Dossier

ICT4Ag start-ups: Building a better e-agribusiness

The recent boom in ag-tech start-ups has helped to further agricultural transformation and improve farmers’ access to valuable ICT-enabled services. But to continue this progress it is pertinent that entrepreneurs design sustainable business models.

Revofarm is leading the way in providing weather and agronomic data to farmers on their phones © Raneil Robinson
Revofarm is leading the way in providing weather and agronomic data to farmers on their phones © Raneil Robinson

Thursday, 26 April 2018

Private technology developers across the Caribbean are creating market information systems to help farmers make better decisions in the field and link them to new markets. These emerging e-agriculture business models are improving crop production and marketing, and increasing revenues for farmers and developers alike.

Agribusinesses across the Caribbean are challenged by a lack of market knowledge, technology and business support. Recently, however, innovative software developers in Jamaica and Trinidad and Tobago have been using ICTs to fill these agricultural information gaps. These e-market intelligence systems are also revolutionising the agriculture sector by digitally connecting producers with markets. For instance, Revofarm, a Jamaican SMS and web-based app, is leading the way in providing weather and agronomic data to farmers on their phones and empowering them to make smart, field-level decisions.

The Revofarm business model was born out of an idea by Ricardo Gowdie, product manager and co-founder, to assist his mother, a trader in the Jamaican markets, by improving her access to a wide variety of crops. In 2014, Gowdie formalised his idea by building a team, which included Oshane Gooden, lead software developer and Warren Robinson, user interface and experience designer. Gowdie explains his vision, “One in every three Jamaicans is a farmer, yet farming only contributes 6.5% to our GDP, with Jamaica importing about €800 million in food annually. Many of the over 200,000 registered farmers in Jamaica live in poverty, unable to break even. Therefore, we want to make agriculture more attractive and sustainable by reducing input costs and maximising production to yield more profit for farmers.” In 2014, annual agricultural production declined by 30% after months of extreme drought accompanied by brush fires. As a result of these climatic challenges, Gowdie also wants to educate farmers about how they can reduce climate change impacts on their crop production.

A long road to profitability

Revofarm’s first major developmental step was entering ‘Start Up Jamaica’, a regional accelerator competition for entrepreneurship and innovation across the Caribbean. Placed in the top three, Revofarm won a place to spend 3 months in 2014 at Oasis 500, a business incubator in Jordan. During this time, they registered the company, and worked with mentors to validate the business concept by studying the market and its needs. In November 2014, the Revofarm team went on to represent the region in the South American leg of the CTA-sponsored Hackathon competition in Peru. With the help of experts brought in to provide mentoring, the team refined their revenue stream, began building their customer base and worked on making the business model sustainable.

“In the ICT4Ag space, the road to profitability is long, but we are getting there. For now, our reward is seeing how the technology has helped farmers improve their planting and selling processes, and increase their revenue. Our main service is to provide access to data, for which farmers’ pay a subscription fee. We recently launched a second service connecting farmers to new markets. Although it is not yet generating revenue, it looks promising,” Gowdie states. Revofarm’s partnership with aWhere in the United States also gives it a competitive edge; aWhere supplies real time satellite weather conditions, pest and disease indices, agronomic data and crop growth stage data. As a result, the aWhere services form part of Revofarm’s main business costs together with research, development, and SMS technology.

Adapting to market challenges

However, despite the progress in e-services, a key challenge in the Caribbean for ICT-enabled agribusinesses is that farming is plagued by low literacy rates, and farmers are slow to adapt to technology. Revofarm has overcome this hurdle by focusing on a subset of its customer base to work mostly with young innovative farmers. Many farmers also do not have access to the internet in the field, so Revofarm reorganised its business model to be able to reach 100% of Jamaican farmers by incorporating SMS technology into its software. With farmers’ reluctance to pay for technology, Revofarm split its services into three customised package solutions so farmers are able to purchase what they need and can afford from a combination of the following: market insight, weather and agronomic data, and market linkages. In addition, they are collaborating with NGOs, such as the Jamaica Castor Industry Association, which will be using their services to provide members with daily market information.

Gowdie states, “Financing is a big challenge, because investors are sceptical about the agri-space due to its unpredictability. By using our technology, we hope to make the sector more predictable, thus increasing access to funding for farmers and also ourselves.” In an ever-changing technological environment, Gowdie plans to remain relevant by investing in research and development. “Our vision is to have 300,000 farmers using our data system by 2030, and improving their yields by 30%, lowering Jamaica’s food import bill while contributing to GDP. We are also changing our business model to become more farmer-centric. We want to understand their challenges, and then provide technological solutions they need. In order to remain sustainable, we plan to add product lines and, in the near future, we intend to build our own monitoring hardware to provide integrated field monitoring systems for farms.”

Moving beyond market delivery services

Trinidad and Tobago’s Market Movers is also recognised as a leading digital agri-business. In 2016, they secured Ernst & Young’s Emerging Entrepreneur of the Year award as one of the fastest growing local businesses. Since its formation a decade ago, the firm has transitioned from an online retail distribution platform for fresh fruits and vegetables to adding wholesale and corporate customers, while expanding into dairy and convenience lines. Its main competitor in Trinidad and Tobago, HubBox Grocery, also delivers some fresh produce items. However, Market Movers guarantees freshness through its alliances with farmers, and has further differentiated its services to provide pesticide-free products. In order to remain sustainable, the firm no longer offers free delivery, as this proved to be its largest operating expense. Its main customers were initially busy housewives, professionals and health-conscious individuals, however, as the business has expanded to provide export business solutions, agro-processing firms have taken an interest in the company.

David Thomas, Market Movers’ managing director, shares why the business decided to diversify, “In the beginning, our biggest challenge was access to cash flow, particularly when we started offering the wholesale option which required sizeable credit facilities. In order to sustain this, we needed new revenue streams. We saw a gap in the market to help companies get their products on local shelves, and also to export. Our niche has always been agriculture-based food industries, so we decided to use our experience in this area to help agro-processing firms.” As a result, Market Movers launched two new business services to help these agro-processing companies become export ready by offering e-commerce website solutions and packaging design options for international markets. By adding these income-generating services, the company was able to mitigate its cash flow issues and become more profitable. Market Movers continues to innovate and, in 2016, introduced Caribbean Papaya – the first local frozen fruit convenience product in Trinidad and Tobago – under its Farm & Function brand.

See also our field report from Senegal: Sooretul - local food products just one click away

Agrocentral: looking to the future with blockchain technology

The Agrocentral business-to-business platform in Jamaica streamlines communication between large-scale buyers, such as agro-processors and restauranteurs, and their suppliers, i.e. farmers. Users pay a monthly service fee to access this ‘one-stop shop’ of tools where they can create and automate orders, track product requirement quotas and generate metrics. This digital centralised space offers a unique way to manage agriculture transactions. Buyers place their orders online and suppliers receive notification via text message, email or a telephone call. As a result, key business costs for the company are website maintenance, web services, and telecommunications.

Janice Mcleod, Agrocentral co-founder, explains that their main challenge, which they are yet to overcome, is that stakeholders view their team as ‘young’, and therefore not having adequate experience. This perception has hampered Agrocentral’s ability to source new customers, which they do through one-to-one meetings, the company website and media coverage. Mcleod also feels that this perception has constrained their access to capital and expertise. She states, “Agri-tech businesses must innovate or die. In 2013, we started off as a communications system to build farmer information. However, due to fragmentation of the farmer landscape, collection and access to data proved to be challenging. So we decided to move further up the value chain to collect information from buyers. While our main clients are here in Jamaica, we also have a customer in Abuja, Nigeria and we expect to increase our exports in the future. We are focusing on Africa as a first step in the international market as their level of technological development is similar to the Caribbean.”

In addition, Agrocentral is exploring the advantages of incorporating blockchain technology (BCT) into its website. BCT is a de-centralised record-keeping system, which is updated in real-time (see Spore article, Digital innovation: Blockchain’s disruptive potential in ACP value chains). Mcleod believes, “We can use BCT to manage our database of economic transactions to record frequency and timeliness of payments. This will allow us to determine how well users pay for the service, farmers will also be able to share how they performed as buyers, and we will also be able to determine which farmers performed best – allowing us to determine which are ‘trusted’ businesses”.

Natalie Dookie

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The Technical Centre for Agricultural and Rural Cooperation (CTA) is a joint international institution of the African, Caribbean and Pacific (ACP) Group of States and the European Union (EU). CTA operates under the framework of the Cotonou Agreement and is funded by the EU.