUMMARY
Platforms represent an exciting opportunity to 
transform smallholder agricultural markets—
shifting from fragmentation to a more efficient 
exchange of goods, services, and information. 
However, even as grant funding is fueling a cycle 
of Platform innovation, it’s clear that the term is 
too loosely defined. Thus, in this report, we set 
out to broadly answer the question: “What is a 
Platform?” Drawing on more than 20 years of 
academic and applied research, we define Digital 
Platforms as models that facilitate direct interac-
tions between multiple users for the purposes of 
exchange. The Platform business model stands in 
stark contrast to traditional pipeline businesses, 
which utilize a linear process of producing and 
distributing goods and services to consumers.
In contrast to general “digital solutions” and 
“coordination initiatives,” Digital Platforms are 
built around network effects. These effects are a 
unique byproduct of enabling multiple users on 
both sides of an exchange to interact, creating 
the potential for exponentially more value the 
larger the network grows. These distinctions are 
a crucial first step in establishing a more solid 
foundation for the use and growth of Platform 
innovations in smallholder agriculture.
The rise and promise of Platforms
in smallholder-related markets
Early Digital Platform innovations in agriculture 
have taken two major forms. The first is mature, 
multi-sector communications, social media, 
content, investment, and payment Platforms 
being utilized by different actors in agricultural 
value chains, increasing connectivity and efficiency 
in a number of interactions. The second is the 
emergence of more than 75 agriculture-specific 
product and service marketplaces that span eight 
distinct models. These marketplaces have the
potential to transform the way agricultural markets 
operate: in some cases, creating access to new 
services entirely, and in others dis-intermediating 
and re-intermediating existing access to goods 
and services.
In this research, we conducted a deep dive into 
these product and service marketplaces, the vast 
majority of which are less than five years old. 
This research revealed, among other insights, 
that 75% of these marketplaces are operated by 
tech start-ups, less than 25% reach more than 
100,000 farmers (with only 10% reaching over 
one million), and 50% are located in Kenya and 
India. This paints a picture of a business model 
well suited to an enabling ecosystem and to the 
neutral, technology-based strengths of start-ups.
Our analysis also offers insight into why Digital 
Platforms—which have dominated other sectors 
for two decades—have lagged behind in agricul-
ture. Until recently, the scale and quality of digital 
connectivity among smallholder farmers was the 
primary constraint. But even as rural connectivity 
has improved, Platforms have gained little ground 
in agriculture. The nature of interactions in 
smallholder-related agricultural markets— 
including volatile prices, low transaction values, 
and localized/seasonal production—and, more 
importantly, the lack of a physical enabling
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infrastructure that allow for the exchange of 
goods or services, constrains the ability of
Platforms to cost effectively build and scale their 
business. Yet, if successful, these marketplaces 
have the potential to transform smallholder 
agriculture in ways that support more inclusive, 
sustainable, and commercially viable food systems.