Over the last three months, IDEO.org designers have worked hand-in-hand with CGAP and Amret MFI in Cambodia to design digital financial services that more effectively meet the needs and desires of smallholder families. Throughout our research, we have made an effort to better understand the lives and aspirations of these households, in the hope of distilling important insights into how digital channels might provide them with access to much needed financial services. What we learned from conversations with over 100 Cambodian smallholder households – families whose livelihoods include both agricultural and non-agricultural income and expenses – will ultimately inspire and inform our final product recommendations.
While we learned much from Cambodia’s smallholder families, eight insights in particular have driven our thinking as we move toward recommending a final product design. Many of these observations may not be new, but they are crucial to understanding and responding to these families’ demand for digital financial products and services.
1. Smallholders see opportunities for growth outside of farming, both for themselves and especially for their children
Farming is a baseline livelihood for many rural people - and is often only one of several sources of income. Beyond their various agricultural activities, members of smallholder household are also shop owners, cooks, or construction workers; and many identify more strongly with their off-farm jobs. We also learned that farmers often hope to provide a future for their children outside of farming, with some parents even paying extra to send their children to private schools and foreign-language classes.
“[We send our two children to a tutor] because…if we can speak foreign language, it’s easy to look for a good job. I want them to be well-educated….We don’t want our children to be farmers…because being a farmer is so tiring," said wholesalers and farmers in Kampong Thom.
2. Smallholders don’t have access to vital agricultural training and information
Most farmers rely on traditional practices, trial and error, and learning from local sources like village elders and input suppliers. Some farmers received training from NGOs, but they have found some information difficult to understand and later hard to apply in practice. For a few farmers, outside assistance helped them to realize better returns. Typically the most helpful assistance came from organizations that provided ongoing in-field support.
“I learned how to farm from my ancestors,” said one farmer in Prey Veng. Another farmer from Kampong Thom explained that, “The NGOs come every year before rice planting. They tell me to use 100kg of seed per hectare but I get better yields by using 200kg…I just know what works for me.”
3. Smallholders struggle to get what they feel is a fair price for their crops
Though international markets offer higher prices for rice, many smallholders and traders have limited access and face competition in selling to those markets. For commonly-grown crops such as rice, processing offers the greatest potential to increase profitability. But these value added activities largely take place outside of the country due to lack of appropriate infrastructure in Cambodia.
A married couple who farm 1.5 hectares of rice said: “There are traders who come to the village to buy rice from us. If anyone offers a suitable price, we will sell…Sometimes the traders bid…800 R, 900 R, but never reaches 1,000 R. We still don’t know how much the fair price is.”
4. Smallholders work cooperatively in order to help their neighbors and smooth irregular incomes
Smallholders frequently cooperate as a community, sharing their labor at harvest, for example. They also share their finances through participation in Village Savings and Loan Associations (VSLAs) and solidarity groups. In this way, money circulates within family and community networks in times of need as community members lend one another cash and hire friends and family members to work their fields, run errands, and staff businesses.
A member of a village solidarity group in Kampong Chang explained: “We hire the labor force for harvesting and it costs five dollars per day for one person…we hire each other. When my crops are ready to be harvested, I hire her to help harvest my crops. But when her crops are ready, she also hires me to help her.”
5. Cows, pigs, and gold jewelry are the tangible, informal ways that smallholders “save” money
Farmers use gold and livestock to ensure that they have cash on hand when they need it; providing much needed income at key points throughout the year. These informal asset-based methods have their limitations; For example, when a loan payment is due or an emergency arises, they may need to settle for a lower price in order to liquidate their assets. But farmers appreciate the tangibility of these stores of value. Some assets, such as a cow, can effectively serve as a retirement fund, as they can produce one calf a year and thus generate ongoing revenue.
A farmer explained her retirement saving strategy: “I’m saving for retirement. I’m going to sell my rice, buy a cow, and sell the calves. I’m also saving to buy gold.”
6. Wedding gifts are an expensive, and frequent, social obligation
Smallholders are invited to over 30 weddings a year and they are expected to give cash gifts. Peak wedding season occurs during the dry season, January–April, and this amounts to a drain on household expenses that farmers simply can’t control. In fact, the number of gifts can sometimes be larger than they can manage financially.
When parents pay for their own child’s wedding, it‘s an even more significant expense (about $3,000–10,000), forcing some to take out loans to provide the desired wedding experience. Given the importance of weddings in Khmer culture, many smallholder families even keep detailed records of wedding gifts, by person and amount, both for the gifts they give and the gifts they receive.
“We went to most of the  weddings because they are all our customers and suppliers. We missed only a few,” said a shop owner and rice farmer.
7. Mobile phones are used for a single purpose, often just to receive voice calls
Almost all smallholder families own phones, but their use is often limited to sending and receiving voice calls. Mobile literacy is low, and most smallholders own basic or feature phones, which cannot display Khmer (Cambodia’s local language) text. In rural communities where literacy rates are already low, this inability to interact with phone interfaces in the local language makes even SMS messaging difficult. As a result, many smallholders rely on younger family members to help them use mobile devices for more advanced functions like apps, photos, and mobile money.
“I don’t know how to dial a phone number, so my kids call me,” said one mother.
8. Cash circulates constantly between the farm and the city
In many families, children go to work in the city or abroad and send money back home. These remittances often make up a larger portion of household income than agriculture itself. If possible, parents will also send their children funds in times of need, or will care for their grandchildren in exchange.
“My children find it difficult to send money home, but they forget that we supported them when they first moved to the city,” explained a parent.
As IDEO.org, CGAP, and Amret look to identify opportunity areas for new smallholder-specific digital financial products and services, these insights help to keep the needs and desires of Cambodian smallholders at the center of the design process. These observations form the first step of the human-centered design process, in which conversations with smallholders are inspiring innovative new approaches to using digital innovation as means to improve the lives of smallholder farmers in Cambodia and beyond.
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