Before last year, George Wainaina’s tiny shop selling agricultural goods and veterinarian supplies in Karura, a lush farming area of central Kenya, wasn’t doing so well. His customers found it difficult to get what they needed. Some would complain; others would simply leave.
“I didn’t sell many products, I didn’t have many suppliers, and I used to have problems with working capital,” recalls Wainaina, the 27-year-old entrepreneur and professionally trained veterinarian. “I would tell them to come back next time. Some used to come back, but most lost trust and disappeared.”
His problem, and that of the farmers he wanted to serve, cut straight to the heart of one of sub-Saharan Africa’s deepest challenges when it comes to creating a profitable agricultural sector: access.
Africa is home to a quarter of the world’s arable land – ripe and ready to become the world’s breadbasket. Yet a stunning 80% of this is not being utilised. And of the 20% that is, the majority is owned by poor smallholder farmers with just one or two hectares of land, who face enormous challenges when it comes to accessing things to improve harvests and incomes that developed world farmers perhaps take for granted: credit; seeds; fertiliser; information on weather and market prices; and the markets to sell their products.
But things are beginning to turn around. A wide range of innovations are being developed in Kenya to help increase farmers’ access to inputs, information and markets, and to boost their productivity.
Since last July, Wainaina has been the proud owner of a “Farm Shop” store, joining a growing franchise network (locally owned and operated) of agro dealers located in rural and under-served areas of Kenya, which hopes to boost smallholder productivity by providing farmers with high-quality products, services, and information. Where once there was a haphazardly arranged set of goods hidden behind a metal cage, now his shop’s aisles and shelves are neatly stocked with everything from fertilisers to hybrid seeds, insecticides, and micro-drip irrigation systems. The store holds demos, promotions, and free training sessions.
One of the keys to Farm Shop’s radical overhaul is that it has done away with the incredibly cumbersome, slow, and inefficient process of paper ledgers and stock keeping. In each store, owners are given an Android-powered tablet with software that allows them quickly and easily order inventory – all at the touch of a button. Point-of-sale transactions are now tracked in real-time, which gives the company a unique ability to track and respond to every single sale, as well as prices and inventory levels. “Before, we used to use cash receipts and paper record books,” says Wainaina. We can now trace all our sales, find totals easily, and order supplies much faster.”
The effect has been almost immediate. Business, says Wainaina, has increased nearly five-fold since he converted the store. Last month, his Farm Shop branch saw an astounding 400,000 KES ($4,500) in sales, with over 1,350 transactions. Farm Shop currently has four shops across Kenya, offering 54 products and services like soil testing, and they are planning on opening eight new shops in eight weeks, starting this month.
The company is also offering to help farmers actually figure out what they need to improve their harvest. With their new soil-testing service, Farm Shop agents can collect soil samples from farmers, and within a few days send results directly to the farmers via SMS, informing them what will help improve yields. For example, if they detect a potassium deficiency, a farmer can then go to the shop and purchase more fertiliser, or get the right kind for what their soil needs.
Yet Farm Shop is not an answer to all farmers’ woes. As Julio De Souza, Farm Shop’s COO admits, “no individual solution can solve the problems for rural farmers in Africa. It’s an ecosystem that needs to be built.”
That ecosystem, at least in Kenya, is slowly starting to develop. Several innovations like Farm Shop are improving the lives and income of Africa’s struggling smallholder farmers, and across the entire value chain of rural agriculture.
For the past few years, social enterprise Kilimo Salama has been piloting a crop insurance scheme for smallholder farmers, hoping to reduce risk and serve a critical and vulnerable market that traditional insurance schemes don’t reach. “Nobody ever really wakes up and says ‘I want insurance’,” confesses Rose Goslinga, Technical Coordinator for Kilimo Salama. But, it’s become a highly valuable tool for helping farmers secure much-needed credit from banks.
Traditionally, farmers try to reduce their exposure to risks like crop failure (from bad rains or crop parasites) by minimising their investment in farming inputs. As a consequence, farmers remain trapped in a cycle of low agricultural productivity and poverty. If the rains fail, they are left with nothing to invest in the next season.
Using weather stations across the country, Kilimo Salama has developed a unique “weather-based index insurance,” which farmers can buy into at the beginning of the season, for typically around 10-20% of the amount they invest in seeds and inputs.
Weather stations are equipped with small sim-cards that wirelessly transmit data every five minutes to a cloud-based server. At the end of the season, this data is aggregated and coupled with satellite data, and used to map out rain patterns. Kilimo Salama then works with agronomists to calculate the index – and find where the rain was too much, too little, or at the wrong time. Farmer payouts are automatically calculated based on their crops, location, and number of seeds purchased.
By coupling bank loans with Kilimo Salama’s insurance scheme, the organisation has enabled banks and microfinance institutions to be more comfortable with giving loans, making access to essential credit easier for farmers. “We not just selling insurance,” says Goslinga, “we’re enabling farmers to get a harvest.” As of this year, Kilimo Salama has insured over 100,000 smallholder farmers across Kenya and Rwanda.
One SMS at a time
Yet even if farmers have a great harvest, that doesn’t mean it’s easy for them to sell their produce. Calestous Juma, Harvard Professor and author of The New Harvest; Agricultural Innovation in Africa claims that the greatest failure of Africa’s agricultural sector is the absence of investment in rural infrastructure. “Markets cannot function if you cannot move goods, services, information and ideas,” he says.
In a nutshell, the problem is many of Africa’s rural farmers can’t get their produce to the markets in time, because of bad roads, lack of communication, and the nature of a highly fractured middle-man-dominated agricultural market. Back in 2011, when nearly 3.7 million people in northern Kenya were facing near-famine conditions, farmers in other parts of the country were either driven by swindling middlemen to sell cabbage at nearly a tenth of the price, or waste it all together.
MFarm, a Kenya-based tech startup, is trying to boost this sector, “one SMS at a time.” Sub-Saharan Africa has the fastest-growing mobile market in the world, increasing at an average of 44% annually since 2000, according to the worldwide mobile communications industry association GSMA. Mobile penetration in Kenya is well over 70%.
Through a simple text message, MFarm allows rural farmers in remote areas of Kenya to check the latest market prices, post information on their harvest for buyers to see and purchase, and band together with other farmers in their area to make bulk purchases of expensive but needed agricultural inputs like seeds, fertilisers and equipment at discounted rates. It also allows them to join together to sell their harvests, making it easier for buyers to reach them.
MFarm’s approach hopes to improve the agricultural sector by in a sense leapfrogging physical infrastructure troubles, and using existing mobile communications infrastructure to increase buyer/seller relationships and transactions.
“Before [services like MFarm], farmers were being exploited by middlemen,” claims Adrian Mukhebi, Chairman of the Kenya Agricultural Commodities Exchange (KACE). “Now, with information via mobiles, farmers are better able to bargain prices against middlemen, and can in some cases increase 25-35% of their profits.”
Technology’s role in improving access for farmers may be exciting and hold great potential, Mukhebi claims, but as these tools and information are not yet available to all farmers it still has some way to go. But if and when they do, perhaps Africa could begin fulfilling its vast potential – feeding itself and the rest of the world.