Clusters by Farmore

The problem : There are approximately 500M smallholder farming households across the globe (Worldbank, 2016). In many of the countries where the operate, their farm holdings are relatively tiny, scattered, and in rural communities with poor road access, low connectivity and other infrastructural deficiencies. This fragmentation makes access expensive, leaving them largely ignored by service providers who are capable of generating immense value in the communities. 

Our solution : There are 2 steps to our solutions 1. Aggregate smallholder farmers at the community level into economically viable units. 2. Deploy shipping container based hubs into these units to act as access points for product ;; service delivery to these farmers. 

Potential Global Impact : Scaling this would primarily provide earnings for a large portion of humanity and improved global food supply from strengthened food supply chains. Simply organizing the humans at this level will provide numerous other developmental opportunities.

Developed nations typically have large scale, mechanized agriculture. And small scale farmers in these country at the very least have access to infrastructure which connects them well to a global supply chains. But in a lot of countries, particularly in West Africa, a lot of the food they consume is produced by smallholder farmers. The nature of smallholder farming in this region means the average farmer size is less than 1 hectare. Farms are spread out over wide areas, in rural communities with poor road accessibility. The distribution and inaccessibility has limited their absorption into formal economies, limiting the development of solutions and the servicing of their needs by industry service providers. 
 
Their informal operations also equals a lack of data which mean governments, development partners and financial institutions amongst others are limited in their ability effectively plan social and commercial programs and investments which would provide mutual value. The result is very hardworking people who remain in stagnated economic positions, silently further threatened by external factors like climate change and pandemics.

The primary benefactor group of our solution is the smallholder farmer. We have selected 2 pilot communities in the FCT and Niger State in Nigeria where we have aggregated 300 farmers each, within a 10KM radius. These are communities where we have worked and some of these farmers we have previously provided services to. Speaking with these farmers, their top needs quickly become apparent and their enthusiasm about our proposed solution is very high. 

A secondary benefactor group is service providers. By successfully organizing the marketplaces, companies with relevant products and service can deliver more effectively at a lower cost and create a mutual value situation. Engagement sessions with offtakers, financial institutions and input production companies has established strong support for our solution and willingness for partnership. 

With minimal financial inclusion and absolute self employment, the smallholder farmer typifies the very characteristics of the informal sector. 

Financial transactions will be at the heart of our solution. To process any financial transaction, our farmers will need to have Bank Verification Numbers (BVN) as prescribed by the Central Bank of Nigeria. This is the most widespread identity system in Nigeria. 

In addition with financial services and produce sales operating via our hubs, the opportunity to successfully incorporate contributions presents itself. Public sector services can also be easily delivered via our solution.

Our solution is grounded in basic economics of generating enough demand to make supply economically viable. The innovation comes in our approach. 

Driven by a profitable activity - Firstly, by using an economic activity (the provision of paid-for tractor services which we currently render in these communities) to spearhead our work into the communities, we immediately begin to establish a commercial viability of the solution. The alternate approach would have been significantly more speculative, by simply getting farmer information before subsequently trying to see if services can be sold.

Use of technologies - By using blockchain technology to store all the farmer data, we can remove a lot of the obscurity of information and increase the trust which is key for governments and development agencies. Our use of the Hello Tractor application is also an innovative way of gathering farmer and field data

 
New and Proprietary Dataset: The combination of farmer data and field data, at scale, creates a new and exciting dataset with huge possibilities.

Bouquet of Services: Finally, we think the overall model of building a bouquet of services to create economic viability in an environment like this is innovative in it's approach to this old problem.

Our company currently offers tractor services to smallholder farmers in communities across Nigeria. This is where our solution starts. 

Once our tractors go into a community, the tractor operation teams begin to register farmers using an application (Hello Tractor)- which is designed to work completely offline - and sync once a connection becomes available. This registration collects significant amounts of data on the farmers (from source of inputs and sales to history of crops and even down to education level and family size) as well as their fields (boundary data).

The teams aim for a total farm land size of 300 hectares within a 10KM diameter. 

The teams also create relations with the community head, who helps in creating a soft landing for their work. The community head will also help in location selection for the hub. 

Once the hub is deployed and setup, word spreads fast in the community, supported by our communication efforts. The preregistered farmers then request for product and services via the hubs. 

On the other hand, the vendors who provide the service are also preregistered and able to deploy the service once the hub is setup and demand comes in.

Improving the connection of smallholder farmers to a larger economy will improve their livelihoods.

Three of the larger aspects of our solution are input sales, tractor services and post harvest processing and sales


INPUT SALES
Activity: Farmers buy their inputs via the hubs.
Outputs: Farmers receive less adulterated inputs, at stable prices, in timely fashions
Short term outcomes: Farmers enjoy more convenient and reliable supply and get better yields
Long term outcomes: Increased earnings for farmers, better planning and more stable production.


TRACTOR SERVICES
Activity: Farmers book and receive tractor services via the hubs
Outputs: Farmer's lands are prepared better, in faster time frames, with reduced efforts
Short term outcomes: Farmers are able to cultivate larger land, productivity improves.
Long term outcomes: Reduced perceived difficulties of the occupation. Industrialised thinking. More farming, more production


POST HARVEST SERVICES
Activity: Farmers use the post harvest processing machinery situated at the Cluster hubs.
Outputs: Harvest is processed faster with less stress to the farmers
Short term outcomes: Farmers produce better quality produce which commands a better price in the market. Farmers earn more money from their harvest
Long term outcomes: Markets trust farmers better and their is more reliability in a system which ultimately favours the farmer's livelihood. 

FINANCIAL SERVICES

Activity: Farmers open bank accounts, run transactions through accounts
Outputs: Farmers are included into financial systems. Generate financial histories
Short term outcomes: 
Long term outcomes: Increased opportunities for financing to their agricultural activities and beyond.

The limitations in public sector service delivery to our users start from the lack of information on the farmers and the high cost of accessing them. By keeping a detailed and up to date register of the people, incorporating any public sector programs into our solution is all but a plug and play situation. Incorporating the regional identity system as a part of the data we hold on the farmers adds this information as a unique identifier allowing governments manage the delivery of the services.

Like the point above, once the needs of the social protection program are understood, our data allows for identification of who needs what. Our active engagement with the people means we can also conduct surveys and get more information as needed. The hubs are a perfect center for people to come and receive things. All in all, our solution is very user friendly for incorporation.

We are currently able to extract all our data from all the applications and technologies we are using.

The applications we use for farmer and field registration are built to operate fully in no connectivity environments and then they upload to servers once connections become available. The applications do not require much interaction from our users and their needs simply need to be vocalised, then operators will be input them into the systems

We are planning to launch 2 pilot hubs by October 2020. The combined number of people we will serve is 584. We plan to launch about 10 hubs per year, which will mean 50 hubs in the next 5 years. Assuming each hub serves 300 hundred people, we will be serving 15,000 farmers in 5 years. Note that the impact of our work also extends to the family members. From our pilot community data, the average smallholder farmer house hold is 9 people, so the impact reach will be up to 135,000 people. Ultimately, our vision is to create some sort of franchise model. Not for revenue generation, but simply because the area to be covered is entirely too vast and the problem needs many hands on deck to solve it. This is where the impact can scale up to the millions.

Our goals in the next year are to launch at least 5 hubs. 2 by the end of 2020 and an additional 3 by the end of 2021. In 5 years we plan have launched 50 hubs and rolled out some form of a franchise program to allow others implement.

Cultural - different communities will have different cultural dispositions and these could affect penetration and acceptance success

Security - there is a rising level of insecurity, particularly in rural areas of Nigeria, which could affect our ability to operate in these communities

Climate change - changing climatic conditions could lead to uncertainty in the production of the farmers

Financial - We will need to secure adequate financing to grow our model and the inability to access financing will limit the solutions. 

Cultural - Our strategy has always been to have representatives of the community as stakeholders in the model. They play a key role as "cultural liaisons" providing advisory services and guidance. This is scalable and sustainable

Security - working with the community leadership, local police, military and vigilantes, we can create pockets of security around our operations. We have successfully operated in one of the most unstable regions in Nigeria (southern Kaduna) using similar strategies. In addition, we will conduct security assessments before selecting communities - avoiding know challenging environments in total. As part of our longer term community development, security development will be part of our efforts.

Climate Change - closely observing trends will be key in understanding the effects in the area. Partnering with organisations and technologies to allow this is part of our mid term plans. Also, irrigated farming for production during the West African dry season will circumvent climate change issue pertaining to excessive or insufficient rainfall. 

Financial - the solution will require money to grow. We expect that the financial viability of each Cluster will present viable investment models. 

Our solution is part of our company called Farmore. We see it as project under our company which has the potential to be standalone organization, or remain under our company as it currently is. It is for profit, with some non profit aspects like community development

We have 10 full time team members and 4 part time staff. Our full time team are employees of the company - Farmore. The part time staff currently work on a demand basis, supporting activities in the local communities where we are planning for our pilots.

Farmore has been working in rural farming communities since 2016. Our original idea as a company was to develop our unique system of contract farming, which engaged the farmers as equity stakeholders in farming projects - as opposed to hired labor. We grew year on year, starting from 15 hectares and 40 farmers, growing to 1500 hectares and a few thousand farmers and laborers. 

This experience has given us a first hand understand of the problem faced by the solution benefactors and has also helped us understand potential operational challenges in implementing our idea, as well as ways of dealing with them.

Our work with smallholder farmers has covered all aspects of their production including financing, land acquisition, land clearing, land preparation, farmer recruitment and administration, input sales and distribution, extension services, harvest and post harvest services as well as sales

We started working on this idea when we began to think about scale. Direct management of cultivation posed a number of limitations to scale and we had to find a way 

We have first hand used the technologies, community relations strategies, farmer management and administration tools and systems, partner relationships which are key to succeeding with our solution.

1. Hello Tractor: Tractorization services remains one of the most in demand services for small holder farmers. Hello Tractor's application for organizing demand and tractor service delivery is a key part of the model around which our solution is based

2. One Acre Fund: One Acre Fund operates a number of programs aimed at supporting smallholder farmers. After successfully delivering tractor services to their supported farmers, we are working to deploy Clusters to serve some of their communities

Our business aggregates smallholder farmers (segment - beneficiaries) into clusters with minimum farm land of 300 Ha in a 10KM radius and deploy shipping container based hubs there, through which products and services (type of intervention) will be sold to the farmers (by segment - customers). Farmore will operate the tractor services directly and charge for access from other vendors.

Our value proposition to the farmers is providing increased, accountable access to improved goods and services. The hubs will collect data from farmers which will be used to measure impact

Our value proposition to the customers is organised demand of a new market.
We will reach our users by referrals from our extensive network, for new communities to operate in. We will reach customers by identifying organisations and pitching.

The key activities are 1. aggregating farmers 2. deploying hubs. 3. signing up vendors. 4. measuring impact 5. managing vendors and service delivery
The key resources are 1. technology for farmer registration and aggregation. 2. technology for cluster management

Key partners are 1. community leadership 2. local government 3. financial service providers (agency bankers) 3. farming input partners
The cost structure will see us deploying capital to aggregate farmers, acquire, refit, equip and deploy the hubs. This will be a fixed cost for every new cluster. 

Revenue will come from tractor services (60%), commission based sales (20%), vendor fees (20%)

Surplus will be invested in communities to expand impact and footprint as well as in new hubs.

We will bring in revenue through

1. Tractor services - using our own fleet of tractors, we will expand on our current tractor service offering to the farmers

2. Post harvest processing services - e.g. maize threshing and drying, soybean drying, winnowing. 

3. Brokerage for sales of produce - leveraging our access to large players, we will determine buyer quality needs. Then we can work with the farmers to offer services aimed at not only making their lives easier, but also increasing the value of their harvest through proper post harvest processing and handling. We can then get them a premium price for their produce and make money from sales commissions.

4. Commissions for sales of insurance services - working with insurance service providers, we plan to sell primarily agricultural insurance. Opportunities to sell health and life insurance also exist.

5. Fees to third parties for service offerings to farmers
A. Financial Services - this will be at the core of the service offerings and our financial services partner is a key partner for the overall model. We have started discussions with some banks focussed on the agency banking model. We plan to charge fees for their operations.
B. Input Sales - access to quality inputs remains one of the biggest challenges for small holder partners and it's a pain which we must absolutely tend to. Working with a reputable partner, we plan to charge fees for access to the market.

We have not raised funds. Our progress to date has been funded by the company founders. While we haven't launched the pilot solution yet, we have provided tractor services to farmers in the communities where we plan the pilot. While we have a range of services which we offer the farmers, the average revenue per hectare is $40.

Our approach to the solution is on a per unit basis. Our main first milestone is 5 Clusters by the end of 2021. With a capex requirement of $45,000 per cluster, we are seeking $275,000 - including 50,000 for opex, which we hope to raise over the course of 2 years. We intend to do this through a mix of grants, retained earnings and debt.

Capital Expenses

1. 2 x Pilot Shipping Container Hubs - $15,000
2. Post Harvest Processing/ Storage Equipment - $30,000

Operational Expenses
1. Salaries - $ 8400
2. Community Support - $2000
3. Travel & Transport - $1250
4. Phone & Internet - $1250
5. Technology - $1500


Total
Capital Expenses - $45,000
Operational Expenses - $14,400
Total - $59,400

We really believe our solution is a key step in the development of this ecosystem which will start to sustainably revolutionize the lives of smallholder farmers. 

To be selected for this prize will really provide huge validation of our solution which is a priceless thing. While the funds will go a long way in driving us forward, we are also keen to the mentorships and partnerships that the opportunity will bring. One of our most exciting things for us is to work people who are just as passionate about big solutions and we are hopeful for exposure to this. We also understand that technology will play a key role in the success of our solution and the opportunity to work with Google Expert Developers is a most ideal outcome.

We are keen to work with

1. Solution Technology- we are not a techonology company at heart so working with experts who who can imagine the implementation of modern technologies - particularly blockchain and machine learning - into our operations, wiuld be highly beneficial.

2. Board Members/ Advisors - experts who can bring in experienced and unique perspectives to our plans

3. Marketing/ Media and exposure - we believe that we need to reach the right

1. Identity & People Data Systems - e.g. Mastercard, Visa

2.UN SDGs/Impact Organizations and Investors - Our work aligns with key SDG goals such as economic empowerment, industry, innovation and infrastructure and gender equality 

3. Local Banks/ Financial Institutions 

4. Agricultural Input Manufacturers

5. Agricutural Mechanization Companies