One of the biggest obstacles to financing smallholder farmers has been understanding who they are and – by extension – what their needs are. Without detailed data, it has sometimes been difficult for people sitting far away in donor programs to see the ways in which farmers are a heterogeneous and varied group.

However, as seen in Dalberg’s 2011 Listening to the Farmer Voice and CGAP’s 2013 Segmentation of Smallholder Households, the sector has begun to identify key distinctions among farmers including their place in a skill-will matrix and their relationship to the market. With this information, financial service providers could begin to define and target addressable market segments. It was a great start to a new way of thinking. CGAP’s 2016 work on two fronts – granular exploration of farmers’ lives in the Smallholder Diaries and the rigorous quantitative National Surveys – has created a more nuanced understanding of higher level definitions, and helped quantify more precise segments incorporating behavioral and attitudinal components. Additionally, broader efforts in the financial inclusion space such as insight2impact are working together to collate and analyze big data sets of clients, including farmers.

Farmer voice is increasingly on the mind of people in the sector. A client-centered approach allows us to close the gap between farmer need and farmer demand by offering what farmers really want. The Learning Lab has hosted two annual gatherings (prior to The MasterCard Foundation’s “clients at the center”-themed Symposium on Financial Inclusion) where financial service providers came together to eagerly learn how to better listen to farmers.  And this reflects a broader trend that is changing the nature of the offering to smallholders.  For instance, MyAgro’s design work in Senegal took into account farmers’ reluctance to take out loans for planting equipment purchases; in response, MyAgro developed a layaway model. Safaricom just launched a digital finance solution for the dairy sector in Kenya based on insights developed from human-centered design support from the Mercy Corps AFA program.  And Proximity Designs is providing short-term crop loans in Myanmar, based on what farmers told them they need.

We at ISF and Learning Lab are learning how to apply this information on the ground. With support from The Bill and Melinda Gates Foundation and research led by Dalberg Design Group (DIG), ISF’s work in Tanzania provides a real-life model of what we can do. We knew that digital credit products offer real potential for Tanzanian farmers, and wanted to find out why they weren’t buying or using them. By identifying five different farmer personas and tracing the credit experience of each, DIG was able to improve the design of financial products and their delivery to fit farmers’ needs. The Emerging Striver, for instance, is comfortable with technology and mobile credit, and hopes to buy her own plot or a small taxi and start a family – very different than the Burdened Breadwinner, whose goals are subsistence and paying her grandchildren’s school fees. DIG mapped each persona’s journey through the lending experience to identify obstacles and developed an idealized digital credit product with five new features including flexibility, integrated savings, and connections with real-world agents. Now a provider is working to deploy a new product with these features.

In the past few years, providers increasingly acknowledge that financing smallholders requires us to deeply understand a farmer’s reality and think differently about how we serve them. Even as we strive to design better products targeted at the needs of specific target farmer segments, we need to delve further into the skill-will matrix. Variations in ability and attitude exist even within a group having similar external characteristics like demographics, geography, and value chain. One farmer may effectively use an input loan to become more profitable while a similar-looking farmer may struggle to earn enough to pay off the interest and find himself trapped. To understand the difference, FSPs may turn to ground-level partners with close relationships to farmers, or to sophisticated analysis of farmer data (including psychometric profiling).

As the new farmer-centric mindset is emerging, sector players – such as investors, funders, providers, etc. – are realizing:

• We need to better segment customers before designing products
• We need to use customer-centric principles in that product design
• We need to build in ongoing feedback from farmers at every stage

Moving forward, if we want to find the models that will scale to market need, we need to go bigger and bolder with this farmer-centric approach and push for data-rich consumer-focused solutions.