Agritech startups aim to lift Nigerian smallholder farmers out of poverty

KADUNA, Nigeria — As the sun appeared on the horizon in the village of Jere in northwestern Nigeria’s Kaduna state, Moses Magaji hunched over his hoe, weeding out grass from the rice plant.

“I love farming more than any other thing, but farming has also become a lot harder than it was in the late ’60s and early ’70s,” Magaji said, without looking up. Behind him, an electrically-powered, self-propelled Reinke center pivot irrigation system moved noisily back and forth across a 20-hectare paddy field.

“In those days farmers had a lot of money; we sold our crops after harvest and it was enough for us,” said the 54-year-old smallholder farmer.

In the decade after independence from Britain in 1960, agriculture was the mainstay of the local economy. Until the discovery of crude oil in 1956, farmers grew sufficient food to meet local demand but also could export a surplus of cash crops including groundnuts, palm oil, and cotton and the agriculture sector accounted for more than 60 percent of gross domestic product.

Barriers to progress

As crude oil began to dominate Nigeria’s foreign exchange earnings, agricultural productivity shrank due to neglect and underinvestment. Soon, local production struggled to meet demand amid a population boom. The corollary is that Africa’s largest country’s annual food import bill grew to about $20 billion every year, according to Nigeria’s agriculture minister Audu Ogbeh.

Today, more than 80 percent of Nigeria’s farmers are smallholder farmers and they are the main producers of over 90 percent of domestic output. A World Bank 2016 report found that “half of working Nigerians are in smallholder farming” but this group accounts for the “poorest 40 percent of the population compared to only 17 percent of wage workers.”

Poverty amongst small-scale farmers is due to myriad of problems including low use of mechanization, poor agricultural extension systems, poor road networks, inadequate market information, and lack of access to credit and quality inputs such as fertilizer and seed. In recent times, climate change — which is marked by irregular rainfall patterns and rising temperatures — has made things worse.

A digital agriculture revolution

To address the shortfalls, a number of agritech startups have appeared in Nigeria of late, hoping to use a range of tools to improve the livelihood of smallholder farmers.

These firms, including FarmCrowdy, ThriveAgric, and Verdant AgricTech, believe digital agriculture is the route out of poverty for farmers but also the key to ending food insecurity.

Nigeria’s first digital agricultural crowdfunding platform, FarmCrowdy, opened shop in September 2016 with seed funding from two institutional investors in Nigeria’s commercial hub of Lagos, and the central German city of Frankfurt.

Started by e-commerce expert Onyeka Akumah and four other Nigerians, Farmcrowdy connects smallholder farmers with investors. Nigerian “farm sponsors,” as the investors are called, select the farms they want to invest in on the firm’s website shop or on its mobile app. Farmcrowdy then uses the funds to hire farmers, lease land, and provide inputs such as fertilizer, seed, and technical support from planting to harvesting.

Farms on the website include rice, maize, poultry, cassava, and soya beans. The farm cycle can run from three to 10 months, depending on the type of farm, with return on investment hovering around 6 to 25 percent. Investors can put in anything from $300 to $1,000, or even more in some cases.

“What we have done successfully is introduce Nigerians to how they can come together in a pool through a trusted platform that they can vet, and sponsor small-scale farmers to grow food production,” Farmcrowdy Chief Executive Officer Onyeka Akumah told Devex.

“If we don’t help farmers we might wake up one day to face [full-scale] food scarcity.”

There are currently about 7,000 farmers working on farms managed through Farmcrowdy in nine states and 1, 135 farm sponsors, mostly working-class urban dwellers in Nigeria and foreign countries such as the United Kingdom and the United States.

The difficulty farmers have in attracting investors has inspired the creation of other platforms, but the challenges facing farmers don’t stop there. When Uka Eje and Ayo Arikawe met at university nearly a decade ago, they were united by a common goal: To address three major constraints facing smallholders — access to finance, to market, and poor knowledge on best practices.

So they started ThriveAgric early last year to crowdfund resources for small-scale farmers who then receive money, seed, fertilizer, insecticide or pesticide, as well as technical training to work on rice, maize, soybeans, sorghum, poultry, and cattle farms, which run for anything between three to six months.

With support from the Ventures Platform accelerator and Google Launchpad, ThriveAgric has been able to scale its operations to 11 states in Nigeria.  

“Farmers gain access to finance needed for their farms, insurance, technology-driven advisory [like] best planting practice based on soil and weather tests and access to premium market [thereby] helping [them] skip a long chain of middlemen,” says Eje, co-founder and CEO of ThriveAgric.

The agritech startup has worked directly and indirectly with about 4,000 farmers on the value chain. It leases farmlands from rural communities and allocates small portions to each farmer to manage. Investment ranges from $280 to $700, and investors under these crowdfunding firms get regular updates about farm progress via text, pictures, or video. The investment also includes insurance coverage.

Agriculture expert Wandie Kazeem believes digital technologies have the potential to transform agriculture in Nigeria.

“Some of the major benefits of digital solution include access to weather information, crop disease, and visual extension service,” said Kazeem, who is the founder of Wandieville Media, a Nigerian media company focused on global development.

“Registered farmers with contracts from offtakers are bankable, meaning they can access finance due to digital record keeping, proof-of-sale records, financial history, as well as tracked payments from their offtakers and sales.”

Making agriculture profitable

At the end of the farming cycle, both FarmCrowdy and ThriveAgric gather the harvest to market via prenegotiated offtake deals with buyers and processors. The farmer gets 40 percent of the profit, the farm sponsor gets another 40 percent, and the startups take 20 percent.

After the investment cycle, farm sponsors can choose to cash out or reinvest on the platform. FarmCrowdy reports that repeat investment is up to 84 percent, while ThriveAgric says theirs is 65 percent.  

Magaji, the smallholder farmer in Jere, manages a 1 hectare portion of the 20 hectare paddy field leased by ThriveAgric. Farmers working with the startup receive seeds, fertilizer, and technical advice, alongside training and payment at the end of every farm operation, such as weeding, planting, and harvesting.

 “The money we receive from managing the farms help us to buy fertilizer and seeds, and pay our children school fees,” he said.

For many farmers, the training is a major draw of such platforms. Fifty-one-year-old Sambo Chollom is one of the hundreds of small-scale farmers FarmCrowdy is working with in central Nigeria’s Plateau state.

“What I like most about working with FarmCrowdy is the training we get on farming practices and the use of mechanization — they have made us better farmers and increased our yield and income,” said Chollom, who owns 3 hectares of farmland.

“Before, I used to produce like 20 bags of maize, soya bean, and cowpea, but since I started working with FarmCrowdy last year, I produce about 30 bags and they even sell them at higher prices.”

Last year, FarmCrowdy raised $1 million from investors such as Cox Enterprises, Techstars Ventures, Social Capital. This year, it got $325,000 in grant from the GSMA Ecosystem Accelerator Innovation Fund to build a mobile app that would enable sponsors to interact with farmers.

Digital agriculture needs data

Verdant AgricTech founder Nasir Yammama started the social enterprise in 2014 to help farmers increase their productivity, earn more money, and promote sustainable farming system which would thrive on largely mobile technologies.

“A lot of people do not understand how crucial data is,” Yammama told Devex. “To actually solve the problems, we have to build a value-chain approach [because] if you don’t address the other stakeholders, farmers might bear the brunt.”

Verdant AgriTech is building a platform that would link small-scale farmers to other key players in the agricultural value chain using data to inform farmers and the stakeholders alike.

The goal is to ensure that “data is available across the value chain so that the farmer is able to make better decisions in the long run,” Yammama said.

“We want policymakers to decide better, we want farmers to decide better, we want agribusinesses to decide better,” he added.

Yammama says data is crucial to modern agriculture because it would make the works of agritech startups, donors, policymakers, and the government easier.

“We have about 8,000 farmers in Kano alone. So imagine if either FarmCrowdy or ThriveAgric is going to Kano, they could actually check in [with us] to see the best performing farm, the farms with the best activity, to sort it out through the commodities or the value chain they want, or go directly to locations that meet their needs,” he said.

The idea is to make about 10,000 active farmers on the platform more visible to extension workers, donors, agribusinesses, the government, NGOs, foundations, and the private sector — all of whom would use available information on farmer demographics, soil conditions, farm maps, weather data, rainfall data, crop yield performance, and more.

“So what we are trying to do is to make farmers visible in terms of saying here’s where they are, here’s their numbers, here’s what they do, the size of their farm, and a lot of that,” he said, adding: “That way, we will be help everybody make better decisions and increase productivity and income for farmers.”

To gather the data, Verdant AgricTech offers services appealing to farmers like weather information and financial advice. In order to access these services, farmers buy one-time paper scratchcards containing a PIN number for a little more than $1 from agricultural cooperatives they belong to. Once a farmer obtains the card, he or she texts the command “REG” or “HELP” alongside details like their name, gender, and location to a short code created by Verdant AgricTech. This system is already running in the northern city of Kano.

The social enterprise validates the request and then proceeds to phone or text the farmer to schedule a visit that would enable its staff to profile the farmer. Verdant AgricTech then begins to offer periodic reminders, advisory services, weather information, and financial skills to registered farmers.

Farmers can easily text commands like “WRT” to get weather forecast, “FINA” for financial advice, “TILL” for guidance on tillage operations, “HARV” for guidance on harvesting, and many more. The social enterprise then uses text, audio message, or phone calls to address the enquiries.

The rise in digital technologies would increase the “bargaining power” for farmers due to access to price or market information, says Kazeem, who has worked with the Central Bank of Nigeria and the World Bank on agriculture projects.  

Verdant AgricTech is currently collaborating with Oxfam on a project that will support at least 25,000 farmers in Nigeria. Yammama says they have developed a short code service as part of a series of efforts to fix the broken agricultural value chain and increase access to information, credit, and the income of farmers.

“We have insurance companies and banks on the project, and we will be launching it soon,” he said. “We want to make sure that those things we don’t traditionally attach to agriculture we begin to do from now.”

The digital agriculture revolution sweeping across Nigeria appears to be happening in other countries around the continent, too. From FarmDrive to M-Farm in Kenya to AgroSpaces in Cameroon to Farmerline and AgroCenta in Ghana, Africa is gradually opening up to a new wave of agritech startups that are offering advisory and financial services, market information, and pricing data to tens of thousands of farmers.

A recent policy shift

To understand why digital agriculture seems to be making headway, it is important to look at recent changes in the agriculture sector in Nigeria. A sliding currency, alongside a combination of weak economy and decline in oil prices forced Nigerian authorities to look to agriculture for rescue as the country slipped into recession in August 2016.

Generally, access to credit and inputs for farmers has been growing in Nigeria, thanks to a few initiatives from the Central Bank of Nigeria. These initiatives link farmers to large-scale processors but also facilitate access to credit by de-risking agricultural financing from banks.

However, expanding digital solutions to smallholder farmers in Nigeria is constrained by illiteracy, cultural barriers, and geography.

Nigerian agritech startups have yet to cover a substantial number of small-scale farmers in the country because the innovations are limited to regions and communities of operation, but the trend so far is impressive.

If anything, it shows digital solutions are bringing innovative ways of solving decades-long problems crippling the sector and making agriculture exciting for young people who are increasingly lured by the use of mobile apps and other forms of technologies.

“The future looks promising,” the smallholder farmer Magaji said, as he cleaned off the dust on his trouser; his hoe draped on his shoulder.

“If we have more companies like ThriveAgric coming up, soon more and more farmers in villages in Nigeria would be reached and there will be more money in small towns and rural communities”

Update, May 7, 2018: This article has been updated to clarify the founding members of Farmcrowdy.