The potential of digital tools to transform smallholder agriculture in Egypt- Fatma Abdelaziz - Mahsoly Launch

There is a growing enthusiasm on the potential of digital innovations to transform the functioning of markets by addressing multiple forms of market failures
Prior studies showcase the impacts of digital tools on farmers’ profits and marketing outcomes, whereby results demonstrate the capacity for tools to match supply and demand, increasing agricultural market efficiency.

1. The potential of digital tools to transform smallholder agriculture in Egypt Kibrom A. Abay and Fatma Abdelaziz International Food Policy Research Institute (IFPRI) May 2024

2. Opportunities from digitalization of Agriculture in Egypt and beyond There is a growing enthusiasm on the potential of digital innovations to transform the functioning of markets by addressing multiple forms of market failures Prior studies showcase the impacts of digital tools on farmers ’ profits and marketing outcomes, whereby results demonstrate the capacity for tools to match supply and demand, increasing agricultural market efficiency. Digital innovations could facilitate access to markets and smallholder commercialization through the following ways: R educe communication and information costs Improve farmers’ knowledge and know- how about market options and prices I mprove access to input and output markets E nable and build social networks and connections Facilitate the delivery of other services associated with agricultural markets such as credits and finance I mprove management of input and output supply chains; I ncrease communication linkages with other stakeholders involved in agricultural marketing. 2

3. Smallholder farmers in developing countries continue to encounter obstacles to digitize Despite the advantages that digital innovations could offer, their adoption remains low and heterogenous in Africa, where agricultural markets remain underdeveloped (e.g., Abate et al., 2023; Aker and Cariolle , 2023). Smallholder farmers-specific challenges Emergence of agriculture “digital divide” Difficulty in obtaining the support of modern agricultural technology Lack of affordability of large investments in digital agricultural technology compared to large farmers Social and cultural barriers to adoption Replacement of the inherited traditional agricultural culture with digital farming technology Agricultural data privacy and security

4. Demand and supply-side factors that may explain the low adoption of digital innovations Demand side constraints : lack of digital literacy, lack of context-specific needs assessment, and digital divide and more importantly accessibility and usability as well as user trust and confidence. S upply-side constraints : insufficient public and private investment in complementary infrastructure, unsustainable business models, and asynchronous pace of change (Abate et al., 2023). However, we lack empirically grounded evidence on alternative and cost-effective interventions to improve adoption and scale-up of digital innovations in various settings Empirical evidence on most effective strategies to improve access and usability of digital agricultural innovations to smallholders with limited level of literacy remains scarce

5. Research Questions of Interest… What are the most effective interventions and strategies to promote the adoption of digital innovations by smallholder farmers? Can digital literacy trainings increase the knowledge and awareness of digital innovations to farmers? Does access to digital innovations and hence associated services such as market information, reduce reliance on market intermediaries and enhance their access to markets? What are the major source of heterogeneity in the adoption and impact of digital innovations?

6. Descriptive findings from baseline survey: Farmers’ demographic and household characteristics. Household Characteristics Mean Std. Dev. Governorate (share) Benisuef 0.488 0.500 Minya 0.512 0.500 Age (years) 44.575 13.026 Male (%) 0.846 0.361 Household size (#) 5.667 2.56 Education category (share) No education 0.352 0.48 Primary 0.05 0.22 Secondary 0.067 0.25 Post-secondary 0.532 0.499 Land ownership 0.574 0.495 Land rental 0.685 0.464 Livestock ownership 0.6 0.49 Involved in wheat cultivation 0.907 0.29 Involved in clover cultivation 0.548 0.498 Number of observations 3332

7. Digital Divide in Access to infrastructure: Medium and large farm-holders are more likely to own a smartphone

8. Medium and large farm-holders have better access to internet large farmholders are more likely to own a smartphone (79 percent) than small holders (64 percent)

9. What services do farmers want through digital services?

10. Major challenges: why farmers are not using mobile applications

11. Types of support that farmers recommend to improve digital tools adoption

12. Untapped opportunities..

13. Way forward The baseline survey shows important features of the landscape of digital infrastructure and highlights how particularly smallholders are marginalized and have even less access to mobile phones and internet when compared with larger farm holders. The survey sheds light on other important bottlenecks smallholder farmers in Egypt face, ranging from access to smartphone to lack of digital literacy. Baseline survey findings shed light that we need to be innovative in the design of different interventions to promote Mahsoly tool to farmers. These findings suggest investments in digital infrastructure coupled with educational interventions to improve farmers’ digital literacy hold significant potential to improve uptake and utilization of digital agricultural innovations by smallholder farmers in Egypt The endline survey will enable us to generate more conclusive evidence, including on impacts on marketing outcomes