FarmCrowdy was one of five (5) startups that showcased at the Stears FinTech Summit in July 2018. You can see pictures from the Summit here.
Driven by palm oil, cocoa and groundnut, Nigeria's agriculture sector once was a leader on the continent.
Now, not so much.
Despite employing half of the country’s population, the industry remains under-tapped. Perhaps in a bid to return the sector to its past glory, the Federal Government has made a lot of noise about the need to invest in the sector. This buzz is why now more than ever, there’s an emphasis on the need to pay more attention to food production in the country.
The buzz is what led to the creation of Farmcrowdy, a digital startup connecting small-scale farmers with Nigerians willing to sponsor farming activities. I chat with Onyeka Akumah, founder and CEO of Farmcrowdy, and he is quick to explain the Farmcrowdy model to me. I notice immediately that the process seems to address some of the challenges within the agricultural sector.
Onyeka Akumah, CEO Farmcrowdy
The most prominent challenge is how farmers struggle to get financing to expand their farms. Even banks would rather not provide loans to farmers.
So the most important thing Farmcrowdy does is link small-scale farmers with sponsors willing to fund the expansion of their farms. Onyeka explains how it works.
Farmcrowdy has ambassadors in the different states in the country, and it is these ambassadors that identify farming communities. “Our ambassadors help us find community leaders within the communities we want. Those leaders then introduce us to farmer cooperatives. The cooperatives give us a list of farmers who think they can work with us and that fit our criteria,” Onyeka says.
Interestingly, they work with farmers that have between one and three hectares of farmland but consistently work on one-third of their farms. This is strategic as the company is focusing on its core market: the farmers that have the capacity to expand but lack the funds to do so.
As we chat, I wonder how Farmcrowdy deals with one of the biggest problems with lending in Nigeria: can you trust your borrower? How is borrower information gathered, I ask. Onyeka explains that they use a community-based model to check the reputation of a farmer. “We present the pool of farmers we get from the farmer cooperatives to the community leaders for vetting. They tell us based on the said farmers' character if they are fit to work with us or not,” he explains.
There is something equally novel and yet old-fashioned in this approach. Novel as it imitates the crowd-sourced rating method used by sharing-economy platforms like Uber, and old-fashioned because it exploits the oldest form of influencing behaviour: social censure and neighbourhood reputation. Onyeka echoes this, saying, "Community leaders and cooperatives do the character check. So, if a farmer messes up, we blacklist an entire area, so the community is wary of presenting someone who isn’t fit. No one wants their area blacklisted."
Beyond access to credit, Nigerian farmers have another problem, they often struggle to find buyers for their produce. It is not odd to hear that farmers are unable to sell off their produce to the right market at good prices. Onyeka, aware of this challenge, tells me that Farmcrowdy gives farmers market access. “Before we make a farmer and his land available on our platform, we go to the market to decide who is going to buy from us,” he says. By the time Farmcrowdy finds someone to sponsor a farmer, it has already gotten prospective markets and buyers. "Before work starts we already know who is going to buy it and at what price."
After that, the sponsors—lenders—come in.
A sponsor is anyone that contributes money—invests—on the platform. Unlike the farmers, sponsors are not subject to any real criteria. Previously, Farmcrowdy only permitted sponsors with Nigerian bank accounts, but now only asks for personal data and BVN details. Nevertheless, the company is wary of big-ticket sponsors. "It’s a red flag if someone wants to put a significantly large amount in a farm at once. We must do some checks. Who knows this person? What does he do? And so on," he muses.
The sponsor's funds provide everything the farmer needs for his available land, whether it is seed, fertiliser or technical know-how. For sponsors, the process is seamless. “Every sponsor has a Farmcrowdy customer care representative that guides them through the sponsoring process and answers all their questions to make the process seamless,” Onyeka enthuses. And in the spirit of diversification, he recommends that a sponsor invests in more than one farm.
While access to credit to expand farming activities, and access to markets to sell their produce, are two key challenges farmers face, they could do with more assistance in terms of maximising their yield. Again, Farmcrowdy steps in here. Onyeka explains that farmers are usually excited to work with them and eager to follow their protocol.
“We have designated technical field specialists and field managers who are constantly on the farm, and monitor the activities of the farmers on a weekly basis, sometimes daily,” he outlines. Apart from technical expertise, they also help with sourcing inputs like tractor services or fertilisers.
At the end of it all, returns from the farm are shared on 40:40:20 basis. Sponsors and farmers get 40% of the returns from the farm, while Farmcrowdy retains what’s left.
The Farmcrowdy model may be simple, but its potential is immense. Since inception in November 2016, the company has worked with over 7,000 farmers. This is still a fraction of the total number of farmers in the country, with some large fast moving consumer groups (FMCGs) boasting networks of over one million Nigerian farmers. "When we start doing a billion farmers, I will consider a network effect," Onyeka laughs. "But let me tell you, it is not about the number of farmers in the network. It is what we do in impacting the farmer's life that matters. To grow their income and help with food production. All our farmers in the first cycle have grown their income revenue by 80%, in one year."
In the next few years, Farmcrowdy wants to create an agricultural ecosystem. “Agriculture is wide. There’s financing, production, logistics, warehousing, market access, marketing and so on. There’s a whole lot of things to do there. We are currently sitting on producing and financing, our market access and logistics are just value added,” he gushes.
Nigeria's agricultural ambitions often sound grand and unattainable. But sitting across Onyeka, it is hard not to share his optimism and zeal. I cannot help but feel greater hope. This is how Nigeria will achieve food security: not through grand ambitions, but step by step, farm to farm, adding value. And with Farmcrowdy, we can all do that.
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