Agriculture remains a key component in the global economy. Roughly four in five people live in rural areas, and eighty percent of them earn a living in agriculture. This is why anything that can be done to improve output, efficiency and profitability would have a major impact on the quality of life for billions around the world. Here’s how digital payments could be the key to sustainable farming around the world.

Remove the Risk Cash Poses

Cash-based economies are incredibly inefficient, and still, 95 percent of all farmers in the world are paid in cash. Not only is cash prone to theft, but taking food to markets in the hope of selling to cash buyers results in significant loss of product along the way.

Others choose to let food rot in the fields instead of going to the work of harvesting it and risking not getting paid for it, while others take food to markets already saturated with the local harvest. Studies suggest that up to 40 percent of all food is wasted due to lack of market access.

It is difficult for farmers to take cash to the bank to deposit it or use that money to take advantage of financial services. Nor do they have to wait for the middleman to eventually return with their cash payment so they can buy things they need.

A lack of readily available savings leaves farmers on the edge of ruin and without many alternatives. Services like Uulala, for instance, allows farmers to arrange secure payment for crops without having to leave home. They can use that money immediately to pay bills or buy necessities without having to carry cash that could be stolen or lost.

Improve Margins for Farmers

Apps and services accessed via smartphones help farmers learn about current market prices for crops so that they sell products for the highest possible price. Furthermore, they can leverage digital payments to secure loans to buy more productive equipment. And for every 1 percent increase in agricultural production, there is a 1.4 percent decrease in rural poverty.

Digital payments increase the profit margins for farmers in other ways. Farmers can cut out the middle-men that take a cut of the profits, and they may be able to sell directly to consumers via digital marketplaces.

They don’t live on the edge anymore, and they earn more money from their crops. This has a massive impact on rural economies. All of this makes farming a more attractive way of life for their children, reducing flight by the young to the cities.

Provide Access to Support Systems

Farmers using financial services and various apps can buy crop insurance. More importantly, digital payments can be used to provide cash aid to people in rural areas otherwise ignored by most social services. There are other benefits to using financial payment systems. Money can be sent to those in need almost immediately, and they can use it wherever they are at the time. There is less “leakage” of aid, too, when it sent directly to farmers instead of sending it through various intermediaries. More of the aid reaches those in greatest need.

Digital payments and the services it allows farmers to access may be the greatest poverty-fighting tool we’ve ever had. It increases profits and productivity of farmers while reducing many unnecessary costs they pay. And their entire community benefits in the long-run.

Author's Bio: 

Pooja Khanna is Training Manager at Sedate Technologies and enjoys working with a variety of entrepreneur and small business all over the world.