Takachar: improving farmers' yields and creating rural jobs

Most fertilizers today are produced in large-scale and capital-intensive facilities in Europe, China, and North America, and then shipped to the emerging markets. Due to this long-distance logistics, rural smallholder farmers often pays 2-3 times the world price for fertilizer. Furthermore, farmers often only have sufficient income to afford one-size-fits-all synthetic fertilizers that may cause long-term soil degradation.

We use MIT technology and proprietary formulas to decentralize/downsize fertilizer production, so that rural smallholder farmers have access to cheaper, higher-quality fertilizers that are locally produced rather than imported from afar, and custom-tailored to the local soil and crop requirements. We help farmers improve their yields by 30% and net income by about 50%.

Bangladesh's economy is driven by small-scale agriculture. Our solution can help farmers increase yields by an equivalent of ~30 billion taka/year, while our decentralized, village-level fertilizer production creates a network of rural job opportunities for underserved populations. 

Most fertilizers today are produced in large-scale, centralized, and capital-intensive facilities located in Europe, North America, and China, and then shipped via long-distance transport to rural areas. As a result of this logistical and import mark-up, rural farmers often pay 2-3 times the world price for their fertilizers, which to us is wrong. Due to their limited income, these farmers can often only afford the cheapest, synthetic, one-size-fits-all varieties that over the long term may actually acidify and degrade their soil due to over-dependence. Farmers, as a result, often see their post-harvest yields decrease by up to 30-40% in the last 20 years. This is a significant concern for local food security. In a country such as Kenya, there are 4 million farmers, spending $76 million/year on ineffective fertilizers. In the world, by 2030, this will be a $30 billion/year problem.

In Bangladesh specifically, just like in our pilot country Kenya, arable soil degradation due to a mix of water erosion and fertility depletion affects almost 8 million hectares of land. This represent a 4 million tons/year of crop production loss for ~20 million rural smallholder farmers (around 30 billion taka/year), according to a recent BARC study (Hasan et al.).

Our primary beneficiaries are smallholder farmers. Meet Mr. Kibuchi, who holds a one-hectare rice farm. Over 15 years, he had seen his yield decrease by about 40%. After using our product, his input costs remained consistent, but he has seen his crop yield increased by 30%, and income increased by 50%. This was sufficient to send his two children to school, and last year, for him to afford a second-hand tractor for his farm. Amongst the 2,500+ farmers that we work with, these economic gains are widely reported, even after one season of using our product. For them, our fertilizer not only restores their soil health, but also leads to better economic outcomes. We therefore help smallholder farmers break away from the vicious cycle of declining soil fertility and yields by restoring their soil productivity affordably. 

Additionally, our project creates additional rural job and income opportunities, such that youths no longer need to migrate to urban slums to find jobs. Meet Japhet: he is from the local village, and joined our pilot production as a worker. After 3 years, he has been promoted to production foreman, and is considering getting an MBA degree in Nairobi to further his career.

We use MIT-developed, patent-pending technology to decentralize/downsize fertilizer production, such that it can be carried out profitably on a village-level scale using locally available resources/labor. Imagine small-scale, low-cost, mobile systems that can be latched onto the back of tractors, donkey carts, or shipping containers, and be moved from farm to farm to enable localized conversion of crop residues into a fertilizer base under 2 hours without needing external energy. This base is then mixed with our proprietary recipes to complete the nutrient as standalone fertilizer. Our process reduces the long-distance logistics needed to deliver fertilizers to farmers by producing the bulk locally. In addition, our proprietary control system allows for us to control the reactor operation autonomously in real time based on the local soil and crop context, thereby achieving high-performance precision agriculture that allows us to custom-tailor fertilizer production for smallholder farmers almost at a single-farm granularity. Therefore, our carbon-negative product, Safi Sarvi, restores local soil health and improves farmers’ yield by up to 30% for the same cost they pay for inputs. 

We are setting up a network of village-based, mobile fertilizer operations (known as MiniPlants), each serving a radius of ~20 km and 500 farming families. Farmers, by selling their residues to the MiniPlants, earn a $20/ton additional income. The local MiniPlants process the input and add the proprietary recipe at a 40% margin, and then sell the complete fertilizer back the same community to improve local farmers' yields, thereby completing the local trash-to-cash loop. From our pilot project in Kenya, we have verified that such a MiniPlant can be financially profitable, and at full-scale netting around $60,000/year. We plan to scale up by working with local agricultural partners to set up additional MiniPlants in local communities. Once demonstrated at scale in different agricultural contexts, the profit-making potential of the MiniPlant model will drive its further scaling and adoption by village-based microentrepreneurs in additional communities.

As an additional benefit, each MiniPlant, in addition to providing rural smallholder farmers with improved soil health, also creates a network of rural jobs such that underemployed youths from rural, marginalized communities no longer need to migrate to urban slums in order to find sustainable livelihood.

Current fertilizer production technologies rely on centralized, capital-expensive (~$500,000), and large-scale (100 tons/day) equipment, optimized for delivery for large-scale agriculture (e.g. the U.S. and Europe). The status quo makes logistical cost daunting for delivery to rural areas in emerging markets, often without reliable transportation infrastructures. Many large-scale fertilizer companies we have interviewed have wanted to reach out and better serve these rural smallholder farmers, but have not been able to figure out a cost-effective way to serve them in a custom-tailored, user-centric manner.  

Our technology is based on a new chemical concept called oxygen-lean torrefaction (developed as company co-founder Kevin Kung’s PhD thesis at MIT), which can lead to a new class of patent-pending, small-scale, low-cost, and portable reactor designs that can be deployed in a decentralized manner, with a more flexible range of feedstock options. This technology allows dramatic downsizing of the minimum capacity and capital investment of the current production process by a factor of 1000, allowing fertilizer to be produced in rural villages using locally available labor and crop residues in just under 30 minutes without needing any external energy or heat. Thus, in contrast to organic composting, our process is faster and requires less land by a factor of 100.

Furthermore, due to our proprietary control strategy, we can modify the reactor operation autonomously in real time based on the local soil and crop context, thereby achieving high-performance precision agriculture that allows us to custom-tailor fertilizer production for smallholder farmers almost at a single-farm granularity.

From our experience establishing our pilot in Kenya, it is easiest to start in a new community by recruiting an elderly farmer (as the champion) with a larger plot whom the younger farmers aspire to be. This champion, being more affluent, can afford to bear more risks. We start by demonstrating our product (for free) on a small section of his plot. By comparing that plot with the rest of his land, it is not difficult to observe improved harvest yield due to reversal of soil pH to more neutral level, as well as restoration of elements of soil health, such as microbial activity and nutrient availability. This typically causes the farmer to purchase more of our product to apply on a larger area of his farm the next season, until he/she becomes a repeat customer. As local farmers are a tightly knit community that tend to imitate each other, generally our product will spread through word of mouth once the early champion confirms the positive results. Many of the farmers using our product choose to sell the surplus harvest to the market, leading to increase in income. The effects are felt even one season after using our product. Most farmers, seeing these benefits, return the next season for our product, expanding the use on their fields and increasing the community's confidence in using it as a standalone fertilizer. This drives the MiniPlant profitability, which also employs more local youths for fertilizer production in order to meet the growing demand.

Currently our pilot serves 3000 farmers. Within one year, we expect this to be 10000 farmers in at least two locations. By late 2022, we will reach 300,000 farmers by deploying around 500 systems in the field. This will involve working with 50 local agricultural organizations like Safi Organics and the KALRO network in Kenya, and BRAC in Bangladesh, which will operate our systems profitably and sell fertilizer to local farmers. Letters of intent from at least 5 similar organizations are available. This expansion assumes each system, at full capacity, produces ~300 tons/year of fertilizer blend that can serve the needs of a village and its 15 km radius, or ~500-1000 farmers. After initial scaling with a manufacturing partner, we intend to further scale by collaborating with existing agricultural equipment companies such as Tata Agrico, having already been actively approached by the organization. We will use their existing equipment distribution network and dealership to get product to market. Our product is also complementary to their existing tractors and harvesters. This will enable the processing of around 1,100,000 tons/year of raw biomass into fertilizer for around 1.5 million farmers.

Furthermore, widespread adoption of our systems in rural fertilizer operations will lead to creation of around $10 million/year of additional income opportunities for 1 million underemployed youths in rural communities, who may otherwise have to migrate to urban slums to find jobs. Our intervention will also reduce open-field crop residue burning, contributing to improved air quality for around 20 million urban dwellers.

Recently, we have received a contingent purchase order from the Nakuru County Government for thousands of farmers enrolled in its fertilizer subsidy program, and are crowdfunding to expand our production to that location, as this requires upfront capital.

Within 12 months, we will launch one additional production pilot in South Asia once we finalize the details with prospective local implementation partners. This will expand the number of farmers we serve to 10,000. In order to support this expansion, we need to raise a capital of $250,000, which we are hoping to achieve mostly through non-dilutive sources such as USAID. Concurrently, we will need to make an additional local COO hire to manage the operations, as well as 5 production workers. The first stage will be a limited trial on rice fields, followed by initial rollout of the product within one village. We will also seek fertilizer certification approval from the local authorities.  

Within five years, we will expand to six countries in East Africa and South Asia. This will be done in collaboration with regional partners such as One Acre Fund (East Africa), Tata Agrico (India), and BRAC (Bangladesh). These partners will host the production sites and introduce us to the local farmers and their fertilizer distributors. We will provide the equipment and expertise, and train the local operation team to set up profitable village-based fertilizer production. This will enable us to reach 1.5 million farmers by 2024, of which 600,000 will reside in Bangladesh.

In terms of technical challenges, we need to demonstrate, in multiple locations and agricultural settings, that our systems can operate under highly stringent requirements in remote settings, often without reliable access to electricity/energy or high-end maintenance services. In rural areas, when things break down, they need to be easily repaired using locally available materials, or else costly shutdowns will follow.

In terms of behavioral change, farmers and prospective implementation partners can be risk averse. They must see proof before they change products. Through our initial pilot with Safi Organics and the local farmers, we learned quite a few things. For example, in a new community, we found it most effective to first engage an older, more affluent farmer who often can afford new products and some risk-taking. This farmer is also someone that other younger farmers aspire to be. Once the product is demonstrated to produce benefits with the initial farmer, he/she often becomes the influential champion who will multiply our customers rapidly.

In terms of IP risks, although our technology is patent-pending, it is conceivable that patents do not completely protect us against local copycats. Since our hardware is cheap and meant to be widely distributed, we will actually be flattered if these copycats start helping us scale our equipment too, but our fear is that they create substandard solutions. However, because the hardware technology cannot operate without our proprietary control system, we can tightly safeguard our control and data as trade secrets, without which the copycats cannot operate.

In terms of the technical challenges described above, while we already built a working prototype and financially profitable pilot in Kenya that can address the requirements named above, we plan to expand to other regions (i.e. Bangladesh) to demonstrate the robustness and versatility of our solution, which will be key for achieving successful scaling. In the U.S., we have also raised a total of US$1 million to be specifically used for R&D to make our core technology and process more robust and scalable in partnership with Massachusetts Institute of Technology (MIT) and University of California Berkeley.

In terms of the behavioral change challenges described above, as we scale beyond this initial community, we may encounter challenges reaching out to other geographically disparate communities. We foresee the need to conduct additional localized pilots. Fortunately, our equipment is relatively low-cost and can be operational within a few weeks. In the medium term, working with an existing equipment manufacturer (such as Tata Agrico) with long-standing credibility in many communities is essential to our scaling. In Bangladesh, our ideal partner would be BRAC. In terms of the IP risk described above, we have already filed multiple patents and are exclusively licensing the fundamental invention from MIT. The goal here is absolutely not to exclude farmers from accessing our services, but rather to prevent poor-quality copycats from offering substandard services to farmers. Ultimately, it will be through a combination of patents, locally-tailored nutrient formulas (trade secret), and branding that we will achieve best impact.

Not applicable

In Bangladesh specifically, just like in our pilot country Kenya, arable soil degradation due to a mix of water erosion and fertility depletion affects almost 8 million hectares of land. This represent a 4 million tons/year of crop production loss for ~20 million rural smallholder farmers (around 30 billion taka/year), according to a recent BARC study (Hasan et al.). In Kenya, our primary experience in the pilot so far has been based on smallholding rice farmers, which is also well-suited to Bangladesh as rice accounts for 50% of the agricultural output and 65% of the calorie intake of the country. Therefore, even a modest increase in rice harvest yield will have an outsized impact on the rural farmers and the country’s economy.

We have been approached by or are approaching a few prospective organizations in South India (India/Bangladesh). One example in Tata Trusts (India), which has provided us funding to support a regional pilot and offered partnership opportunities to scale up our manufacturing and deployment within its sister companies. We have also been looking at working local partners in Bangladesh, such as BRAC or emPOWER Group. We will identify a suitable pilot site within their network of farming communities, from which conduct initial user-centric customer discovery and local hires. Then, a limited production pilot (costing ~$1,000) and a one-season trial will be carried out with a small group of 5 rice farmers. A successful outcome will lead to launching this village-based operation in Bangladesh within the next 8 months.

Not applicable

Currently we have six full-time staff, four part-time staff, two interns, and one contractor working on this project. During the busy season (e.g. during planting), we can hire as many as 16 casual laborers.

Our team combines the technical depth with market expertise in this sector.

Kevin Kung worked on the core technology for 7 years as his PhD thesis at Massachusetts Institute of Technology (MIT) and was responsible for scaling more than 150 units of the preliminary technology in Kenya. His PhD supervisor, Professor Ghoniem from MIT, is also a company co-founder.

Samuel Rigu grew up in a poor farming family in rural Kenya and witnessed first-hand the fertilizer access issues that his family members and friends faced. He therefore resolved to study agribusiness in university in order to solve this problem for his communities. He also worked as an agribusiness manager for a few years. He therefore brings in-depth knowledge of how to work with rural smallholder farmers and their influencers.

Vidyut Mohan brings industry-specific knowledge in the fertilizer supply chain in South Asia, is well connected with the different stakeholders ranging from the rural farmers to large institutions such as Tata.

Prior to co-founding this company, the team has worked together in other capacity in biomass since 2011, including co-founding a prior start-up that sold more than one million low-toxin mosquito coils.    Starting from just a concept that no one believed in back in 2012, the team has convinced MIT (including MIT Solve) to put in more than $600,000 in the foundational R&D, and convinced government agencies (National Science Foundation and Department of Energy) to provide competitive commercialization support of $1M. Our team has a track record of execution and success.

In Kenya, our pilot is being conducted in partnership with Safi Organics Limited, a local fertilizer manufacturing distribution company. Our technology and process are hosted at their production site based in Mwea, Kenya. KALRO and the local Kirinyaga County Government have provided us access and training curriculum to the 5,000 farmers in their jurisdiction. As of last month, the Nakuru County Government issued us a purchase order in order for us to serve the 1,000+ farmers under the government's fertilizer subsidy program. In Kenya, we plan to continue to scale by working with these strategic partners, including One Acre Fund.

In South Asia, we have received the support of Tata Trusts, which have provided us with generous funding, industrial expertise and government connections in South Asia for an initial prototype. We are setting up prospective partnerships with a Bangladesh-based organization (such as BRAC and emPOWER Group) but this is still preliminary at this point. 

Finally, for R&D, to de-risk our technology, we rely on ongoing technical collaborations with Professor Ahmed Ghoniem’s group at Massachusetts Institute of Technology (MIT). Professor Daniel Sanchez from University of California Berkeley is working with us to conduct lifecycle analysis of our process.

Initially, we own/operate our \village-based fertilizer production. We purchase crop residues from local farmers at $20/ton, process using our technology into the fertilizer product, package it, and then dispatch it to the farmers via existing agricultural input distributors at $225/ton. Farmers are willing to pay because this is the same price as what they have been paying per acre per year for conventional synthetic fertilizers, yet they see their yields improve by up to 30% using our product.

As we scale within the next 2 years to 10 communities in Kenya and Bangladesh, we will continue this business model, as this gives us maximum control and learning as we iterate our process/solution for diverse crop types and agricultural contexts.

As we expand further, we will shift away from this labor-intensive business model into a business model resembles that of a Canon inkjet printer: we sell the hardware cheaply but charge an ongoing usage fee for the proprietary automated control system necessary to operate the equipment safely and consistently. While farmers are the ultimate beneficiaries, our solution will be financed initially by local grassroots agricultural organizations that work with these farmers and whose mission is to improve local farmers' livelihood. Our solution will directly fit into their purview. As this initial group of early adopters show the profitability of our model (around $60,000/year in a full-scale village-based operation), we expect that additional village-based fertilizer production facilities will be set up elsewhere by local microentrepreneurs who wish to derive the same profit.

In our initial own-and-operate model, we have proven through a pilot in Kenya that we can sell the product at $225/ton. With the production costs (input feedstock, labor, packaging, logistics, distributors' cut, etc.) of $138/ton based on actual financial figures from the pilot operation, this gives us a 40% gross margin. We have demonstrated by early 2019 that our pilot operation is already financially profitable based on this business model at around 1 ton/day of production. At full-scale village production, we project that this will generate around $60,000/year of net profit after taxes. The majority of this profit will be reinvested into our scaling efforts to other communities in order to accelerate our impact.

In initial scaling, we plan to finance through a combination earned revenue and grants. In later scale, we will add impact investment as a component.

In the longer term, as we shift away from this own-and-operate model to an equipment-and-service-based model described above, our upfront investment cost will be ~$100, which will be affordable for most prospective partners. As some of these projects try our process, see the initial success, and would like to scale to full capacity, the upgrade needed will cost another $5,000. In cases where this is a financial barrier, we can even help finance. However, the majority of our revenue will be based on the proprietary control system necessary to custom-tailor the reaction safely/stably under diverse biomass conditions. We will charge $10/ton usage fee for the IoT-based smart operation of our reactor.

For implementation, the greatest barrier in scaling remains engaging farmers in behavioral change in a user-centric manner. From our experience running the Kenyan operation, we learned that farmers are definitely willing to change their purchase decisions in light of perceived benefits, but this switching process takes time, especially because crop-growing takes at least a few months to witness any benefits. In Bangladesh, engaging key local implementation partners knowledgeable in and well-connected with the local smallholder rice farmers will greatly reduce this barrier. If selected, we plan on leveraging Tiger IT Foundation's existing partners to finalize a fit. The Foundation's network of local entrepreneurs/mentors will also help us immensely, as we likely will need to tweak our operations and business model in the specific context that best suits Bangladesh rice growers, whose preferences may be different compared to Kenyan rice growers. Doing business in Bangladesh means also getting incorporated locally, and getting our product certified by the local government. All these formalities are items that we believe that the Foundation's network can provide timely support for us.

Finally, in terms of financing, while the Tata Trusts have generously offered us some initial grant funding for this regional expansion into South Asia, the amount ($25,000) is not sufficient to build up a full-fledged village-based operation in Bangladesh that can reach financial sustainability. Therefore, we are actively seeking other local sources to supplement our financing needs. Any prize money that we may receive from this Challenge will help us meet this financing goal.

Not applicable

In terms of implementation partners, currently we have connections to the following reputable local NGOs: BRAC, Palli Karma-Sahayak Foundation (PKSF), as well as Sajida Foundation. In our initial pilot implementation of our village-based fertilizer process in Bangladesh, we will primarily be working with farming communities within these organizations' network. Through Tiger IT Foundation's network, we will also be looking for other similar organizations. Furthermore, as we scale, we believe that our solution can be best deployed, owned, and scaled by the local farmers' cooperatives. Some of this inital financing may be through a local microfinance service. Through our MIT contacts, we are also connected with the Grameen Bank as an example.

Currently in Kenya, given that local governments often have fertilizer subsidy programs for local farmers, one way that we are expanding our services is to work with local county governments and similar agricultural input organizations to ensure that our product is also available to the farmers in their networks. In Bangladesh, we will be working with equivalent organizations such as the Bangladesh Agricultural Development Corporation, which provides agricultural inputs to local farmers in order to scale up the number of farmers.

Finally, to adapt our process in the context of Bangladesh farming, it will be strategic to conduct collaborative R&D and crop testing with a local research institute, such as the Bangladesh Agricultural University. Furthermore, the Department of Agricultural Extension in the Hajee Mohammad Danesh Science and Technology University has done similar work that we can build upon.