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Building Resilience Through Digital Marketplaces

A project supported by a SFN Scoping Award is exploring how virtual marketplaces could help smallholder farmers and microenterprises become more resilient to food-system shock.

The COVID-19 pandemic brought to light just how fragile food supply chains can be: with traditional trade disrupted, many producers struggled to find alternative routes to sell their products. Consequently, across the world shoppers were faced with empty shelves at supermarkets, even though farmers were having to throw away mountains of unsold produce.

Some of the worst hit were the many thousands of smallholder farmers and urban microenterprises trading fresh, perishable produce in low- and middle-income countries. Typically, these rely on in-person interactions at marketplaces, trade hubs and bazars, meaning that the COVID-19 lockdowns effectively shut down their trade.

Sarang Vaidya, Co-founder of fresh produce agri-tech venture go4fresh, describes the situation in his native India: “Disruptions to traditional marketplaces during the COVID-19 pandemic resulted in extensive on-farm food wastages, unfulfilled demand, and major setbacks to the livelihoods of millions of small grocery shops, street vendors, and hawkers. If we want to help communities to become more resilient to future shocks, we need to provide access to alternative markets.”

A marketplace on a mobile phone

With mobile phones being almost ubiquitous across India, Sarang believes that one solution could be to create ‘virtual’ marketplaces that directly connect smallholder farmers to buyers (such as retailers, wholesalers, restaurants, and canteens). In 2019, this vision inspired him and his team at go4fresh to develop a collaborative, digital platform to connect producers and businesses in food supply chains.

However, currently very little is known about how such a platform should be designed to best meet the needs of smallholder farmers and microenterprises. To address this, Sarang is leading a SFN-backed project which is engaging end-users to identify the key data sources and features required to build a scalable, user-friendly virtual marketplace for affordable smartphone devices. The UK-India partnership involves experts in data science from STFC, besides a variety of Indian-based food-sector partners, including farmer groups and fresh produce buyers.

The central objective was to build a prototype virtual marketplace for four vegetables (tomato, cabbage, okra, and green chilli) along an established trade route in India. This ran from the village of Otur in the Pune district of Maharashtra, to a market in the Kandivali neighbourhood of the state capital Mumbai (a distance of 200 km, or roughly five hours of driving).

Through the Indian team’s links, the project consulted over 60 smallholder famers, microenterprise owners, and transporters. Due to ongoing COVID-19 lockdowns and social distancing restrictions, many of the interviews were conducted using phone/video calls or online chat functions. This qualitative research was supplemented with quantitative data, including live market prices, delivery dates, crop production data, and consumer prices on ecommerce platforms.

Mapping the challenges against widespread adoption of digital technologies

“We found that both the supply and market ends of the chain faced distinct challenges hindering the adoption of digital technologies” says Sarang. For those supplying fresh produce, a key issue was low current use of digital technologies, with less than a third using digital sources of information, such as market data and weather alerts. Another concern was that current data sources were often updated only infrequently, limiting their accuracy over time. In combination, this meant that smallholder farmers were often unaware of the current market prices for their products, resulting in them selling their goods for below-average price.

Meanwhile, for the microenterprises purchasing fresh produce, the most prominent issue was the large variation seen among different lots of the same food product (including quality, weight, and packaging) and the lack of standardisation. This inconsistency meant that most traders visited the market every day to ensure they could access the best-quality products available.

From their findings, the team mapped out the different variables currently influencing transactions between buyers and sellers, and used these to build a prototype digital marketplace. This also sought to address the low access smallholders currently have to pricing information by linking to benchmark markets with live data feeds. STFC co-PIs in the project Dr Jens Jenson and Dr Tom Kirkham, contributed their expertise in data architecture, selecting a platform and user interface, and effective use of data science & sensor technology.

A promising prototype

The result was an ecommerce platform designed to be resilient to network failures, provide strong data security, and be compatible with mobile devices. “The buyer interface has an end-to-end order management, with an integrated payment gateway. Meanwhile, the seller interface is a simpler version of a multivendor marketplace with features to add products, quantities, and target prices” says Sarang. “Based on over 300 transactions, we found that when farmers used the app to check the forecasted price for their product, this could increase their income by 15-22%, by helping them to find the best place to sell their products” he says. “This also enabled them to decide whether it was worth transporting their produce to the market in Mumbai to get a better price, or if they would receive the same amount at a local market.”

In the future, go4fresh envisages that the apps could also allow smallholders to capitalise on growing food trends, including the rising demand in India for healthy and nutritious food, besides food that is produced more sustainably. “Digital marketplaces can allow smallholder farmers to directly connect with the buyers who are most interested in their products, resulting in the best price for them and higher-quality products for consumers” Sarang says.

For the next stage, the team will refine the template, based on input from a wider range of stakeholders covering different food products and supply routes. A particular aim is to simplify the interface and introduce an Indian language version for those with limited English. Ultimately, however, Sarang hopes this approach will have an impact far beyond India.

“In many countries across South-East Asia and Africa, we see a similar scenario. If rolled-out at scale, digital marketplaces could help provide a more sustainable and resilient livelihood for millions of marginal communities” he concludes.

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