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How smallholder farmers are using technology to fix market, credit woes

Pius Mitei, a small-scale farmer in Rift Valley, tried his hand at agribusiness in 2015 for the first time. He bought 200 chickens, but lack of quality inputs and limited knowledge of the poultry business saw him record losses.

Short of new capital to inject into the venture, he abandoned it and took up an informal job in the transport industry.

Then mid last year he came across FarmDrive, a local IT firm driving the financial inclusion agenda for farmers.

He sat through a training session conducted by the firm at Kampi ya Moto and got to learn how to access credit to start off his poultry venture afresh. After signing up with FarmDrive, Mitei got his first loan the same month, enabling him to buy new stock and feeds.

He later got a top-up to expand his business to include strawberry and coriander farming.

Lewis Kanyoro, another farmer in Githunguri, uses Fresh Pro — a digital platform that connects buyers and sellers. Fresh Pro bridges the gap between farmers and sellers by removing middlemen who are notorious for exploiting farmers.

The platform allows farmers to concentrate on their core production function and worry less about marketing and selling their goods. Fresh Pro uses data to determine what is grown by its members.

The tech firm follows through from planting to harvesting and delivery, a business model they use to eliminate waste. Mitei and Kanyoro are among the small-scale farmers benefiting from technologies targeting the agricultural sector in the country.

The technology is linking farmers with buyers of their produce, promoting financial inclusion and changing livelihoods in the process.

“Since I joined FreshPro a year ago I never worry about market for my goods because they take care of it. They give me good returns which I was unable to realise previously. It works well for me and I have even recruited my friends to join,” said Kanyoro.

Mastercard’s recently launched mobile market platform 2Kuze, for instance, connects sellers with agents and buyers and promotes transparency as the farmer is able to track the final price of their produce.

The best price

2Kuze is run in partnership with Cafédirect Producers Foundation, a non-profit organisation working with smallholder farmers globally. Farmers in Nandi Hills use the solution to sell their produce. The involvement of farmer-friendly agents ensures the produce reaches the right buyers for the best price.

“We believe that by using mobile, a technology that is so ubiquitous among farmers in Africa, we can improve financial access, bring in operational efficiency and facilitate faster payments,” said Daniel Monehin, Division President for Sub-Saharan Africa and the head of Financial Inclusion for International Markets at Mastercard.

Even with the rise in access to broader markets, farmers are still faced with the hurdle of ferrying their produce to buyers, leaving them at the mercy of transport cartels which buy the produce at a song and sell it at as much as 10 times more in a different locality.

“Transport and packaging are some of the challenges that farmers face. The value chain is being hijacked by transporters,” said Khalila Salim, Business Leader, Strategic Partnerships, at Mastercard Labs for Financial Inclusion.
The challenge brought to the fore the need for agents who have a network that can pick the produce and deliver it to the buyer, without the cost being placed on the farmer.

Cafedirect acts as the go between, packaging and transporting the produce. A similar model is used by FreshPro where the team picks produce from farmers and delivers it to buyers. The mark-up is usually included in the final invoice to the end consumer.

With the technology, farmers can also see how much it costs to get their produce to the market, including transport and packaging costs, and avoid falling prey cartels. Online classified platform OLX has also joined the growing list of tech firms changing the agribusiness landscape in Kenya.

Early last year the firm introduced an agricultural section where farmers seeking to sell livestock and fresh produce can identify buyers and avoid middlemen. The section has so far registered more than 10,000 farmers. The firm also runs an SMS service which enables farmers to access inputs at a bargain from suppliers.

Small-scale farmers account for 85 per cent of players in the sector. The industry has for a long time been characterised by old farming techniques, leading to poor harvests.

It is also poorly funded as most farmers are unbanked and lack access to basic financial services and credit facilities. Tech firms like FarmDrive use information gathered from such farmers to build credit models which financial institutions use to provide loans.

Predict yields

FarmDrive’s idea moves away from traditional lending models where financial institutions rely on credit history and tangible collateral to issue loans.

Its system can predict a farmer’s yields and income, determining how much a bank can lend a person. The service uses data to help farmers, who are regarded as risky by most banks, to access credit.

Th tech firms are also packaging their services to include training to equip farmers with necessary skills to improve their output.

Fresh Pro, for instance, is set to start supplying its members with farm inputs and improve on training.

“As agricultural practitioners with an engineering background, we understand one fundamental fact — numbers never lie. After 24 months of research, proof of concepts, prototypes and pilots, we built a business model that eliminates the waste and uncertainty associated with agriculture using data as our guide,” said Fresh Pro founder Ahmed Eddle Ibrahim.

“We have an end-to-end solution fuelled by data. The business model eliminates waste, bearing in mind that Kenya loses 15 to 50 per cent of its produce from post-harvest losses and guarantees authentication of produce origin ensuring minimum residue levels are adhered to.”

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