Using technology to increase access to mechanization for smallholder farmers in sub-Saharan Africa

Summary

Across sub-Saharan Africa, the use of machinery in modern farming is widely recognized as essential to increasing the productivity of all other inputs (e.g. seeds, fertilizer, water, labor, time). Through its Internet of Things (IoT) digital solution, Hello Tractor is connecting tractor owners and smallholder farmers, ensuring up to 40 times faster planting and reducing costs by up to one third. This is increasing farm yields and making profit for tractor owners.

Challenge/Problem

Africa has the world’s highest rate of population growth, with estimates indicating that one in four people will be living in Africa by 2050. It is also the continent where agricultural productivity is lowest. The lack of access to mechanization contributes to a cycle of entrenched poverty and food insecurity, as well as a gender productivity gap that jeopardizes community, country, and continent stability. In Nigeria, only an estimated 50,000 tractors are available, compared to millions of smallholder farmers. This mismatch between supply and demand of tractor services increases transaction costs, including the time and distance involved in connecting smallholder farmers to tractor services.

Solution

Hello Tractor’s technology connects tractor owners and smallholder farmers in Sub-Saharan Africa through an Internet of Things (IoT) farm equipment management and sharing application that seeks to sustainably support mechanization by reducing transaction costs between tractor owner and farmer. Farmers, through the aid of local agents aggregating demand, are able to make requests for tractors through the company’s app, which are then routed to tractor owners who accept the requests and deploy their tractors to service these farmers. The company’s platform simplifies complex data to make tractors profitable as business assets even in smallholder farming systems.

Hello Tractor is minimizing the cost of acquiring farmers’ bookings while ensuring that these farmers receive quality and timely services that are both affordable and yield-optimizing. 

Tractor contracting is made profitable and farmers more productive through a software and analytics platform to improve decision-making, transparency, and efficiency. At the core of Hello Tractor’s value proposition is proprietary software and data models combined with IoT technology developed in partnership with Calamp hardware. A low-cost monitoring device is installed on the tractor, connecting it to the Hello Tractor cloud for remote data-tracking and analytics.

Hello Tractor’s entry into Nigeria has strengthened the mechanization ecosystem and helped to increase the usage of Information and Communication Technologies (ICTs) in agriculture. In 2018, John Deere signed a significant deal with the Federal Ministry of Agriculture and Rural Development (FMARD) to bring 10,000 new tractors to the market over the next five years. As part of the deal, Hello Tractor will help implement a pay-as-you-go (PAYG) model in close coordination with top stakeholders across the public and private sector, including commercial banks, private tractor service providers, dealers and small- to medium-scale farmers. By the end of the five-year partnership, the project is estimated to bring 9 million hectares of land into production, creating 37 million metric tons of additional food and adding over 2 million direct and indirect jobs.

Results

Since 2017, about 250,000 smallholder farmers have acquired Hello Tractor services. Farmers who accessed tractor services via Hello Tractor reported saving an average of US$125 on land preparation. This represents over US$31.25 million dollars in savings for the more than 250,000 farmers who have been serviced so far.

In addition, farmers who used Hello Tractor enjoyed yields 60 per cent greater than those of farmers who accessed tractors through other services. Hello Tractor has serviced more than 250,000 farmers and yielded 6.25 million bags of rice – double the harvest of farmers who do not have access to tractors and are relying on manual labor.

An analysis of rice farmers indicates a 143 per cent increase in farmer profits, with rice farmers projected to make an additional US$377 when using a Hello Tractor-connected tractor.

Lessons Learned

A key factor for improving smallholder farming is simultaneously addressing value chain challenges. Farmers represent one link in a chain that includes contractors, dealers and off-takers whose needs must be addressed to create an environment that enables success. Hello Tractor’s primary customers today are contractors, small business owners who require solutions that help lower costs and drive revenue growth in order to serve smallholders. The company has used this simple but realistic premise to guide platform improvements and prioritize a growth strategy: to service more smallholders, the technology and support services must enable tractor owners to operate successfully.

Next Steps

Through technology, Hello Tractor is creating sustainable business opportunities for compact (sub-100-horsepower) tractor owners while ensuring smallholder farmers have affordable and convenient access to mechanization services. Over the next five years, the company intends to position itself as the leading telematics solution provider for sub-100-horsepower tractors globally. To do this, Hello Tractor has set strategic goals including expanding into more than 15 new markets, building market-leading technologies and products and reaching 20,000,000 farmers by the end of 2023.