Sharing Economy and Crowdfunding: An Opportunity for Sustainable Agriculture Pursuits
Existing Agriculture LandScape
Agriculture is the world's largest industry employing over one billion people and generating over one trillion dollars’ worth of food annually. However, sustaining life on an increasingly crowded planet grows more complicated in every passing day, and producing sustainable food for more than 7 billion people is one of the most important conservation issues of the 21st century. It is estimated that demand for food will increase to 50% by 2050 to feed the world population that is also estimated to cross 9 billion by that time.
In the face of climatic volatility, degradation of agricultural land, and strained food production resources, there is a need to rethink how we produce and can reduce our impact on nature by producing in a more sustainable way.
Crowdfunding: An Alternative Financial Instrument
Around the world, farmers especially smallholding which constitutes the largest part of the agriculture landscape facing challenges ranging from lack of access to credit, real-time market price information, high input cost, expensive farming instruments, food losses, and lower yield.
One of the key challenges is the lack of access to credit facilities and tough borrowing conditions from financial institutions to buy timely inputs.
To produce more in a sustainable way, it is necessary to link agriculture producers with more easy and viable capital options. One of the emerging financing trends is Crowdfunding, a type of alternative to a bank loan, which has the potential to broaden the base of the agriculture sector investment pyramid.
Crowd financing in agriculture is being used worldwide to raise funds online for investment and lending. For Example Barnraiser an exclusive online Crowdfunding platform dedicated to raising capital for sustainable food production. Similarly Kiva, a nonprofit online lending platform connecting online lenders with farmers who are in the need of capital.
Crowdfunding has great potential and there are several options available to investors and farmers under Crowdfunding e.g. partnership with farmers, equity or revenue-based financing, or share lease.
Sharing Economy: Saved Resources and Generate Revenue
Similarly with the emergence of the Sharing Economy (SE), a disruptive economic model based on the concept of “access over ownership” and sharing of underutilized assets in a way that is economically efficient and environmentally friendly. It is considered a modern form of the market economy that not only helps farmers to save capital investment (from buying assets) but also provides revenue generation (through lease or rent) opportunities to those have who unused farming assets.
The SE expected to grow from $14 billion in 2014 to $335 billion by 2025 for the five most prominent sharing economy sectors. In the agriculture sector, SE has already been used in different parts of the world. For Example, in USA Maine Farmland Trust launched an initiative called “Share use farm Equipment” where farmers can pay rent or fees and get access to different agricultural equipment. The FLOOW2 is another online marketplace for companies and individuals in the agriculture sector which allows them to trade and share free capacities with each other. Similarly, Hello Tractor, a Nigerian-based company is connecting farmers in the need of tractors with the tractor owners through its digital tractor sharing application.
SE and Crowdfunding: An Opportunity for Sustainable Resource Usage
There is a major shift in agriculture practices among farming communities and considerable growth is predicated for the future. For the agricultural sector benefits of SE and Crowdfunding are many folds.
First, these instruments not only help farmers to reduce their costs but also to improve resource efficiency. Secondly, these also have impacts on the value chain of businesses such as assets and personal (i.e. fewer assets and physical building), Research and development (i.e. external contribution and open innovation using Crowdfunding).
Thirdly, adopting these models will help to address environmental issues, e.g. SE is based on the optimization of existing resources and technology. The more we share less Earth resources will be consumed, which creates a more sustainable and efficient mode of consumption. By adapting the SE model, will also help in the reduction of waste and less transportation which means less CO2 emission and reduced carbon footprint.
Sharing economy and crowdsourcing proved commercially viable business models and rapidly being adopted by the business. These models offer increased economic opportunities for the producers and other actors in the value chain and ultimately consumers in terms of getting high-quality products. They are also helpful to overcome problems of dispersion of producers, diseconomies of scale, lack of access to finance, and poor access to market information.
With the emergence of technology (internet, mobile, apps) and new sustainable business models like Crowdfunding and the sharing economy, there is hope to overcome these issues of the farmers in the agriculture sector by reducing their poverty and ensuring food security.