When most consumers and investors think of fintech, short for financial technology, their minds are immediately drawn to niche industries like cryptocurrency development and meeting the challenges of modern healthcare systems.
What few consider is how fintech may be able to solve today’s agricultural problems.
Lenders already use fintech to help them streamline the lending process and improve visibility for lenders and borrowers, alike. The current models for data analytics are not tailored to agricultural applications, which pose unique risks that many conventional lenders are unwilling to undertake.
Some fintech companies are now helping farmers bridge this gap by using powerful risk analytics and farm management tools.
Farmers and growers are meeting these lenders in the middle by adopting more sustainable practices.
Crowdfunding is a unique phenomenon that would never have become popular without the development of novel financial technologies. In the context of agricultural production, crowdfunding can connect all actors, from farmers and landowners to investors and end-consumers, using one platform.
Crowdfunding empowers farmers, encourages public engagement, and promotes transparency, making it a perfect platform for funding modern agriculture across the world.
Ongoing payment programs
Fintech facilitates ongoing payment programs, which are perfect for medium- to large-scale farms. Any farm that produces substantial volumes of food or other agricultural products needs access to expensive equipment like tractors, irrigation systems, and harvesting machinery, but these tools tend to be very expensive.
Using fintech to make the switch to ongoing payment programs allows farmers to avoid some of the most common problems associated with traditional lending solutions so they can better organise their finances and maximise their profits.
Affordable financial services
Financial inclusion rates have traditionally been low in the farming sector in many areas of the world, especially in places like India, but fintech makes them more accessible. More specifically, it makes financial services more accessible to small to mid-sized agricultural operations.
Microfinancing operations facilitated by the collaboration of modern fintech companies with the Indian government have already provided funding to hundreds of micro- to medium-scale agricultural operations and are poised to continue this trend into the future.
Adequate crop insurance used to be a farmer’s pipe dream, but thanks to fintech, it is becoming a reality. Protecting the farm’s crops against unexpected weather events and other environmental losses is now much less of an ordeal, which means that more farmers are able to access this valuable financial resource.
Since fintech can be used to predict risk more accurately, risk-averse insurance companies are more willing to offer what would once have seemed like failing policies, and everyone wins.
Fintech is still in its infancy, but it is already reshaping the world. As these thoroughly modern technologies are incorporated into the field of agriculture, sustainability and profitability should both increase, making it easier to feed the world’s growing population while providing an equitable livelihood for the farmers that make it possible.