Rabobank and Wageningen University & Research in the Netherlands have joined forces to develop a digital tool to monitor smallholders' crops. The information it provides helps to lower farmers' risk profiles so that they can gain access to credit.
Access to finance is essential to boost farm productivity. However, banks are often unwilling to provide finance to farmers as they perceive it as too risky and costly. Accurate information improves the credit assessment parameters. A more reliable risk profile could stimulate financial institutions to provide loans for smallholders, making it an important driver for economic growth and prosperity.
Reliable, ongoing data
A team from Wageningen University & Research (WUR) and Rabobank looked for actionable ways farmers could improve their credit rating. The team is now developing a tool it calls the Climate Smart Digital Farm Finance (CSDFF) Solution, which supplies reliable information about farms from different data sources.
“We designed a so-called Green Monitor that identifies and tracks crops at field level,” says Gerbert Roerink of the Earth Informatics Team at WUR. “We can achieve a resolution of 10 by 10 m2 using images from the Sentinel-2 satellite. The satellite supplies regular updates on biomass development in the field. ”
“Sentinel-2 provides regular updates on crops in the field”- Gerbert Roerink, Earth Informatics Team at Wageningen University & Research
“The objective of the CSDFF Solution is to provide banks with data on crop production while reducing the need to visit farms in remote areas,” adds Corné de Louw, Advisor at Rabobank International Advisory Services. “Regular crop monitoring, a key element in the credit cycle, has been very expensive to date, which is why it has been utilized only rarely. CSDFFS makes it affordable and straightforward to implement.”
“The CDFF Solution is affordable and straightforward to implement”- Corné de Louw, Advisor at Rabobank International Advisory Services
The science behind the Solution
Plants absorb the red part of sunlight and reflect the near-infra red part. Bare soil and water reflect sunlight differently. The CSDFF Solution uses this phenomenon to quantify biomass development using special vegetation indices. The most frequently used is the Normalized Difference Vegetation Index- green. The index rates the green biomass with a number between 0 and 1, where low values (less than 0.2) represent water and bare soil, and higher values represent one or more layers of green leaves.
Fields' boundaries and the crops growing in them can be mapped using the satellite information, and the crop growth and yield monitored and quantified. This data is combined with price information to help estimate a farmer's loan repayment capacity.
The CSDFF Solution in action
More information = more investment
“Making farm credit more easily available results in more sustainable farming methods,” says Roerink. “Farmers are able to invest in better seeds, equipment and storage facilities. Not only do yields rise, less of the crop is lost, right at the beginning of the supply chain, because it is harvested more efficiently and less is spoiled during storage.”
Farmers stand to profit from the tool in several other ways. They can maximize yields by adjusting irrigation and fertilizers according to the information it provides, and tackling any disease or pests it detects.
The team from WUR and Rabobank completed a successful pilot project in December 2017, testing the Solution on small barley and wheat plots in Ethiopia. It is currently working on optimizing the model in order to implement it at a local financial institution in Ethiopia.
Read more about the work of Rabobank International Advisory Services here.