8 May 2024

Boosting smallholder farmers’ resilience with policy and technology

By Stephanie Smith, Senior Vice President, Humanitarian & Development, Mastercard


Agriculture is a vital sector in many low- to middle-income countries as a primary source of employment. It is also a significant contributor to GDP. Yet the agricultural sector is uniquely vulnerable. One example is that while many communities in Sub-Saharan Africa are reliant on rain-fed agriculture, this region also experiences one-third of the world’s droughts, which has been compounded by the global climate crisis.

Even in typical years, smallholder farming is a precarious business. Most farmers lose between 30 to 40 percent of their crops to post-harvest losses (FAO), impacting their ability to make money or save profits. Without sufficient liquidity or credit, farmers are often forced to sell their crops prematurely at a discounted price.  

Given the agricultural sector’s importance to so many regions, there is one way to help agricultural communities build resilience – by expanding access to finance and markets for farmers, traders, cooperatives, and other agricultural businesses and entrepreneurs. This effort requires physical and digital infrastructure. 

Digital infrastructure in action

Mastercard developed Community Pass, a digital platform built specifically for low-income, rural, and remote communities. Community Pass offers a myriad of benefits, including connecting farmers to service providers, which can include governments (to provide subsidies or other benefits), banks (to provide loans and other financial products and services), and agricultural companies (who buy produce and sell products like drought-resistant seeds). The platform works offline because most remote communities do not have access to reliable, affordable connectivity.

Community Pass gives smallholder farmers a digital identity that makes them visible and accessible to banks. This offers a two-fold benefit: firstly, it enables the smallholder farmer to access credit to buy quality inputs, like seeds and fertilizer, at the start of the harvest season, or to procure a bridge loan until they are ready to sell their harvest; secondly, a bank, with the appropriate consent, can see the farmer’s digital transaction profile on the Community Pass platform, which reduces the bank’s cost of consumer acquisition and lending risk, unlocking a new consumer segment.  

Community Pass is also building farmers’ resilience for unforeseen events. For example, at the start of the COVID-19 pandemic, local markets were shut down in Andhra Pradesh, India. Smallholder turmeric and mango farmers were unable to sell their produce, putting their harvests and livelihoods at risk. Mastercard partnered with the government of Andhra Pradesh to roll out Community Pass, giving farmers remote access to a new market of buyers while reducing food waste and income losses. Farmers were able to sell their produce at 25 to 50 percent higher prices than the local market. 

Why collaboration is key to helping farmers thrive

Mastercard’s experience in India, Sub-Saharan Africa, and elsewhere shows us that collaboration with public sector players – governments, central banks, and regulators – as well as the local private sector is critical to the success of initiatives like Community Pass.

Ultimately, local partners understand local markets, customs, cultures, and languages best. They know their communities deeply and are best positioned to understand the needs of smallholder farmers and other agricultural businesses in their region. Local private sector can design products and services that are tailored to the value chains and climate in their region. Similarly, public sector partners draw on their local expertise when designing policies that help bring solutions to the market while supporting agricultural communities. Mastercard partners with both local private and public sector organizations to provide secure digital infrastructure that helps deliver their services to rural communities.   

Building and scaling digital infrastructure will involve collaborating with regulators to create policies that encourage digital innovation, bolster digital inclusion, and support interoperable infrastructure efforts that are environmentally and economically sustainable. Digital infrastructure must be designed to work for all, including those in low-income and remote communities. Costs can be kept low if service providers share interoperable infrastructure that spans across communities.

At Mastercard, we are excited by the potential of digital infrastructure to build the resilience of vulnerable communities such as smallholder farmers. We also know that smart policy and technology go hand in hand. We look forward to continuing our work with central banks and regulatory partners as we strive to expand access for low-income communities around the world.

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