Platform for African – European Partnership in Agricultural Research for Development

Monday, March 13, 2023

Is digitalisation beneficial for small-scale producers?

Paquette, D., Ontieri, E., Day, B., Schmidhuber, J. & Tripoli, M. 2023. Agricultural technology ecosystems in East Africa – Taking stock in Kenya, Rwanda and Uganda. Rome. # 90 p.

Paquette, D., Ontieri, E., Day, B., Schmidhuber, J. & Tripoli, M. 2023. Agricultural technology ecosystems in East Africa: Taking stock in Kenya, Rwanda and Uganda – Summary. Rome, FAO. # 40 p.

FAO launched an initiative to assess the existing impediments for scaling innovation and technology in food and agriculture (AgTech) and to identify options to improve the enabling environment for AgTech-focused businesses. 

The initiative offers a tool for decision makers to promote the uptake of AgTech, investment and entrepreneurship in Africa, ultimately to advance agricultural productivity and food security. Together with the Yield Lab Institute, FAO’s Markets and Trade Division (EST) developed a methodology for the assessment and applied it in three East African countries: Kenya, Rwanda, and Uganda. 
  1. Digital solutions are expensive: We researched the ability of other value players to pay on behalf of farmers e.g. seed providers baking in weather index insurance for customers
  2. Digital Infrastructure: Cant afford smartphones, cant afford data, cant afford electricity to charge them limits the technology you can deploy to feature phones or dumb phones. Rwandan government and startups like AgUnity are buying smartphones for farmers.
  3. Digital literacy: Depends on literacy, school years, exposure etc
  4. Demographical divide: Decision makers/farm owners/more risk averse are older, the more technology literate/less rick averse are younger
  5. Rural/urban divide: Even the internet connection standards available in rural areas limit connectivity to offline data collection that is stored awaiting a connection to process/upload e.g. HelloTractor. Having to switch across multiple standards makes the product expensive
"Here is the paper we just published on our prior study of the AgTech ecosystem in East Africa covering small holder farmers and their problems. I've authored the same white paper in the past for Brazil and I am currently authoring one for West Africa." Eric Ontieri. Research Consultant at FAO & The Yield Lab Institute (erictwabe@gmail.com + eric@theyieldlab.com)
Related:

Digital Agri Hub e-conversations

Digital innovations play a crucial enabling role in transforming agriculture and food systems in low-and middle-income countries. With the rise in use of digital agriculture tools, it is imperative to also be more aware of the limitations of digital solutions and of the entire D4Ag “ecosystem”.
  • The Digital Agri Hub recognised the importance to spark conversations on certain “stereo-types”, backed by experiences shared by the D4Ag community. Therefore, starting 27 February 2023, Digital Agri Hub launches and curates a conversation around some potential clichés in this domain. The Digital Agri Hub expect exchanges to lead to a more objective, prudent and realistic attitude on how to approach and present digitalisation for small-scale producers in low- and middle-income countries. 
  • It can also open new avenues for solving issues that are at the basis of these possible stereotypes.
  • The discussion will be maintained on the DGROUPS platform: https://dgroups.io/g/d4ag.
The 5 e-conversations are about: 
  1. The co-design of digital solutions by small-scale producers 27/02/2023-06/03/2023
  2. Is digitalisation beneficial for small-scale producers?  
  3. Smart farming 
  4. Gender and D4Ag projects 
  5. Independent evidence of D4Ag impact

1st e-conversation: the co-design of digital solutions by small-scale producers

Human-centred design  
  • Understanding the challenges, bottlenecks and pain points of the potential users is a fundamental requirement. This is best done by a business analyst (or equivalent). The challenge (read failure) happens when the analyst approaches the problem with a programmer/ app developer mentality. 
  • Non-young Sma;; Scale Producers SSPs generally struggle with digital technologies. There is the need for segmenting SSPs since some of them have no technical knowledge of digital innovations to better contribute at the start of design but can provide feedback as these services are deployed with them.  
Shared resources  

2nd conversation: Is digitalisation beneficial for small-scale producers? 

Small-scale farmers are defined as farmers operating on two hectares of land or less. Similar limits in the size of holdings applies to producers in the livestock, agro-forestry, aquaculture sectors. There is a mantra that digitalisation is a pathway out of poverty and food-insecurity for them.
 
Is this true? Or does digitalisation only work for large-scale producers? Who are the small-scale producers who ultimately benefit from digitalisation, and what are the eventual preconditions? Are there examples of viable business models which can support such solutions apart from public/donor funded ones?

Shared resources  
Extract of some contributions

Director at AGInnovate. AGInnovate. Kenya

There is a lot of literature and general positive feedback that highlight the potential positive impacts of digitization in smallholder agriculture. 

However, the question of whether investment in digitization actually leads to profits for farmers is complex and depends on various factors. Firstly, it is important to note that digitization alone is not a panacea for smallholder agriculture. There are several other factors that need to be in place for digitization to have a positive impact on farmers' profits, such as access to finance, markets, inputs, and extension services. Digitization can help improve efficiency, reduce transaction costs, and enhance access to information, but it cannot solve these underlying problems on its own. (...) While digitization has the potential to improve smallholder agriculture, investment in this area should be approached with caution and should be part of a comprehensive strategy that takes into account the broader needs of the sector. 


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From: Arsene Birindwa Advisor AdvisorDigital Agri Hub

Although large-scale farmers may have access to significant resources and economies of scale, digitalization has opened up new opportunities for small-scale producers to expand their reach and improve their production processes. By leveraging digital tools and platforms, small-scale farmers can now access new markets, enhance production efficiency and quality, and reduce transaction costs. However, the impact of digitalization on small-scale farmers is not always straightforward. Digital technologies can be expensive, and not all farmers can access the necessary infrastructure, such as reliable internet connections and smartphones. Furthermore, the content provided on digital platforms may not always be appropriate or relevant to the needs of small-scale farmers. For small-scale producers to harness the potential benefits of digitalization, there are several essential preconditions that must be met. These include access to affordable digital technologies and infrastructure, the availability of relevant and accessible content, and supportive policy and regulatory frameworks. Without these preconditions, small-scale producers may face significant barriers to effectively using digital tools and platforms, limiting their ability to compete in the global market. 

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From: Dr. Gilbert arap Bor, Eldairy Farm - Kapseret, Kenya & Lecturer, Marketing and Management, Catholic University of Eastern Africa, Eldoret, Kenya

Small-scale producers around the world are already using digitalized agriculture in a number of ways:
  1. In Kenya, the current e-voucher system for the distribution of subsidized fertilizer is a very clear form of digitalization of agriculture. Farmers receive an sms (e-message) with invites them to report to their nearest National Cereals and Produce Board (NCPB) or the Kenya National Trading Corporation (KNTC) to get their subsidized fertilizer. All registered Kenyan farmers - Smallholders, medium scale or large - have and continue to benefit from this technology which is ongoing as I write this.
  2. At least every Kenyan farmer is already digitalized in that they have mobile phones and they participate in digital finance. They make and receive payments for whatever agricultural activity using Mpesa or Airtel Money.
  3. Many agricultural co-operatives are currently sending their members loan funds and produce income using Mobile money. Similarly, the members are repaying their loans, members fees, and others through the same system.
  4. In as far as actual technical farm production, farmers are able to use their mobile phones to ask for and receive technical advice. If a farmer's crops have been attacked by any insects or any other form of disease, the farmer can take a photo of the leaves of the plant and sent it to an agrovet or an agricultural officer and will receive almost instant feedback on what the problem is and what to do about it. This area is not completely exploited and needs further intervention.
  5. Farmers pay the employees using mobile money.
  6. Farmers receive weather forecasts using their mobile phones. For example, the Kenya Agriculture & Livestock Research Organization (KALRO) has developed an ap - Kenya Agricultural Observatory Platform (KAOP) which gives farmers throughout the country accurate weather forecasts.

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From: Reaction of  Ednah Karamagi (Program Director at AVAP Farmers Association, Uganda) to the contribution (shared resource) of Eric Ontieri. Research Consultant at FAO & The Yield Lab Institute.
  1. Digital solutions are expensive: Depends on which you are looking at. The word "expensive" is relative. To a farmer, it depends on the value they place in the tabled solution. If they see value, they will save from their produce and engage. It is important to note too that among the farmers, their income levels vary too. What I have just said may not apply to the poorest of the poor. When poverty levels trickle in, "priorities" takes precedence.
  2. Digital Infrastructure: Cant afford smartphones, cant afford data, cant afford electricity to
    charge them limits the technology you can deploy to feature phones or dumb phones.     You will be surprised at how many famers today own smart phones ... and the number is increasing. Main source is from their children and grand children. For the data, i cant speak ably for other countries but for the case of Uganda, with all these telecom wars, each telecom company presents varing packages with an aim to entice the users. This gives farmers a wider plate to choose the bundle they can afford. Again, like said before, "value, value, value". This is critical to the smaller scale farmer
  3. Digital literacy: Depends on literacy, school years, exposure etc. Many NGOs though, in Uganda, train the farmers on practical use of the phone; that the phone can be used for more than phone calls and SMS. Many know ... the percentage is what i cannot talk about because i dont know
  4. Demographical divide: Decision makers/farm owners/more risk averse are older, the more technology literate/less rick averse are younger. Not for the case of Uganda. Many farm owner/managers are youth. These youth go abroad and return with loads of money. They buy large chunks of land and many engage in specialised farming, not mixed farming; e.g chicken alone, rabbitry alone, etc. Maybe also it could be because the government is always talking about benefits of engaging in agriculture, giving loads of opportunities here and there.
  5. Rural/urban divide: Even the internet connection standards available in rural areas limit connectivity to offline data collection that is stored awaiting a connection to process/upload e.g. HelloTractor. Having to switch across multiple standards makes the product expensive. Not the case of Uganda. We have 4G basically everywhere. We still have dark spots, yes, but they are not as many so as to create a noticeable impact.
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From: Kelvin Odoobo, Shambapro Limited, Kigali, Rwanda

Lots of young people are picking interest and actually engaging in agriculture as a business – agribusiness, but they are just below the radar. From my almost two decades experience in the East and Southern Africa region there seems to be a big divide between the kind of farmers that are usually target beneficiaries of public sector (Government and NGOs) and those that actually respond to private sector players. In some areas there is overlap between those two groups but usually the first group are usually those that grow staples, and are a target because their specific value chains are those that are considered crucial for national or regional food security.

Naturally, the value chains are less intensive, have lower price margins and are subject to price
fluctuations resulting from the ‘political’ nature of these crops i.e., they are easily affected global shocks, national produce inflows and outflows etc. These group finds it difficult to digitalize because most of the factors affecting their ability to produce bumper yields and get profits are subject to external factors e.g. rains, fertilizer availability (subsidies), public funded extension knowledge etc.

Interestingly, the young agripreneurs are going into more business-oriented value chains that are usually more demand-driven, less subsidized, where good agriculture practices are learned more from peers, internet and less from traditional extension sources.

These young farmers are in it mainly for the money, they are hungry to learn and use digital tools because that is their unique advantage.

They do greenhouses, passion fruits, spices (horticulture), poultry, piggery – the kind of things that find a natural growing market without specific value chain support in urban areas of Africa. For many of them, this is a side hustle, something they do away from their main employment or source of income. This group is slowly taking over their space in agribusiness in the region between commercial farming and subsistence farming but are usually below the radar of the public sector because they are classified economically more for their main job or education. They do agribusiness quietly, over the weekend and do not want their employers to know that they are as bold as they are or sometimes their families because of the negative age-old perception towards agriculture.

They don’t have a lot of money. They use their savings from their main hustles to invest in farming. They are more likely to adopt technology that makes it easier to run their farm businesses as pioneers and sometimes they lose because they are the guinea pigs, but they are much more resilient and risk more because they are in it for the money.

I have met such agripreneurs in Kenya, Uganda, Tanzania, Malawi, Zambia, South Africa etc. Most
of them have parents who belong to the previous category. They throng Facebook farming groups and twitter spaces to learn more from peers every evening between 5pm and 9pm on weekdays. These are really the future of agribusiness in Africa. But they are not targeted usually by the public sector because that sector puts too much emphasis on food security and the famers at the lower end of the pyramid (for good reasons) yet a good chunk of the target beneficiaries really would opt to do other income generating activities if they had a choice or obtain more funding.

The young people do not get most of this support because they are not well targeted [but] because they have smart phones, do tik tok, watch their news on social media,
don’t have any issue with data bundles and always want to upgrade to the latest internet connectivity channels because internet s not a cost to them but a key investment that connects them and equalizes them to other global citizens without leaving their homes etc., so they do not look like the kind of ‘farmers’ who are waiting for government subsidies for farm inputs or for a government official to find market for their produce for them etc.

They already use digital tools for many other parts of their life, and are not complaining about 4G network penetration because they know the hacks around this. They live in urban or peri-urban areas but they adventure out into deep rural areas to find cheap land with good future prospects often. They belong to investment clubs with their peers and are hungry for investment opportunities including agribusiness.

These are the kinds of farmers that I would appeal those who are in the public sector to dedicate a small portion of their attention to target specifically for financial and non-financial support in a business-wise way, not for grants or donations. It could yield some surprising results and help us in that huge problem of trying to lower the average age of farmers in Africa.

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From: Maureen Agena ICT4D/Ag Consultant, Uganda

Based on my experience working with small holder farmers especially in eastern Africa, I must add that although digitization has a big potential to improve small holder agriculture, there are existing bottlenecks that must first be addressed.
  • Access (Network infrastructure, language), extension services, markets for the products, inputs like seeds/fertilizers and so many more. The underlying bottlenecks inhibit growth and progress of small holder farmers. If those are addressed, then digitizing the processes becomes an issue of making them seamless and convenient for farmers. 
  • Ownership is what will guarantee the effectiveness of investing in digitization. There must be political will, which then informs policy and investment. The digital solutions must be demand driven by the farmers and they must solve a broad range of challenges and add value. That's all they care about.
  • Small holder farmers should also be willing to spend on functional digital solutions, only then can you guarantee sustainability and uptake. This way, there is a reduction in duplication. 
  • Funding digitization on its own is not enough, farmers must undergo training on record keeping, value addition and so much more. 
  • But generally work within existing Government frameworks to complement existing and planned interventions and to avoid working in silos.

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From: Md Shahid Uddin Akbar CEO Bangladesh Institute of ICT in Development (BIID)
Based on progress of e-Agriculture of Digital Agriculture of last 2 decades, I strongly vote for more on establishing basic services [like infrastructural facilities, availability & access to extension / business development services, basic ICT services (Phone, Internet)
access to finance and marketing] for small scale producers / farmers instead of high sounding AI, IoT or Blockchain. 

Let’s make the market eco-system more efficient and competitive for the small scale producers / farmers rather than creating market for the high-tech solution providers & experts.

BIID AGRICULTURE INNOVATION LAB (B-LAB)
  • The B-Lab idea is based on the proposition that it is sort of an umbrella organization with a focus
    on young people in the rural areas who want to become real entrepreneurs, especially in agriculture sector.
  • Service of B-Lab will be guaranteed from a dedicated professional team at back office in Dhaka along with 24/7 online service availability and BIID acts as a leading but also a facilitating organization. 
  • Youth segments age group within 18-39 are being targeted with special focus on students & women communities. 
  • BIID as mandated for ICT4D (Information and Communication Technology for Development), it fosters usage of ICT in all sphere of B-Lab activities and service delivery.

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From: Jacob van Etten, Digital Inclusion, Alliance of Bioversity International and CIAT (CGIAR)

I agree that SSPs may not always benefit and also agree with those who say that digital transformation is an important part of agricultural development now and in the future.

SSPs will not always benefit: access to digital services is generally limited for SSPs by low digital literacy, non-inclusive design of solutions, lack of access to devices, infrastructure, etc. However, we should not only look at individual SSPs' access to digital services, but also to how digital services can play a role in service delivery in general. Digital services do not always reach farmers directly, but help to improve the efficiency of information exchange, data analysis, as done by service providers. Perhaps we should  not only be looking at the end of the pipeline and analyze how digital transformation is affecting all players in the agricultural and food sector.

If we analyze the overall 'digital ecosystem' (different digital services and how they interact), we may discover that the limitations are not at the endpoint, but elsewhere.

A worrying trend is that digital business models tend toward vertical integration. This means, for example, that input suppliers created digital services that link with extension, with aggregators, etc. This seems to be the most viable business model to 'monetize' investment in digital services. Farmers are not always ready to pay for information on its own, so bundling services makes sense. They will pay for it as part of the fertilizer or seed. An important reason is that consolidation works from a digital perspective, as organizations or individual farmers are less likely to deal with one app for each task. Also, farmers will buy more inputs if they also have a market to sell, so vertical integration makes sense from that perspective as well.

However, this could also lead to a few players consolidating the market and less market power for farmers and their organizations. In the end, SSPs will indeed not benefit, but not because they are missing out, but because they are more effectively exploited by large players.

This does not mean that agricultural transformation needs to be stopped. It means that we need a critical look at the digital ecosystem to avoid this situation and invest in different things, for example:
  1. investments in integration + standards development so that new players can easily come into the system;
  2. governance rules for digital business that limit the opportunities for strong monopolies to emerge, rules that oblige players to make their solutions as inclusive as possible;
  3. public digital infrastructures -- to create services where private players won't go.
This is a complex issue, as we still don't fully understand what is going on. It will be very important to map digital ecosystems and how they evolve to make this issue more visible. My hope is that the Digital Agri Hub can help us to better understand this!

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From: Sander Janssen Team leader Earth Informatics at Wageningen Environmental Research
Reading through your discussions, I had three thoughts on how digitalization can lead to impact:
  1. Access to information (market prices, best practices, ideas, etc) is crucial. This leads to farmers doing things differently, and being able to strengthen their agency in their activities. With farmers doing things differently (new crop, new way of cultivation, etc), the immediate benefit is not always clear, as it is not linear. It is often not that ‘I change this, and then I get that’ (e.g. I put more fertilizer, I get more yield). However, over time, a different ways of doing things and being connected helps to build resilience, to innovate from the ground up, and gradually change the farming practices. But we need more nuanced thinking about benefits than just expecting immediate benefits. Here the point of transformation comes in, how can digital help us all to achieve that?
  2. Market power of small scale producers is problematic, as there are always many small scale producers and few buyers. Digitalization helps here to give producers insight in prices of products and inputs, and thus strengthens the negotiation position and sketching out what is possible and what not. However, it is still important to realise that this is a structural set up, and issue, which requires digital to be combined with organizations like cooperatives and farmer organizations, in order to organize more market power for small holders
  3. There are still many structural problems for digital to operate smoothly, e.g. lack of connectivity, digital literacy, relative complicated solutions, standardization and portability of digital solutions themselves. This means that it is not always easy to operate, but also puts some emphasis on two other points: a. the importance of ‘simple’ solutions that are really focused on improving the access to information in rigorous way; b. importance of co-design or user centred design (our previous topic in this e-conversation) to ensure that solutions are build directly into the context of small scale producers, to find out what works there (so no technology push, but user pull).
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From: Peter Ballantyne, Consultant, Communications and Knowledge Management

I think we need to unpack your question a bit more: "How true is the mantra that small-scale producers benefit from digitalisation?"

Asking - can SSPs benefit? and do SSPs benefit? The answer to both is probably 'yes' or 'yes, if' some of the conditions suggested by many people here are met. Do all SSPs benefit? There are some big questions around power and unintended impacts where benefits may be more easily grasped by the people who already have assets, and certain left behind or vulnerable groups may just get further left behind. The challenge I suppose is for all SSPs to get some benefits.

In the conversation here, we have tended to move quite quickly to equate 'benefitting' with 'using' and I think we should more clearly differentiate between what an individual SSP can do, and benefit from, herself with a phone, for example, and the benefits an SSP can get from a more efficient and targeted digital extension system, digitally-enabled farmer coop, digitally-informed local government, etc.. Smallholders can surely also benefit from digital innovation elsewhere in the value chain, even if they are digitally unconnected themselves?
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From: Sadie Shelton, University of Vermont, USA, Alliance of Bioversity International & CIAT

The Agroecological TRANSITIONS Program's Inclusive Digital Tools project (ATDT) is exploring how digital tools can be more inclusive of all smallholders, especially farmers at the greatest risk of exclusion like women and those with limited digital or linguistic literacy.

We found that smallholders don't always need to be the end user of a tool to benefit from it's use (e.g., a digital application designed for agricultural extension agents to communicate with more efficiently with a greater number of farmers, or for monitoring progress toward farmer's goals).

Here are some CGIAR outputs focusing on digital tool use by SSPs from ATDT: SEE REPORT AND BRIEFS ABOVE.

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There is a larger context of digitization. Where is your data being stored and to whom is the benefit going?

Even in the realm of app design, the dominant paradigm is easily seen at work. The first thing an app developer does is figure out the database your information will be stored in. Long ago, our sovereignty was removed, and we became an ID number in the database of everyone’s services. We’ve been duplicated and rehashed over and over, so now, when a marketer wants to know something (anything) about us, the corporations that sit in the background collecting and assembling all of our ‘stolen’ datapoints, then share and sell these details to one another. It’s happening at blistering speed to determine what ads and other content you will ever see. It has been the goal of my life’s work to help the “other 5 billion” avoid this fate. You are worth more as a living breathing human, than to become a recipient of Fecebook’s “free” internet service.

So, to answer your questions and where they lead to… yes, everyone should embrace the digital tools that help productivity, sustainability, and mutual support, BUT those tools must be made from the ground up to protect individual sovereignty. This becomes especially important when we look at disaster and conflict resiliency. Think about it, if any population required a corporate spoon to eat with, then at the first glitch in the schedule many would go hungry. Similarly, if anyone depends on the services of an entity out of their control, then they are at risk, and any disruption causes the system to collapse. Even if it is temporary, humans cannot rely on a centralized for-profit ecosystem to protect their individual wellbeing.

The solution, I believe, is to create an infrastructure that treats every single individual as a sovereign independent entity. Everything they do is contained on a blockchain as a verifiable ‘receipt’ of one’s actions. Of course some information is private between you and whomever you interact with, but you ought to be incomplete control of what is made public. The benefit of having any public metadata is that you become relevant for goods and services others are searching for.

In such a system, all of your data as a farmer belongs to you, and anyone that wants it must come to you for it. That way, you get paid directly by the marketers instead of them paying a third party to collect details about you and share them with all the other data aggregators.

When you are in control of your data, you are free to share it with other farmers near you, or even stream out a portion, like rainfall and sunshine. That way, the humans in an area become the weather service, alerting neighbors to conditions before affecting their crops.

The benefits of such a system in disaster are mainly that interaction and resource sharing can occur immediately, that community can be rebuilt immediately with just the members present, and when connectivity is restored all the interactions get reconciled and the outside world has a very clear picture of what is needed and where.

However, instead of sending well fed, well educated surveyor-experts, the agencies and governance will be responding to direct requests from individuals and the communities they gather into for sharing needs and resources. Huge cost and efficiency gains happen here along with the more important element of self-directed recovery, which mitigates trauma and improves resiliency. Self-efficacy in general promotes healthy society, but none of the Big Aid orgs or the UN are geared to allow it. Yet they speak about it daily.

To really offer sovereignty means giving up control of the data ownership and management. I believe firmly that we are finally at a place where the value of data to organizations and governance has outstripped the benefit of controlling its gathering and storage. I believe the Western paradigm does not require the status quo as much as it requires better data quality. For the very best data quality and freshness, you must interact directly with the individual citizen. Since they ALL have a cell phone, or can get to one within a short walk, there is no longer any excuse for sending out ‘survey teams’ or for ‘experts’ telling you how to live.

The secret has always been about the data being communicated, allowing the controlling elements to make decisions for you. That time has passed.

So yes, embrace what the technology actually provides and insist on sovereign designs, not the dreams being sold to you by organizations that actively or passively implement the current extractive paradigm, either knowingly or through their ignorance.
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