Farm Management Information Systems (FMIS)
What is this guide and why does it matter?
This guide contains actionable steps on how to design and implement a Farm Management Information System (FMIS). We believe that an FMIS can benefit various stakeholders in agricultural value chains and enable other innovations in smallholder inclusive business models. Our data shows that agribusinesses can use an FMIS to engage with famers more efficiently and effectively while also creating value. This guide contains a wealth of information based on companies’ shared experience with regard to Farm Management Information Systems. It examines why and how to design, set up and operate such a system.
This guide is particularly useful to companies, support organizations and donors working with enterprises to strengthen their business models.
What is a Farm Management Information System?
Farm Management Information Systems (FMIS) are Information Communication Technology (ICT) based tools that support farmers and value chain actors that work with farmers in making data driven decisions in order to improve their operations. In the context of the FarmFit Insights Hub and this document, we will focus on the use of FMIS by value chain actors to boost their engagement with farmers rather than individual farmers using an FMIS to manage farm operations. In recent history, there has been an increase in the use of such systems among value chain actors such as agribusinesses in low and middle-income countries. They have been proven to enable data driven decisions that support smallholder farming. Such systems also help identify opportunities to increase the commercial viability of their inclusive business models.
FMIS are implemented by businesses to simplify the collection, aggregation and analysis of last-mile farmer data. An FMIS is typically used to collect farmers' agronomic, geospatial, and transactional data. This data can be used to determine what services such as inputs, certification, and training to provide to which farmer, where and at what time. It can also be used to manage sourcing activities such as collecting produce, automating farmer payments and tracing produce. FMIS often have communication features such as mobile messaging systems that provide farmers with real-time information such as weather and market data, as well as extension services such as training on Good Agricultural Practices (GAPs).
While the definition of a Farm Management Information Systems may vary depending on the user, this guide takes the perspective of the agribusiness as the actor implementing an FMIS in their smallholder-inclusive business models.
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How does it typically work?
While there is no one-size-fits-all approach, we provide an illustrative overview of how an FMIS works and its key functions below. This guide’s “How to implement an FMIS” section provides more detailed information on how to design, set up and operate such a system.
- FMIS maintenance and improvements: Once the FMIS is integrated into the company’s day-to-day operations, it requires continuous maintenance and improvements. While the company owns and manages the system, it may receive continuous support from an FMIS provider in terms of hosting and updating the software.
- Data collection and uploading: Data can be collected at the individual farmer level or at the farmer group level and may be entered into the FMIS directly via a farmer's device or through company agents and/or staff.
- Data-informed decision making: The data is analyzed and used to segment farmers more efficiently. It is also used to adjust services to their needs or help improve sourcing strategies. The company can also use the data for monitoring and evaluation (M&E) purposes.
- Tailored service provision: Companies typically tailor service provision to farmers based on the data and farmer segments generated via the FMIS.
- Direct messaging: Companies often have the option to integrate communication features (e.g., SMS) into the FMIS. These features can be used to update farmers on upcoming training activities, field visits, changes in market prices or aggregation activities. Two-way communication, which enables farmers to reach out to companies’ staff and/or agents in case of grievances, or for advisory purposes, could be added to the system as well.
- Data sharing for complementary service provision: With farmers’ informed consent, the company may share data on their profiles with other service providers such as input providers and financial service providers.
Why implement it?
Please click the links below for more details on the benefits that FMIS offers for different actors across the value chain:
- Efficient and effective farmer management - Digital data collection via an FMIS allows for more efficient profiling and management of farmers compared to paper-based data collection, which is time-intensive, prone to human error, and typically does not lend itself for analyses. Digital data collection can enable companies to better understand farmers’ activities and needs, better segment them and tailor service provision for more impact, improve relations, and reduce side-selling risks.
- Reduce sourcing cost - Farm Management Information Systems enable companies to forecast supply volumes, allowing for cost-efficient planning. This may include logistics, such as when and where to allocate field staff/agents and matters relating to collection of produce. Additionally, transactions and calculations for input loans and payments can be automated, reducing human error and increasing transparency and efficiency.
- Reduce credit risk - Companies that offer inputs on credit as well as other financial services use FMIS to better manage and monitor the process of loan application and repayment. Data from the FMIS (e.g., farmer field size and crop) can be used to calculate the cost of credit for required inputs and provide real-time insights on estimated yield and harvest dates, and functions for automatic deduction of loans from farmers harvest sales can help companies mitigate the risk of loan defaults. Finally, farmers’ credit history can be managed through an FMIS, allowing companies to make informed lending decisions.
- Cost-efficient communication to farmers -With communication channels such as mobile messaging integrated into the system, more farmers can be provided with training and information when compared to in-person visits. In addition, the information sent to farmers can be customized to their specific needs. Based on farmer profiles generated in the FMIS, customized information can be sent to individual farmers, which is more effective than sending the same information to all farmers, and more efficient compared to situations where companies manually identify who to send what information to. Finally, touch points with farmers can be much more frequent as FMIS-enabled communication does not require staff or agents to visit them in person.
- Easy Monitoring and Evaluation - FMIS enables companies to optimize internal operations. This includes the management of human resources, which can be done by monitoring daily activities and the performance of companies' field staff and/or agents. It can also be used to measure the impact of services on farmers’ livelihoods while also evaluating the return on investments of interventions.
- Improve access to (tailored) services - The FMIS can be used to provide customized services that are more effective than using a one-size-fits-all approach. For example, GAP training and input offerings can be adjusted based on farmers’ cropping calendars and conditions in the region. This can lead to improved productivity, reduced cost of cultivation, and improved quality of produce.
- Improve communication - With direct messaging integrated into the FMIS platform, farmers can be more easily and frequently reached with information and training, especially farmers in remote areas. FMIS with a two-way communication function can also allow farmers to quickly reach the companies’ field staff with requests for support.
- Create farmer (financial) records - The FMIS creates a unique user identification platform for farmers. The system records information about the farmer as well as farm practices and transactions. As such, a financial track record for each farmer is built which is useful for farmers seeking to access financial services like loans and insurance. It also enables the building of a credit profile that could be used by third-party financial services providers.
- Increase transparency and security - FMIS can be linked to other digital solutions, such as digital weighing scales and mobile payment solutions used during procurement, thereby increasing transparency and boosting the security of payments made to farmers.
- Better forecasting of required complementary services - The FMIS can be used to more effectively estimate farmers’ needs for complementary services such as mechanized services. If this data is shared, it can enable other services providers to access new customer segments without the need for major investments.
- Reduce lending cost and risk for financial service providers (FSPs) - The sharing of information obtained via the FMIS can contribute to an increased appetite for FSPs to lend to smallholders. FMIS can be used to create a record of transactions, which FSPs could use to develop digital scorecards for credit decisions. An FMIS can also support FSPs in loan recovery through tracking and management of loans. Advanced FMIS could also allow FSPs to offer their services, which may include collection of payments through the system. Click here to read IDH’s report on data sharing partnerships for smallholder finance.
- Better measurement of impact on farmers - By combining FMIS data with impact data, development organizations can better understand the impact of their partners (including companies) on farmers. The system also provides an overview of what services are having a positive impact on smallholder farmers in different contexts. This significantly reduces the cost of data collection for MEL.
Context matters: What are enabling conditions for Farm Management Information Systems?
Farm Management Information Systems are used across a variety of different contexts. However, the level of efficiency gains from such systems can vary depending on a variety of enabling conditions. The following section highlights key conditions where Farm Management Information Systems are most effective.
Value chain Perishability Geographical dispersion of farmers Degree of farmer organization Data policy environment Digital infrastructure Rural infrastructure
Why not? Key limitations, risks and unintended consequences
From the perspective of the implementing organization, there are a number of limitations and risks that should be taken into consideration before you implement a Farm Management Information System including:
Minimum viable scale Reliance on agronomists Required human capital Dependency on FMIS software provider
Similarly, there are unintended consequences that can emerge as a result of FMIS. These can impact (certain segments of) farmers, the environment, local community, partner organizations and other stakeholders. For instance:
Perpetuating existing inequalities Poor farmer data governance
Smarter design choices can help mitigate some of the limitations, risks and unintended consequences of implementing an FMIS. Read on further to see how you can smartly design your intervention.
How to implement a Farm Management Information System
This section highlights key steps in integrating an FMIS as well as decisions that should be made across the implementation journey. It also provides an overview of key mechanisms through which an FMIS can be optimized for better outcomes.
How to get started
FarmFit has supported
- Identify the objectives of implementing an FMIS in partnership with business teams that work with smallholder farmer data. Work with these teams to make a list of key business operations that could be enabled or strengthened through the use of FMIS. Formulate relevant questions that data from an FMIS should answer.
- Ensure internal alignment, particularly among senior management to create consensus on implementing the FMIS for said objectives. You can achieve this by leveraging testimonials from partners or other agribusinesses that have already invested in similar FMIS solutions.
- Decide whether to develop an in-house solution or implement an off-the-shelf solution. Take account of anticipated fixed and recurring costs associated with the system to determine whether this falls within your budget. An off-the-shelf solution is a good choice if you do not have an IT team nor IT skills within your organization. In such cases, this will reduce challenges related to technology development, giving you time to focus on other operations. Developing such a technology from scratch requires specialized skillsets.
- If you decide on using an off-the-shelf solution, invite proposals from multiple FMIS providers and select the appropriate service provider based on criteria such as:
- Expertise in relevant value chains and geographies
- Previous experience working with similar companies
- Competency and skill of the team
- Experience in working effectively in last-mile contexts
- A user-friendly interface that eases data entry
- Flexibility for possible Application Programming Interface (API) integration
- Availability of references from existing clients. As a good practice, speak to at least two clients before choosing an FMIS provider
- Create a budget for the implementation phase by considering all expenses, including not just the cost of developing or purchasing the software but also costs related to:
- Remuneration to agents: Compensation of field agents and personnel involved in data collection or managing the FMIS
- Hardware costs: Acquisition and maintenance of relevant hardware such as smartphones and tabletс
- Data costs: Data transmission and storage expenses.
- Training and capacity building: Capacity building for staff to effectively utilize the FMIS
- Logistics costs: Transportation, fuel, and any other activities associated with the FMIS implementation process
- Quality assurance tests: Costs associated with validating data and insights, generated periodically to ensure that the information is accurate
- Costs for value added features: For instance, integrating two-way communication with farmers, farm-level traceability, or interactive voice response (IVR) based communications
- Develop a comprehensive plan with clear timelines with the FMIS provider. Ensure that the rollout plan consists of a detailed list of activities required for successful implementation. For each activity, map out and determine the roles and responsibilities of all stakeholders.
- Identify the right data fields should be captured through an FMIS to meet the objectives identified during the planning stage. As good practice, start with a small number of data fields that are essential to your business and the farmers you work with. You could start by capturing data related to farmers and farm characteristics along with fields necessary for aggregating data on your company’s core business operations. This may include output trade, input supply, lending, and other similar business metrics. Gradually integrate additional data fields that have the potential to offer value-added services to farmers. This phased approach allows the company to utilize the system's full potential while preventing data overload during the early stages.
- Customize the FMIS for local contexts by integrating modules such as offline data entry, local language integration, or data architecture that is compliant with local laws and regulations. While handling farmer data, always ensure that the process is aligned with local data protection and sharing regulations (see section on mitigating risks to understand best practices on farmer data management).
- Develop an organizational chart mapping the different roles and responsibilities of (internal and external) staff and other stakeholders (such as farmers, farmer organizations, public and private partners) needed for the implementation of an FMIS. Identify key skills required and accountabilities for each role in order to streamline activities within the team.
- Conduct a comprehensive assessment of the skill requirements and current capabilities in your team in order to successfully implement the FMIS. Based on the assessment's findings, decide whether to hire new staff or provide training to existing personnel.
This phase involves actual rollout of an FMIS and includes data collection, analysis, and continuous improvement.
- Set up a team to implement the FMIS as per the organizational chart developed during the design phase.
- Conduct capacity building for each role as required. Record key training sessions so that they can be used by new recruits.
- Commence data entry into the system and adopt the following mechanisms to ensure that the data collected is accurate:
- Develop Standard Operating Procedures (SOPs) for field agents responsible for collecting data to minimize discrepancies. Make sure that these SOPs are concise, clear and are easy for field agents to understand. If required, develop SOPs in local languages.
- For data collection, utilize field agents and intermediaries such as lead farmers that are well-versed in local contexts and have a standing relationship with farmers in your supply chain. This can build trust and foster more efficient and better-quality data collection.
- Roll out compensation structures for agents that include both variable (commission-based) and fixed components. Commission-based compensation incentivizes performance while the fixed component provides agents with job security and a sense of stability.
- Incentivize farmers to share data by clearly communicating the value of sharing information. This can be achieved by: a) understanding and documenting the economic benefits to farmers from sharing data, and b) creating new incentives for farmers to share data such as access to relevant industry-based information and advisory, access to finance, etc.
- Analyze collected data on a periodic basis to understand what gaps or quality issues exist and refine the FMIS to better suit your business needs. Seek farmer and agent feedback to continuously improve the FMIS user interface.
How to optimize your Farm Management Information System
From our work supporting companies implementing FMIS, we have found several practices that can improve outcomes for companies, farmers and agents.
- Leverage aggregation points for data collection - Whenever possible, make use of aggregation centers where farmers meet for transactions to reduce costs instead of relying on door-to-door data collection methods. For instance, off-takers could collect data at locations where they buy produce from farmers. This enables field agents to efficiently gather information from multiple farmers in one location, reducing time and expenses associated with traveling to individual farms or households. Additionally, integrate digital scales, geotagging, and digital payments that automate data entry at these aggregation points.
- Use-drop downs instead of free texts - Use drop-downs rather than free text to capture data in fields that are prone to spelling mistakes or open to interpretation (such as value chains, commodities or location of the farmer). This approach reduces the probability of data entry errors by restricting entry to pre-determined fields. It also makes data more structured and consistent resulting in better aggregation and analytics.
- Leverage remote sensing data for supply chain management - Use satellite-based remote sensing to collect information on data points such as land mapping, crop analysis, crop yield estimates, and crop health. This often provides companies with more supply chain data that are relevant for optimizing their decision-making process.
- Provide value added services to farmers - Use FMIS data to provide value-added services to farmers beyond your core business. These additional services could include input finance, insurance, access to crop-specific extensions, and market price information. Bundling core services with such value-added services can help make farmers more resilient. For instance, you could also use the FMIS to facilitate access to services from third-party providers. Similarly, if farmers produce more crops than are required, you can leverage FMIS data to give them access to other buyers.
- Customize service delivery through farmer segmentation - Use FMIS data to segment farmers for customized service delivery rather than adopting a one-size-fits-all approach. Create customized service bundles adapted to the needs and opportunities of specific segments. For instance, women farmers, owing to social and cultural norms may require customized services. Similarly, younger farmers may be more adept at using digital agricultural services. This can improve productivity and increase quality of outputs by creating an ecosystem for farmers.
- Leverage gender disaggregated data to better serve women farmers - Be gender intentional. Collect gender disaggregated data using FMIS. Once aggregated, use the data to develop products and services that are gender transformative. (See section on mitigating risks on how being gender intentional can de-risk operations).
- Align roles and responsibilities with service providers to mitigate risks related to ownership of critical activities - Work with service providers to develop a detailed roadmap from the contracting to the rollout phase in which roles and responsibilities for each activity are clearly defined. This is important as most service providers provide Farm Management Information Systems through a software-as-a-service model. It means that their work is limited to customizing the FMIS and providing it to the implementing company. A detailed understanding of their roles will help both stakeholders align expectations and better prepare for delivery.
- Ask for consent and promote farmer-centric data sharing principles to mitigate risks related to data regulations – Remain aware of and compliant with evolving laws on data privacy and sharing. Make sure to meet all necessary legal requirements before engaging in any form of data sharing. Focus on getting informed consent from farmers before collecting their data. This process should include educating farmers on topics such as what data is being collected, how it will be used, how they can benefit from sharing their data, and if there are any associated risks involved. Once farmers are trained, they should be allowed to decide whether they want to share any personal data.
- · Use FMIS data for credit scoring to mitigate lending risks - If you provide loans to farmers or deliver inputs on credit, you can identify partners using FMIS data to develop credit scoring models. Such data enables de-risked lending to smallholder farmers, which could potentially reduce interest rates.
- Leverage digital tools and innovations to reduce errors and build farmer trust - By using digital scales, mistakes related to quantities can be minimized. Digital payments can minimize errors in recording transactions. Geotagging can reduce errors, especially when it comes to locating farmers. The use of digital tools for recording data also increases transparency, thereby establishing trust between farmers and businesses.
- Be gender intentional and subsequently transformative to reduce the risk of leaving women out of supply chains - Consider gender in data collection, aggregation, and analysis to ensure that women are not left out of service delivery. Use data to design and deliver customized services to women farmers. In order to be gender intentional: a) collect gender disaggregated data; b) ensure that there are women in the field staff; c) encourage women to participate in training and demonstrations; and d) use Interactive Voice Response (IVR) instead of written communication to overcome literacy barriers.
- Have transparent conversations with FMIS providers to understand future costs - Liaise with the service providers to understand what costs you may incur in the future for customizing or maintaining the FMIS. Note that these expenses can sometimes exceed the initial cost of purchasing or developing the software. Ensure that these prices (which could include annual maintenance costs, software updates, and adding new modules) are well accounted for. Given that it may be difficult to migrate to a new service provider, ensure that you plan ahead before making any commitments.
- Start with a pilot project to ensure the system is optimized - Conduct pilot projects that collect data from a subset of farmers before initiating pan-company implementation. This allows you to test and refine the system before it can be deployed on a larger scale. Provide feedback from the pilot projects to the FMIS provider so that any deficiencies can be corrected before a full-scale deployment.
- Use a phased approach while increasing data fields - Start with a few fields related to farm/ farmer characteristics and business operations. Map out how each data field could be used for business operations. Refrain from adding data fields that are not directly linked to business operations. Once the inflow and analysis of data is streamlined for these data fields, identify additional data fields that can enhance business operations or service delivery to farmers. While adding new data fields, ensure that only those that enable decision-making are included. Do not include data fields that are not useful.
- Establish data sharing partnerships - Establish data-sharing partnerships with
other value chain actors that provide complementary services to recover some of the FMIS implementation costs. For instance, sustainable cultivation and traceability data can be useful for corporate entities that have sustainability commitments. Similarly, farmer data can be useful for financial institutions seeking to de-risk their lending to smallholder farmers. Please note: For any such data sharing partnership to be operationalized, IDH recommends a farmer-centric data governance approach where farmers have full awareness on what data is being shared, consent to the data being shared, and benefit significantly from the data sharing.
How to complement your FMIS
The successful implementation of
- Agent Networks: Commission-based agents can be used in data collection into an FMIS and also ensuring that there is two-way communication between an agribusiness using an FMIS and farmers in the supply chain. Having a strong commission-based agent network can optimize the implementation of an FMIS. Click here to read more about implementing a strong agent network.
- Segmentation of Farmers and Farmer Organizations: Data from an FMIS can be used for segmenting farmers and farmer organizations. This can enable delivery of customized rather than generic services, which are likely to be more useful to customers. Segmentation can also be used to build risk profiles of farmers, eventually reducing the time required for due-diligence in the case of lending to farmers or their organizations. Click here for a recent farmer income study on farmer segmentation. Alternatively, click here for a guide on farmer organization segmentation.
- Service Coalitions: By participating in a
service coalition , several organizations can benefit from a common FMIS. The coalition’s value is enriched by the multiple and complementary services that each organization can offer (inputs, finance, training, etc.) using a common set of data collected via an FMIS. Co-investing in an FMIS through a service coalition can significantly reduce the costs associated with operationalizing an FMIS.
What is the impact of a Farm Management Information System?
As most of the agribusinesses that we support are still in the midst of FMIS implementation and operationalization, it is not yet possible to fully measure the impacts of FMIS. However, in order to shed more light on its impact on companies and farmers, we are awaiting results from our end-line assessments, which include data collection at company and farm level. We aim to share updates on FMIS impacts during 2024. The sections below are currently based on anecdotal evidence:
Business case
Our work with agribusinesses confirms that Farm Management Information Systems enable companies to perform various key activities more efficiently. Examples include more efficient data collection and farmer management compared to paper-based approaches; automation of payments for inputs and advances when compared to manual calculations and payments; more efficient communication with farmers via digital channels compared to in-person visits; and more efficient planning and allocation of resources based on data and forecasts generated via the FMIS.
Anecdotal evidence from a rice and beans trader in East Africa suggests that using an FMIS has saved an estimated 30% in time management, and 25% in operational costs. The company has uploaded data from 15, 000 farmers onto the system, including information on their credit status, supply contracts, training attendance, and GPS location. The FMIS has helped the company manage finances, including mobile payments, for farmers. It has also helped with the automation of payments for inputs and advances, and has facilitated monitoring and evaluation. It has also been used for active communication with farmers, particularly in regard to harvest-related topics.
However, we do not have conclusive evidence that such efficiencies lead to overall cost savings in smallholder inclusive business models. This depends on whether the relatively costly initial investment of an FMIS and the ongoing implementation and maintenance cost can be recouped from efficiency gains, which will differ for each company.
Value creation at farm-level
Anecdotal evidence suggests that an FMIS can also create value for farmers. While it may not directly impact farmer livelihoods, it can improve access to services. Testimonies from farmers based on recordings of their transactional data via the FMIS shows an increase in the likelihood of accessing finance.
A buyer of beans in East Africa is currently linking mobile payment solutions and digital weighing scales to its FMIS. Various farmers that sell to the company noted that the use of the digital scales and mobile payments has made procurement more transparent and increased their sense of security. Farmers also welcomed the company’s current efforts to upload transactional data to the FMIS so that a record can be kept and shared with financial institutions.
While companies seek to leverage the FMIS to improve farmers’ access to finance, some encounter challenges in doing so, sometimes due to a lack of interoperable data systems or additional data collection costs. Click here to read IDH’s report on data sharing partnerships for smallholder finance.
Further research is needed in order to measure the value created for farmers, while also considering possible though unintended negative impacts. More in-depth studies are needed to determine whether replacing in-person training and communication with digital channels to reach more farmers could compromise the quality of service provision and exclude of women who might not have access to phones.
