Agriculture remains the most prominent aspect of the rural economy in most regions of the world but there is still the question of money as one of the most significant losses to the rural farmers. Fortunately there has been no prior exposure to formal financial systems by the small-scale farmers due to a bad banking system, distance to the financial institutions, lack of collateral, and low financial literacy.
However, over the past few years, an increase in the use of mobile technology has followed and as a result, mobile farming finance is a viable solution for the rural population. This is altering how farmers save, borrow, insure, and even invest their money since it provides financial services using mobile phones. This determines new levels of rural development.
Mobile farming finance divisibility eliminates the geographical barrier that the rural farmers have had over the years since they do not need the physical branches of the bank and the burdensome paperwork. Farmers will then have the opportunity to take care of a savings account, as well as receive microloans and digital payments with the assistance of simple mobile apps or solutions that operate on SMS.
Financing disparity in agriculture in the rural regions
The rural villages largely endowed with farmers who do cash economy, where the farmers paid on a season-to-season basis depending on the crops. It is the volatility of revenues that viewed as one of the major risks by traditional banks and therefore, they not interested lending money.
The process of obtaining loans in most cases requires a lot of documentation, traveling long distances, and long queues before obtaining a loan. Due to this, the majority of farmers employ informal lenders who charge an extremely high interest rate and this places the families in debt.
With this low finance, farmers find it difficult to purchase good seeds, fertilizer, tools, and irrigation equipment. The output is low, the income does not expand and poverty in the rural areas does not go down in case there is not an adequate amount of money. We require convenient accessibility to the financial solutions to compensate for this lapse, as they are adaptable and can fit the rural lifestyle. This is what mobile agriculture finance is looking to offer.
Mobile farming: what is the cash?
The mobile farming finance refers to the application of mobile phones and other internet-based services to avail financial services to the farmers. These services offered not only on simple feature phones but also on smartphones, and they include mobile payments, savings accounts, microloan services, insurance goods, and input loans. The mobile money systems enable the farmers to be in the position to make payments even without necessarily having to visit a bank facility.
The mobile agricultural finance traditionally sieved based on creditworthiness by connecting with digital IDs, farm accounts, and transactions. Even these lending decisions have become better given that other systems rely on satellite, weather service, and agronomic databases. The outcome of this a simplified information-based financial structure particular.
It was a design that was designed to meet the needs of the farming industry the rural regions. Not only does such an online solution cut down on the length of time required to process the loans, but it is also more effective in quantifying the risk of agriculture. Lenders can also design financing products, as well as the planting periods and expected harvest periods, through real-time and previous farm performance.
Mobile device-based Farmer insurance
The agricultural insurance has been experiencing a challenge over the high cost of administration and the claims filing process that is very time-consuming to access the rural areas. Mobile farming finance is transforming this since it is creating mobile device-based insurance products as well as index-based insurance products. The farmers can subscribe and retrieve their rewards besides paying their premiums via their phones.
Majority of these insurance covers automatic payments for the property due to weather information or satellite information whenever specific conditions fulfilled, i.e., drought or heavy rainfall. The mobile insurance will save the farmers when they need it to save on the paperwork and time wastage. This is to safeguard their livelihood and no effect made on their earnings.
Most of these insurance covers include automatic payment of the coverage of the property case of weather conditions or satellite information circumstances where some requirements met, such as drought or heavy rainfall. Mobile insurance will be there to bail the farmers out when they require it most, as it seeks to minimize the paperwork and time loss. This ensures that they not killed and their earnings not hit.
Mobile Finance in the Future
Mobile farming finance will probably be even more applicable to rural development as more people use their mobile phones and transform the digital ecosystems. They will be combined with satellite services, AI, and IoT technologies to make sure that the process of credit assessment and risk management is enhanced to a large extent.
The fact that the Rural farmers can operate their entire finances (both their savings and loans) through one mobile application (insurance and access to the market). Such integration can lead to a lot more output, stability, and prosperity. Other than the use of technology, mobile agriculture finance will most certainly improve the agricultural value chain cooperation.
Agribusinesses will continue to share data and platforms with governments, cooperatives, and financial institutions in order to offer more integrated services to farmers. Through the better connection and real-time data, farmers will be in a position of being able to match financing with planting time, market demand, and the weather. This is not only an effective process but also it promotes wise borrowing.