Investing in agriculture is indisputably one of the most effective ways to reduce hunger and poverty, increase agricultural productivity, ensure food security, enhance environmental sustainability, and measurably impact livelihoods in developing economies. With global population expected to reach more than nine billion by 2050, the FAO estimates that agricultural production will need to grow by 70 percent to keep the world’s population fed and healthy. However, only about 10 percent of this growth will come from availability of new lands, meaning 90 percent will need to come from intensification of current production. To ensure that this intensification is sustainable, targeted investments to smallholder agriculture are needed.
One such targeted investment must be in the area of mechanization. In emerging economies, we find that smallholder farmers generally plant late, under-cultivate, and lose income due to antiquated planting practices and over-reliance on manual labor. In Africa, as much as 50% of yield gap can be attributed to lack of mechanization – with 8 tractors per 100km2 of arable land compared with the global average of 200 tractors. At Hello Tractor, we provide an IoT-enabled technology services platform that aims to increase the productivity of current mechanization assets, while unlocking pent-up demand for mechanization services and additional liquidity to finance more tractors onto the markets in which we operate.
The novel COVID-19 pandemic has further intensified the need for investments in agriculture mechanization, with shrinking local labour markets, movement restrictions of migrant and rural labour that are essential for farming, and negative impacts on overall food supply chains. At Hello Tractor, we are acutely aware of these impacts on our network of farmers and tractor owners. To address these challenges, we are not only ramping up our digital engagement efforts, but also partnering with county governments across Kenya, AGRA’s Village based agents and The World Bank’s Million Farmer Initiative to mobilize existing supply of agricultural equipment to smallholder farmers in need. We are leveraging our technology solutions to assist our local partners to better plan and manage equipment disbursement and use data and analytics to more efficiently reach farmers.
The novel COVID-19 pandemic has further intensified the need for investments in agriculture mechanization, with shrinking local labour markets and negative impacts on overall food supply chains
Through our COVID-19 response strategy, we have been able to further set the stage for the launch of our innovative pay as you go (PAYG) tractor financing model for tractor ownership. This model will increase food production, create jobs by supporting youth and women contractors with flexible financing to buy equipment, and encourage investment from banks and other financial institutions who previously struggled with investing in agriculture due to a lack of transparency and data to make informed decisions. This tractor financing product provides investors with flexibility to quickly deploy capital, manage risk, and scale their investment based on project success. We are kicking off initial implementation of this product across Kenya & Nigeria, after which we intend to scale the model to all our other markets of operation.
To achieve scale in these unprecedented times where face to face engagement with customers is limited requires an engagement strategy that carries everyone along effectively and digitally. As such, we have re-imagined our approach to engage with our customers through a digital journey. Tailoring key messages to different types of customers, we build and facilitate online communities via WhatsApp and social media platforms and utilize short learning videos to better connect with our customers. Already, we are beginning to see significant strides in achieving our ultimate goal of increased mechanisation and collaboration between farmers, tractor owners and dealers
The Hello Tractor PAYG product will increase food production, create jobs by supporting youth and women contractors with flexible financing to buy equipment, and encourage investment from banks and other financial institutions
Two critical elements for successful implementation of our PAYG structure as well as our digital strategy are an integrated payments solution and access to finance. To this end, we are excited to have been selected to participate in the Mastercard Start Path program – a program designed to allow us the opportunity to unlock additional value for our farmers and mechanization equipment owners by expanding their access to banking and payments infrastructure. Our work with Mastercard will not only make mechanization and financing more accessible to smallholder farmers across emerging markets, but will contribute significantly to a more sustainable and secure global food system.