Participants on GIFT's 30th Global Young Leaders Programme (YLP), in partnership with IRRI - International Rice Research Institute, proposed a new business model to provide an information services platform for rice farmers in the Philippines and elsewhere.

1. Business Plan for an Information Service Platform
for Rice Farmers – a Proposal for IRRI
Developed on the 30 th Global Young Leaders Programme
January 2013
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2. Table of Contents
Executive Summary 3
Introduction 7
Background 10
Business Model and Operations 21
Business Development and Strategic Partnerships 39
Sales and Marketing 43
Organisational Structure and Governance 53
Financial Projection 58
Risk Analysis and Mitigation 67
Recommendations and Action Plan 70
Appendices 79
2

3. Executive Summary
3

4. Executive Summary (1)
• Global demand for rice will increase, particularly in Asia, alongside population placing
increasing pressure on systems of rice production. The Philippines for example depends on
rice imports to meet current domestic demands, in spite of having a long tradition of rice
farming.
• The International Rice Research Institute (IRRI) plays an important role in performing leading
edge scientific research into many aspects of rice production – headquartered in the
Philippines but with a presence in rice producing countries around the world.
• Key challenges faced by smallholding rice farmers in the Philippines and elsewhere include
landlessness, a vicious borrowing cycle difficult to escape from, insufficient access to credit
and therefore a lack of processing tools and resources and very importantly a lack of critical
information for both pre- and post-harvest activities in the rice production value chain.
• GIFT and the YLP team of participants was invited to explore ways that IRRI could consider
commercialising its mobile platform: “Nutrient Manager for Rice” (NMR) in order to promote
improved rice production in the Philippines, and to potentially apply findings and principles of
the business model to other countries where IRRI operates.
4

5. Executive Summary (2)
• Based on site visits to rice producing communities in Infanta and Victoria, meetings with
potential partners and stakeholders and extensive work with technical and management staff
at IRRI, the team of participants recommends the establishment of a New Company to
manage the development and delivery of the information platform for rice farmers – first as a
pilot business in the Philippines, and then potentially applying the concept in other rice
producing countries.
• The proposed New Company will:
• Manage the technology platform to provide rice farmers with valuable information from
pre-production to post-harvest, including Nutrient Manager and extending beyond into
other info services
• Connect farmers with service providers, financing and support the development of an
inclusive value chain
• Bring together public, private and civil sector players through a new commercial entity and
ownership structure that is financially viable and drives social benefit
• Promote the re-positioning of rice farming among rural communities and especially the
younger generations in order revitalise rural communities and support the drive toward
self-sufficiency in rice production for the Philippines, thereby helping build a future pillar of
the community
5

6. Executive Summary (3)
Key features of the new company include:
• New company to be established with a majority ownership for farmers. Details of equity
stake for IRRI to be negotiated
• Impact investment opportunities for select partners or investors and shareholding options
for farmers’ associations and employees, as well as ‘sweat equity’ for management
• A business model based on growing a significant subscriber base of farmers and others in
the rural / agricultural community and then capturing revenue in the form of commissions
from key service providers and commercial partners as well as market intelligence for sale
and targeted marketing opportunities for companies seeking to market to rural customers
• A new concept for outreach and interface between the company and rice farmers in the
form of a field-based sales force of “Sales & Service Agents (SSA)”, who are active members
of the community and who will work to link the new company with farmers first by
promoting subscriptions to the network and then to support the use of the ICT platform
service as needed by farmer subscribers
The proposed company will require an initial injection of USD 6 million with a break-even at
year 5 and an IRR of 54% by year 10. It is estimated that the company can reach and secure
approximately 750,000 rice farmers as subscribers in the Philippines by year 10, thus promoting
an increase in overall yield, improved livelihoods for farmers and enhanced rural environments.
6

7. Introduction
7

8. Project Partners
Entity Description
• A non-profit independent research and training organisation
International Rice • Dedicated to developing new rice varieties and rice crop
Research management techniques that help rice farmers improve the
Institute (IRRI) yield and quality of their rice in an environmentally sustainable
way
• Works with public and private sector partners for agricultural
research and extension to deliver training and knowledge
transfer
• An independent pan-Asian think and do tank dedicated to
linking business, government and civil society to foster
Global Institute For constructive dialogue and address global challenges
Tomorrow (GIFT) • Organises the Global Young Leaders Programme (YLP), an
executive leadership programme based on real world, real time
experiential learning for participants and on tangible and
actionable outputs with positive social impact for partners
8

9. Global Young Leaders Programme (YLP)
Participants from businesses and civil society worked with IRRI to propose a
business model for the commercialisation of an integrated ICT platform to
improve rice crop management in the Philippines, as well as strategic
recommendations on managing partnerships in the future. YLP Participants
came from companies and organisations below:
9

10. Background
• Global Food and the Role of Rice
• Overview of the Philippines
• IRRI and Rice Crop Management
• Rural Mobile and Banking Markets
• Identifying Gaps and Opportunities
10

11. Global Food and The Role of Rice
• A small increase in global food prices drives millions into extreme poverty
• Rice is a staple food for more than 3 billion people (almost half the population)
• More than 90% of rice is produced and consumed in Asia
• Green revolution in the 1960s introduced high yield variety seeds and agro-
chemicals. Productivity doubled by late 1970s
• Continued pressure on food production driven by environmental degradation,
climate change, population growth and urbanisation
• Adoption of effective crop management
practices to maintain soil fertility and
ecological balance is central to food
security
• Strengthening and developing inclusive
value chain is crucial to improving
farmers’ livelihoods
11

12. Overview of the Philippines
Country information *
Population: 104 million
Capital: Manila
Land area: 298 km2
Religion: 83% Catholic, 10% other
Christianity, 5% Islam
History and Geography
Located in Southeast Asia
7,107 islands, with three main locations:
Luzon, Visayas and Mindanao
A Spanish colony for 300 years and under
US influence for 50 years
A country of over 7,000 islands, reliant on agriculture and remittances and boasting
one of the highest economic growth rates in Southeast Asia
* The CIA World Factbook, 2012
12

13. Overview of the Philippines
Economic
GDP(2011): 224.7 billion USD (*2) GDP growth rate(%) in Philippines
GDP growth (1-3Qof2012): 7.1% (*3)
GDP/Capita: 2369.5 USD (*2) 8
Disposable income per household (2011): 6
8406.5 USD (*4) 4
2
Unemployment Rate: 7.0% (*5)
0
Poverty Rate (2009): 26.5% (*6) 2004 2005 2006 2007 2008 2009 2010
Social Development
Although the economy has been recovering
steadily since 2004, the Philippines still has
the highest income inequality in Southeast The Philippines is emerging and
Asia. promising, but still challenged by
A third of the population lives below the poverty
poverty level of USD1.25/Day (*7)
*2 World Bank 2012
*6 World Bank
*3 National Statistical Coordination Board, 2012
*7 CNN, What is driving the Philippines
*4 Euromonitor International Ltd, 2012
surprisingly strong growth, 2012 13
*5 Global Finance

14. Agriculture and Rice in the Philippines
• Accounts for 13.2% of GDP and
employs 33% of labor force (12.27
million people) (*9)
• Crop production is 19.6 billion USD,
with palay production at 6.2 billion
USD
• Palay accounts for one third of the
total harvest area or 4.5 M ha (*9)
• Rice production is not sufficient for
national consumption needs
• A farm commonly produces rice,
corn and coconut with a few
livestock and poultry
• A majority of farmers have on
average 2 hectares of land 2013 as the Year of Rice for the
Philippines to reach rice self-sufficiency
*8 Philippine Daily Inquirer, ADB urges Philippines to address income inequality, 16 April 2012
*9 Bureau of Agricultural Statistics, Overview of Philippine Agriculture
14

15. Analysis of Rice Value Chain
Input Supply Input Suppliers
Supply/ 10% Seed, agrochemical
Production Production dealers/ salesforce
Handling 18%
Producers
Threshing Farmers
8%
Post-harvest Drying
Processing
Storage Palay Traders
22% Service units
Milling
42% Processors
Small and large mills
Wholesale
Estimated
Marketing/ Post-Harvest Large Distributors
Distribution/ Retail Value Loss:
Retailers
Consumption 90%
Consumption Consumers
Significant loss in value of rice crop occurs in post-harvest
due to lack of infrastructure and credit
15

16. Rice Farmers in Need of Support
• Despite land reforms, a majority of
farmers are landless and are trapped in a
cycle of borrowing for the purchase of
agricultural inputs
• Farmers require a range of information
and services, from pre-production to
post-harvest, and from weather to market
updates
• After labour, fertiliser is the second largest
cost for farmers
• Currently the average rice yield is 3.7t/ha,
lower than the world average
• Low yield partly due to the incorrect use
of fertiliser (*10)
Rice farmers require additional information on farming techniques
to improve livelihoods in rural areas
*10 FAO, USDA
16

17. IRRI and Rice Crop Management
• IRRI has developed a series of ICT tools to
address rice farming, including the Site-
Specific Nutrient Manager for Rice How to access and use Nutrient Manager
Web Smartphone GSM mobile phone
(NMR), the Rice Doctor, and the Rice
Knowledge Bank
•
Farmer calls
NMR, a web and mobile based tool, to dedicated number
Interactive Voice
provide rice farmers with tailored Response
implementation box
recommendations on nutrient
management Smartphone
output
• 20,000 nutrient management guidelines Web output
Smartphone
provided to farmers in 2012 Available in Philippines and
Indonesia
and mobile:
Text output
• NMR developed and tested in the
Philippines and replicable in other rice
producing countries
0 11 12 13 21 30 32 3 45 - 5 61 - 65 71 -
9 9 51 9 92
17

18. Key Findings: Nutrient Manager for Rice
Benefits
• Reduces fertiliser cost thus saving farmers money
• Potential to increase paddy yield when info is used
by farmers
• Tailor-made advice for farmers
• Potential for print out service
• Net environmental and social benefits
Challenges
• NMR is beneficial but not comprehensive.
• Farmers also need assistance on weather, prices,
post-harvest support to help maximise their crop
• Low penetration into farming community
• Many farmers unfamiliar with ICT interface
• Lack of availability of hardware and capital

19. Rural Mobile and Banking Markets
• Mobile operators achieved 67% household
penetration in the Philippines
• Most prolific text messaging markers in the world
– accounts for 10% of global SMS messages
• 1 million Filipino overseas workers transfer USD
50 million per month to relatives in Philippines
through mobile banking
• Mobile Wallet – 8.6 million Smart Money and 1.3
million Globe G-Cash registered users
• 780 rural banks covering 85% of municipalities
and cities
• BPI Globe BanKO is the Philippines’s first mobile
phone-based, microfinance-focused savings bank,
reaching over 400,000 micro-entrepreneurs in the
past two years
Mobile presents good opportunities to reach rural farmers
http://www.malaya.com.ph/index.php/business/business-news/8408-billions-sent-
thru-phones
http://www.gsma.com/publicpolicy/wp- 19
content/uploads/2012/03/universalaccessfullreport.pdf

20. Identifying Gaps and Opportunities
UNMET NEEDS OF FARMERS EXISTING INFRASTRUCTURE
• Reliable technical information to • Access to IRRI’s knowledge
support sustainable farming practices repository and extension tools
• Access to suppliers, service providers • Community organisations and
and buyers in the rice value chain extension workers
• Access to post-harvest facilities • Nationwide mobile network
• Access to credit, insurance and other infrastructure
financial services • Large mobile banking user base
RECOMMENDED OPPORTUNITY:
Establish a commercially viable information service platform that leverages and
expands on existing services. Beneficiaries will include: farmers, suppliers, buyers,
extension workers and the larger agricultural community.
Integrated information service platform
can support the development of an inclusive rice value chain
20

21. Business Model and
Operations
• Introducing the New Company
• Business Model
• Operations
• Summary of Revenue Streams
21

22. Introducing the New Company
Vision
To support and connect farmers through an integrated platform to a suite of
educational tools and product and services supplied by the company and key partners
Mission
• To bridge the gap between the needs of the farmers and those of the service
providers throughout the value chain
• To support sustainable rice farming, particularly through the optimisation of
farming inputs (fertilisers, pesticides, herbicides, etc)
• To develop and empower young farmers to become next generation agriculture
knowledge workers
• To support farmers in improving their livelihoods
• To achieve self-sufficiency in rice production
FarmSaya positively impacts farmers, rural communities and rice consumers,
by helping farmers enhance their farming practices and livelihoods.
22

23. Business Model
Core Partners Farming Communities
Knowledge Providers Co-ops
Mobile Network Mobile &
Farmers
Operators Web Apps NGOs Field
School
Service Providers
Products & Services Farmers
Local MFIs
Rural Banks Micro-insurance IVR Stores
SMS Sales & Service
Printout Agents (SSA) Extension
Workers
Agri-inputs Agro Information
Suppliers Market Intelligence
buyers Providers
An Integrated Information Service Platform to support an inclusive value chain
23

24. Business Model
FarmSaya’s Network of Service Providers
Accreditation ensures
Core Partners
credibility and builds trust
Knowledge
Providers
Mobile Network
Operators
Product & FarmSaya Accredited
Service Providers Services Local Dealers
Sales & Service Agents (SSA) work
Rural Banks Micro-insurance with service providers and local
dealers to develop a network of
accredited local dealers to provide
Agri-inputs Agro Information products and services to the
Suppliers buyers Providers farming community.
24

25. Business Model
FarmSaya’s Network of Subscribers
The success of the platform depends on
the subscriber base. Higher volume of
Farming Communities
subscribers and higher usage per
subscriber creates value for service
providers. This is required for Farm Saya Co-ops
to be financially viable by monetising this
value with other sectors. Farmers
NGOs Field
School
Sales and service agents
work with key actors in community to Farmers
(a) Enrol farmers
(b) Quickly scale the platform Local
Stores
MFIs
(c) Ensure regular use of the platform
(d) Lower dependence on volunteers Extension
Workers
or the overly worked extension
workers
25

26. Business Model
Core Services for Farming Community
Micro-finance and
Micro-insurance Group Purchase of
Nutrient Manager and Agriculture Inputs
Crop Management
Knowledge and Tools
An information service platform to
support an inclusive value chain Coordination of
Farm Equipment Leasing
Organising
Learning Groups
Coordination of Contract Coordination of
Farming with Millers / Buyers Post-harvest Services
26

27. Operations
Crop Management: Knowledge and Tools
Primary Information and Technical Support Complementary
Services provided by IRRI & PhilRice Information Services
Nutrient Weather
Manager for Forecast
Rice
Market Information
Rice Crop
Rice Doctor
Manager
Open Source
Sustainable Farming
Knowledgebase
Voice service, Local Specific
Knowledge
Bank
SMS Alerts, Information
Printouts
Endorsement by Department of Agriculture
will aid nationwide rollout and adoption
Knowledge delivery through mobile and web platforms
27

28. Operations
Micro-finance and Micro-insurance
Accredited Service Providers
Payment for products and services
Agri-inputs:
through micro-finance bundled with micro-insurance Seeds
Fertilisers
Farm
Rural Banks equipment
Micro-finance Institutions (MFIs) leasing
Micro-insurance Company
Mobile Banking Farmers payback Post-harvest
micro-loans after services:
Treshing
sales of produce
Drying
Storage
Access to credit helps farmers gain access to agri-inputs, Milling
farm equipments and post-harvest services
Linking farmers with Rural Banks and MFIs to provide access to credit
28

29. Operations
Group Purchase of Agriculture Inputs
Group
Nutrient Manager purchase of
provides customised agriculture inputs at
recommendations discounted price
Accredited Agriculture
Input Dealers
Payment
Micro-financing for farmers
Farmers provided through mobile banking
Bundling group purchase with Nutrient Manager and micro-finance
Group purchase reduces cost for farmers and increases sales through the platform
29

30. Operations
Coordination of Farm Equipment Leasing
Coordinates leasing of farm equipment
for farmers and cooperatives
Leasing
Company
Payment
Micro-financing for farmers
provided through mobile banking
Access to farm equipments such as combine harvester can help reduce post-harvest lost
Making farm equipments affordable with micro-finance support
30

31. Operations
Coordination of Post-harvest Services
Coordinates access to Post-harvest Service Providers
post-harvest services for
Harvesting using
farmers and cooperatives
combine harvesters
reduces physical lost
and paddy can be
dried in time
Drying paddy to 14%
moisture content in
time improves rice
quality
Micro-financing for farmers
provided through mobile banking Storage for 6-9
months to fetch
Future opportunity may exist for FarmSaya to nurture higher prices in
local entrepreneurs to run post-harvest service hubs the market
and broker members’ crops to processors.
Providing access to post-harvest service providers
to ensure farmers capture and maximise crop value
31

32. Operations
Coordination of Contract Farming
Links farmers and cooperatives to
Millers / Agro Buyers
Facilitates access to post-harvest
facilities and transportation
Contract Farming with
Millers / Agro Buyers
Payment for farmers provided
through mobile banking
Contract farming can help reduce post-harvest lost and capture more value for both farmers and buyers
Linking farmers to markets – ensuring accurate pricing
32

33. Operations
Organising Learning Groups
Organises learning groups
for farmers and cooperatives
Learning Group
SSA
Content Providers
Extension Workers
Agri-inputs Agro
Farmers support and learn from each other Suppliers buyers
and other mentors through learning groups
FarmSaya SSAs may facilitate learning groups among members of farming
communities. Content providers may also pay to sponsor.
33

34. Operations
Sales and Service Agent (SSA) are a Human Interface
+
SSAs develop network of accredited local service providers and interact directly with
farmers and rural communities to deliver the information on available services
• Relationship based on trust and familiarity as farmers prefer to interact with people rather
machines – important for community building and growing the brand and subscriber network
• Most of farmers do not have strong technology background and some are intimidated by it
• SSAs act as the bridge and intermediary as well as service hub between the platform and
farmers – certain subscribers will require more attention while others may prefer to use their
own device or another device in the community. SSAs will need to be flexible to their needs
SSAs add a human touch to the platform when interacting with farming communities
34

35. Operations
Value Added Service: Monetisation of Market Intelligence
Capturing market intelligence
Co-ops from rural communities
Farmers
NGOs Field
School
Recipients
Farmers
Mobile
Local MFIs Network
Stores
Operators
Extension Rural Banks Micro-insurance
Workers
Agri-inputs Agro
Suppliers buyers
Capturing and monetising market intelligence provides targeted marketing
opportunities for service providers and partners through FarmSaya
35

36. Operations
Potential revenue: Market Intelligence
With the data generated from the use of the integrated platform by various parties, most
notably the large numbers of farmers and rural communities, useful knowledge and insights
can be extracted, organised and sold to existing partners or other businesses looking to reach
rural consumers. (e.g. customer pattern, behavior, market opportunities, land usage, etc)
Sector Example Possible Benefits
To use data to predict who will respond to the new marketing campaigns
Marketing/Retail Unilever, Nestle
such as direct mail, online marketing campaign, etc
To allow banks to promote new and appropriate financial products to
Finance/Banking Rabobank, Citibank, etc
targeted customers
To improve their products which suits customer better to increase sales and
Manufacturing Kubota, etc
customer satifisation
Governments Philiphine,etc To include the data in national statistics
Data to be used ethically and as a key revenue stream to grow the business
36

37. Operations
Various Users Demand Unique Data
Enterprise SME / Local Business
Mobile Agri-inputs
Network Rural Banks
Suppliers
Operators Agri-inputs Local buyers,
Micro- dealers Rice Mills
Agro
Buyers insurance
Nutrient Manager,
Market Intelligence Customers and Local
to reach rural consumers Market Information
Community Farmers
Farmers Cooperatives,
Extension Workers, NGOs,
MFIs, Local Government
Personalised Farming
Farming Training Materials, and Post-harvest Information,
Database of Local Farmers, Database Database of Accredited
of Accredited Local Dealers and Local Dealers and Buyers
Buyers, Learning groups information Learning groups information
FarmSaya meets information needs of Enterprises, SMEs, Community and Farmers
37

38. Summary of Revenue streams
Priority Revenue stream details
• Service fee and commission for hosting and sale of
Primary
farming-related products/services through the platform
• Service fee and commission for hosting and sale of non-
farming-related products/services through the platform
Secondary
• Monetisation of market intelligence
• Future premium subscription model
• General sponsorships and display advertising
Possible future
• Sponsorship of Learning Groups available to relevant
revenue
companies (agri-inputs, etc)
Basic subscription service provided free of charge for farmers
38

39. Business Development
and Strategic Partnerships
• Strategic partnerships for FarmSaya
• Types of partners and service providers
39

40. Strategic Partnerships for FarmSaya
Phase I Phase II Client base moves from farmer
Build a network of Reach out to service to rural communities elsewhere
core partners providers for global adoption
• Build platform • Increase the value
Farmer
and develop key proposition to
features encourage higher
Rural Communities
enrolments
• Meet farmers’
most immediate • Encourage the use
Global Adoption
needs of FarmSaya as a
vehicle to access
farmers and sell
products and
services to a large
subscriber base
Approach to strategic partnerships expands from local to global
40

41. Types of Partners and Service Providers
Core Partners Service Providers
Financial services: rural banks, MFIs, insurance
Knowledge Providers: Agri-inputs suppliers, Agriculture products buyers
IRRI, PhilRice Agriculture information providers
Consumer products suppliers catering to the bottom of the
Mobile Network Operators pyramid and rural communities (not only farmers)
…
• Strategy for Phase II: Push for a differentiation of subscribers.
• Service providers include companies that cater to the Bottom of the Pyramid, Fast Moving
Consumer Goods (FMCG) companies, Equipment manufacturers or Financial Services
Companies
• Diversified partners provide enhanced value to the subscribers and ensures that the model
moves from a farmer base to a more extensive rural community
An integrated platform with bundled services from various service providers can off-set
operation and distribution costs required to reach out to customers in rural areas
41

42. Criteria for Partner Selection
Accreditation of partners is critical to ensure FarmSaya achieves desired goals
• Existing customer base
• Technology platform
Criteria for • Access to investment and financial capital
partnership • Strong government relationships and support
• Socially-minded companies will be given preference
• Prospect for potential partnerships to bundle products and services at
reduced prices
• Reduce marketing cost per customer
• Large pool of service providers to entice farmers to becoming subscribers
Value • Opportunity to use a replicable platform
proposition • Target large customer base across regions
• Aggregated market information
• Opens up new markets
• Nation building and social development
42

43. Sales and Marketing
• Objectives
• Strategy
• Role of the Sale and Service Agents
• Reaching communities: Engaging Young
Farmers
• Nationwide Campaign for Rice
• Farmer Subscriber Targets
43

44. Objectives: Sales and Marketing
• To enrol farmers onto the platform, and
establish a subscriber network in rural
areas
• To broaden the subscription base to
include other customers beyond the
farming communities
• To create brand awareness and loyalty
to FarmSaya by providing services
needed by farmers and their household
• To turn farming into a desirable and
profitable profession
• To attract young farmers and youth
from rural areas
44

45. Strategy: Sales and Marketing
Various channels will be used to attract and enrol a critical mass of farmers and
raise awareness about the benefits of joining FarmSaya to gain access to farming
knowledge, products and services.
Farmer Subscriptions
Agri Religious
Shareholders
Organisations Communities
Indirect Channels
(Sales & Service
Direct Channel
Education
Public Sector Media
Agents)
Institutions
NGOs and Social
Retail Chains
youth groups Networks
Enrolling farmers through Sales and Service Agents as well as indirect channels

46. Resources Required to Build Network
Initial outreach driven by SSAs, public sector, NGOs and shareholders, later to
be supplemented by other channels
Est. Initial Resource Required Note: The bubble sizes represent Est. # of
(Index on the scale of 10) farmers reached/attracted (index on the
Direct Channel
scale of 10)
10 Media
8 Private/Corporate
partners
6
Retail Chains
Shareholder
4 Agri Orgs
Public Sector/ Gov Orgs Social Networks
2
Religious Communities Education Institute
NGO
0
-2 0 Years 1 2 3 4 5
Direct sales outreach is supplemented by a variety of marketing channels
46

47. Enrolment Strategy
• Combination of ICT tools and Convenience
regular human interface to stores Pawn
shops
acquire farmer enrolment
Accredited
• Using social media to attract dealers
young farmers Money
• Partners contribute with changers
discounted and bundled Promotion
Sales &
services/products to attract mass Platform
Service
enrolment Agents Community
• Outreach and awareness raising centres
through printed materials and Religious
campaigns via existing networks communities
and multiple touch points in the Info
community kiosks
Corporate
partners
47

48. Farmer Subscriber Targets
Sales and Service Agents (SSAs) serve as a key channel to enrol farmers. They build
relationships with local communities and become trusted representatives of
FarmSaya at the grassroots level.
Number of subscribers Subscription Target by Year
746,496
800,000
700,000 622,080 Assumptions
518,400 • YR 1 employs 42 SSAs,
600,000
each enrolling 2 farmers
500,000 417,000 per day on average
400,000 345,000 • SSAs: responsible for
285,000 70% of enrolments.
300,000 225,000 • Remaining 30% from
200,000 135,000 indirect channels
100,000 15,000 60,000 (branding, campaign,
farming community…)
0
YR1 YR2 YR3 YR4 YR5 YR6 YR7 YR8 YR9 YR10
Subscription Target to reach 750,000 users by Year 10
48

49. Role of SSA in Selling Subscriptions
+
SSAs are clearly differentiated from public sector extension workers:
• Promote FarmSaya ICT platform and support delivering info services
• Work in best interest of farmers to improve crop management
• Highly motivated through private company incentives and potential employee
shareholding options
• Well equipped with hardware and well supported with world-class knowledge
resources from IRRI etc.
Sales & Service Agents present a new model for serving the needs of farmers
49

50. Reaching Communities: Engaging Young Farmers
Future sustainability of rice production depends on engaging and attracting the
next generation of farmers
How to achieve this?
Use of ICT devices (web and mobile)
• To attract young people to get interested in IT and
bridge the digital – agriculture divide
• To build an online network for young farmers to share
tips and experiences (e.g. Facebook / Twitter)
• To support partner advertisement via local media
specifically targeting young generation
Deliver key messages through schools
• Introduce and generate interest around agriculture and farming by promoting
the benefits of rural lifestyles as a positive alternatives to urban poverty
• Generate enthusiasm by linking farming with national and cultural pride
• Nurture agriculture-major students as Student Ambassadors
• Fund student groups to conduct village education and registration service
50

51. Staged Approach to Attract Young Farmers
Promote FarmSaya in
schools, branding as
cool, desirable and
good lifestyle
Attract a new generation of
young farmers to be active
on FarmSaya, earn more and
be proud of their career
Create awareness of
FarmSaya, link to
existing social media,
technology & culture

52. Nationwide Campaign for Rice
• Build on the momentum from the Philippines’s 2013 Year of Rice
• Raise awareness on the importance of rice as a staple food for rural communities
and urban dwellers
• Mobilise the Filipino population around a nationwide campaign in support of
farming communities
IRRI campaign in support of
the National Year of Rice It takes a nation to grow rice!

53. Organisational Structure and Governance
• Shareholding concept
• Organisational structure
• Organisational Highlights
• Governance on Intellectual Property
53

54. FarmSaya Shareholding Concept
• Core partnerships are invited for
shareholding:
– IRRI
Potential Shareholders
– Farmers associations Private
– Private sector sector
– Civil sector Civil
– Government sector
• Equity opportunities will be offered to Farmers IRRI
farmers and FarmSaya employees
• Exact shareholding breakdown to be
determined by IRRI and partners during Government
future negotiations
Proposal for IRRI to invest and lead in new shareholding partnership
54

55. Organisational Structure
Board of Directors
Technical Board
CEO • IRRI
• Phil Rice
• DA
Commercial Services Operations Information Technology
Responsible for: Responsible for: Responsible for:
• Business & Product • Human Resources • Software development
Development • Finance • Information management
• Customer data analysis • Legal structure • Content development
• Sales & Marketing • IP & Patents
• PR & Comms • Corporate affairs
• SSA Training
55

56. Organisational Highlights
• Set-up of the company and development of the integrated ICT
platform to be ensured by IRRI staff during the start-up phase
• Recommended secondments from IRRI and/or other partners in
key functional roles to reduce overhead costs – also promotes
development of commercial awareness and skills among IRRI staff,
useful in future corporate partnerships
• Leverages on IRRI’s expertise and knowledge to develop the
integrated platform, to include Nutrient Manager and other
infomation services
• Equity opportunities to farmers associations and
employees (incl. SSAs)
• Management team will be given “sweat equity”
to ensure the long term interests of stakeholders
and the proper incentives for growth
• Functional units headed by a CEO, solely responsible
for P&L to ensure commercial targets are met
56

57. Intellectual Property: Governance Issues
• IRRI should decide which knowledge
should/should not be made available on the
FarmSaya platform
• All IRRI research and data, including the
Nutrient Manager, will continue to be hosted
and protected by IRRI
• All other information and data generated by
the platform, including customer
information, will be hosted by FarmSaya and
may be used for market analyses
FarmSaya provides IRRI a pilot opportunity to manage its Intellectual Property
57

58. Financial Projection
• Overview
• Financial Projection
• Revenue Breakdown
• Cost Breakdown
• Scenario Analysis
• Sensitivity Analysis
• Assumptions
58

59. Financial Projections - Overview
• FarmSaya requires a start-up investment of
USD 6M, according to the base case
calculations, with No Additional Cash Call
• According to calculations based on
assumptions, the company will break-even
during the 5th year and recover the total
capital investment in 6 years
• IRR over 6 years: 17%
• IRR over 10 years: 54%
FarmSaya projected to be a self-sustainable business starting in year 5
59

60. Financial Projection (Base Case)
5,000,000 1,000,000
4,000,000 800,000
3,000,000 600,000
2,000,000 400,000
1,000,000 200,000
(1,000 PHP) 0 0 (Persons)
1 2 3 4 5 6 7 8 9 10
(1,000,000) (200,000)
Revenue Net Profit Cost Acumulated Cash Flow No. of Perticipants (RHS)
Average Profit Margin of 8.7% over the first 10 years.
IRR over 6 years of 17% and over 10 years of 54%
60

61. Revenue Breakdown (Base case)
2,000,000 800
(Persons)
1,800,000 (1,000 PHP)
700
1,600,000
600
1,400,000
1,200,000 500
1,000,000 400
800,000 300
600,000
200
400,000
200,000 100
0 0
1 2 3 4 5 6 7 8 9 10
Service fee & commission from farming related sales of goods and services
Service fee & commission from non-farming related sales of goods and services
Fee from Premium Users
Data Sales
No. of Participants (RHS)
Service fees & commissions from goods and services provided through the
platform are primary revenues for FarmSaya
61

62. Cost Breakdown (Base case)
400,000
(1,00 PHP)
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
1 2 3 4 5 6 7 8 9 10
Labor Marketing IT Occupancy Admin.
Labour costs, especially for SSA’s, is primary costs for the business
62

63. Scenario Analysis
Customised Data Required
Scenario Usage Growth Break Even
(Revenue at Year 2) Capital
Aggressive growth
USD750k Year 3 USD 4.2M
Optimistic (+40%)
Base Moderate growth USD500k Year 5 USD 6M
Pessimistic Weak growth (-60%) USD250k Year 6 USD 9.5M
Base case shows break even in Year 5 with capital requirement of USD 6M
63

64. Sensitivity Analysis
2,000,000
(1,000 PHP)
1,500,000
1,000,000
500,000
0
-500,000
1 2 3 4 5 6 7
Accumulated Profit Accumulated Profit(Best) Accumulated Profit(Worst)
64

65. Key Assumptions
• 70% of farmers’ total revenue is spent on farming costs.
• 55% of total farming cost is labour cost and the remaining 45% is for agricultural
inputs
• 30% of total farmers approached will subscribe to the platform
• Once established as subscribers, 30% of farmers’ non-labour cost will occur
through the platform – thus providing commission-fee revenue
• FarmSaya will cease the expansion of its sales force after year 5
• Each SSA enrols average 2 farmers per day, overall the SSA’s are responsible for
70% of the total enrolment
• Remaining 30% of the enrolment comes from indirect channels
• General staff salary increases at 5% annually on top of inflation
• Compensation of SSA includes base salary of PHP 15,000/month, plus
suggested commission of PHP 100 per subscriber
• General staff turnover rate is 10% annually
65

66. Assumptions – Revenue and Costs
Key Revenue Streams
• Commission from sales of products and services through FarmSaya Platform
• Monetisation of market intelligence
• Future “Premium Subscription” opportunities once network is established
Key Costs
• Labor cost associated with Sales and Service Agent (SSA) is primary cost
• Marketing cost to reach additional subscribers
• IT development
• Additional operating costs
66

67. Risk Analysis
and Mitigation
67

68. Risk Assessment
High risk Medium risk Low risk
10
Demand not sufficient to match the supply 1
1
High
provided through the platform
Service providers bypass platform to avoid 3
5
2 paying commissions once establishing
communication with customers 8
Expenses for managing SSA sales force too high
IMPACT
3 4
Medium
to maintain strong cash flow
Competitive platforms similar to the Nutrient 2
4
Manager for Rice enter the marketplace
Failure to build up sufficiently large subscriber
5
network and failure to attract business partners 7
6 Higher than expected turn-over rate for SSAs
Low
6
Weaker incentive for SSAs once subscriber base
7
growth slows down
Natural disasters that affects business operations Low Medium High
8
including projected subscriber growth targets
LIKELIHOOD
68

69. Risk Mitigation
No Risk Functiona Likelihood Impact Risk Mitigation
l Area
1 Business H H Service diversification and
Demand not sufficient to match the
Model continuous design to attract more
supply provided through the platform
customers
2 Service providers bypass the platform Market M M Conduct non-compete contracts
after establishing customer relationship with service providers
3 Expenses for SSA’s too high to maintain Finance M H Need to create a secure system to
strong cash flow outsource
4 Competitors making a platform similar Market M M Leverage IRRI’s knowledge to
to the Nutrient Manager for Rice differentiate
5 Market M H Deploy more channels and
Fail to build up large subscriber group
partnerships to push sales
6 Higher than expected turn-over rate for HR L L Good employee training scheme
SSAs solid incentive plan; shareholding
7 Weaker incentive for SSAs once Finance L L Good employee training scheme
subscriber base growth slows down and solid incentive plan
8 Natural disasters that affects business Nature H H Build strong local-based
operation communities and service hubs
69

70. Recommendations
and Action Plan
• Recommendations
• Timeline
70

71. Recommendations for FarmSaya (1)
• An equity based model to be created for an integrated information platform
called FarmSaya to enable IRRI to deliver existing and future research outputs
and farming best practices to farming communities
• Develop comprehensive ICT platform with a suite of information features in
addition to Nutrient Manager to include:
– Local and regional weather information and impact on farming
– Relevant information across the value chain, from pre-production to post-
harvest resources
– Consider expansion to include information for other crops in addition to
rice, to capture greater number of rural subscribers
– Other information solutions can come online to meet the needs of various
organisations which come online at a later date
71

72. Recommendations for FarmSaya (2)
• IRRI owns the knowledge database. FarmSaya manages the platform,
distribution and operational processes to reach end users and business
partners
• IRRI should take a stake in the venture while leveraging partners assets – this
includes playing a leading role on the Board of Directors and contributing to
the management team, potentially through secondments or rotations. Details
of equity stake for IRRI to be negotiated
• Seek impact investors keen to support the development of Philippines
agriculture and or rice production in other countries where IRRI has a
presence
• Ensure strong government support, while being pragmatic about exact nature
of collaboration and potential role in the new venture. Government can take a
small stake to provide legitimacy to brand end mission
• Farmers and employees of FarmSaya to be made shareholders which will
promote loyalty and retention. Formulae to be developed
72

73. Recommendations for FarmSaya (3)
• Incentive scheme for SSA rural sales force which may include combination of
salary, subscription commissions and share options
• Ensure that FarmSaya creates a movement bigger than the rice farmer alone
– Subscriber outreach should be campaign driven with nation-building
approach
– Focus on ways of making farming desirable and attractive to young
people from rural communities
• Seek ways for the business model to be expanded beyond the Philippines
and provide ICT platform delivery and structure to be customised according
to other countries’ needs and local context
73

74. Recommendations for IRRI (1)
• Pursue commercialisation as a complement to
traditional fundraising for research - IRRI
recommended to seek private sector partners
interested in implementation of commercial
projects using IRRI scientific knowledge and
network
• Use Science & Research to influence public
policy outcomes and engage key private sector
partners for measureable local benefits –
ensuring that benefits from IRRI research are
realised in the Philippines
• Consider the creation of a Public Policy
department and a Business Unit and establish
priorities aligned with IRRI mission and values –
to be applied in Philippines as well as other
countries where IRRI has a presence
74

75. Recommendations for IRRI (2)
• Apply research and science to solving
post-harvest challenges and develop
creative solutions in order to return
more value to farmers and to create
greater economic incentives for the
farming sector
• Strike a balance between high-end
scientific research and the need to take
existing scientific knowledge in the
“field”
• Be more customer focused in practical
ways and address existing problems
with existing know-how
75

76. Implementation Timeline
Month 6-12 Month 12-18 Month 18-24
• Incorporate Board of • Report back to
Initial negotiations Directors Chairman/Board of
and ‘go-ahead’ • Nominate Chairman of Directors on Progress
from shareholders Board and management • Initiate next steps
secondments from IRRI
• Incorporate legal entity • Start Phase I operating • Preparation for Phase 2
• Raise funds & secure in the end of month 24
start-up investment
Establishment of • Memorandum
business entity association
• Resister corporation
• Set up business
infrastructure
• Recruit key • Prepare talent hiring • Launch staff hiring
management staff • Establish SSA training
Human Resources • Secure rental office and procedures
set up facilities
Pilot Scale up
76

77. Implementation Timeline
Month 6-12 Month 12-18 Month 18-24
• Negotiation with • Start contract sign-off
potential businesses
partners and clients
Business (initiate communications
• Launch brand
Development with core partners)
awareness campaigns
• (communication with
secondary partners)
• Launch re-developed • Validate data • Step 2: Ongoing R&D
Product integrated platform • Step 1: Quality Control • Evaluate development
development with additional of new products to rice
services farmers
• SSAs reach out to • Field visits all A category • Field visits all B&C
farming communities Farmers’ community category Farmers’
Sales & Marketing for extensive • Run nation-wide community
enrolment campaign campaign around rice
(ongoing)
77

78. Implementation Timeline
Month 6-12 Month 12-18 Month 18-24
• Set up finance • Accounting and • Set up audit and
infrastructure financial reporting control systems
Finance • Accounting and • Financing
financial reporting • Financial monitoring
• Secure financing
• Build/ buy/ lease • Run platform efficiently
IT Operations platform
• Identify major/ key • Build advocacy plan • Implement advocacy
Corporate Affairs stakeholders and key plan
opinion leaders
• Look at adjacencies • Build new business models along with business
Innovation development
• Set up framework and • Apply for IP/ patent • Develop
IP/ patents database relevant to platform commercialisation
IP protection plan for usage of IP/
patents
78

79. Appendices
79

80. Proposed Partner – Additional Info
• BanKO is the first mobile phone based in the Philippines
• Set up under the aegis of the Bank of Philippine Islands (the largest
Bank in the Philippines), Globe Telecom (Largest Mobile Company in
the Philippines) and Ayala Corporation
• The bank reaches its customers through partners and mobile
technology
• The Bank carefully evaluates its partnership model and offers
partnerships to institutions that possesses liquidity, open for long
hours and is available across the country.
• Phil Rice has better influence power within Philippines and IRRI can
provide strong technology support to Phil Rice
• Phil Rice already has “Knowledge bank” which is adopted for
Philippines
– Local languages (4 local+ 1Engligh)
– PalayCheck system through whole rice production process
– Can be connected via facebook which farmers like
• Phil Rice can provide free “text center” 0920-911-1398
• Phil Rice has various media channels “ magazine, website and
broadcast”
• Phil Rice can provide training programme to local farmers and
extension works
80

81. SSA projected numbers & costs
Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10
Enrolment 30,000 75,000 150,000 240,000 300,000 360,000 432,000 518,400 622,080 746,496
70% by SSA 21,000 52,500 105,000 168,000 210,000
(Organic growth CAGR 20%)
SSA effective 500 500 500 500 500
Number of SSA 42 105 210 336 420 420 420 420 420 420
Salary 180,000
Travel expense 40,000
Estimated cost breakdown of SSA per year:
Mobile device 12,000
Total per year (PHP) 232,000
81

82. Potential Marketing Channels (1)
Category Channel/ Execution How it works?
Direct SSAs/ Info Kiosk (Year1) Via incentivised SSAs (visits, walk-in) and info kiosks of our own, build
Channel our own points of contact across the targeted region
Private BanKO (Year1) Micro financing provider with its distribution channels readily available
Sector (e.g. NMR posters/flyers distributed via BanKO’s branch offices)
Research PhiRice (Year1) Disseminate NMR info via PhilRice FFS trainers or seedling distribution
Institute channel (e.g. circulate NMR flyers along with seedling instructions)
Private Jolibee (Year4) Utilise Jolibee’s restaurants as points of contact, disseminate NMR’s
Sector posters and flyers at Jolibee restaurants
Farmers Seed-Grower/ Farmer Co-op Provide seed grower co-ops and farmers’ co-ops with NMR flyers and
Organisation (Year 3) farming guidance; with help of co-ops, select “Pilot Farmer” and build
up the success stories
Education Ag College Students (Year 3) Designate agcri-major students as Student Ambassadors; Fund Student
Institute Volunteer Groups for NMR Campaign/Education Initiatives; Hire
Student Ambassadors to conduct village-wide education and
registration service (with devices) on weekends
Farmers Org Post-Harvest Service Provider Provide Post-Harvest best practices training/info sharing, and attracts
/ Private Sec. (rice mill/storage) (Year 3) farmers who use targeted post-harvest services
82

83. Potential Marketing Channels (2)
Category Channel How it works?
Public Sector/ Gov ATI/Extension Workers (Year1) Train the “Farmer scientists” nominated by the
Org extension workers
Religious Village Churches (Year1) Distribute flyers and conduct periodical education
Community sessions for community farmers
Private Sector New Agri Inputs Investing Partner Usage of their distribution channels
Network (Pioneer, Syngenta, Year 3)
Private Sector Beverage Company (e.g. San Miguel) Access rural communities via established sales
(Year1) channels and national sales forces; bring marketing
expertise and $ (e.g. fund the social events of farmers,
in which NMR’s info will be disseminated)
Private Sector Telecom (e.g. Globe, Smart, Sun) Mass info sharing/advertising (via text msg); hosting
(Year1) the toll-free help hot line for farmers
Media Radio/ local TV channel (Year 2) Advertisement, brand image building
NGO Mercy Corps / Gawad Kalinga (Year1) Information referral
Retail Chain Seven Eleven/Supermarket (Year4) Putting up posters and distribute flyers in stores
Social Network Facebook / Twitter (Year 2) Building young farmers’ online community
83

84. Estimated Impact of Nutrient Manager and FarmSaya
Assumptions
Low rice yields and
Subscription base: inferior quality of rice PROBLEM
10 % of 3 million farmers
= 300,000 farmers
30% adherence to 100,000 farmers
recommendations follow recommendations SOLUTION
Increase yield of palay by
10 sacks/farmer * 2 season 1 ton palay annual
= 20 sacks yield increase
x 50 kg / sacks = 1000 kg
x 15 PHP/kg = 15000 PHP 15,000 PHP annual
(Source: Farmer Interview) income increase IMPACT
Small and Medium Miller: 100,000 farmers x 1 ton x 60% =
Conversion rate of palay to 60,000 tons of milled rice
milled rice is 60% increase in production
84

85. Thank you!
85