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%.