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Nigerian agri-tech platform connects farmers to local investors

In Ifo, a town in the south-western Nigerian state of Ogun, a path to a poultry farm is nestled away from freeway traffic heading to Lagos, the country’s commercial hub.

In a large brooder, tens of thousands of seven-day-old chicks are stretching on the dirt and dipping their beaks in and out of the feeders.

Dayo Adeoye picks up two chicks and places them on a a scale. “I need to check their weight to be sure they are meeting our target,” he explains. “This helps us optimise production and maximise profit.”

Mr Adeoye is part of a team of consultants and farmers recruited by Nigeria’s first digital agricultural platform Farmcrowdy. Started by e-commerce expert Onyeka Akumah and agricultural consultant Africanfarmer Mogaji, the platform aims to help smallholder farmers improve their production.

Farmcrowdy’s CEO Mr Akumah describes the firm as “a social impact” organisation.  The firm received seed funding from two institutional investors in Lagos, Nigeria and Frankfurt, Germany in December 2016.

Most farmers in Nigeria, like the much of Africa, are smallholders who struggle to get the financing they need to improve farming methods and boost their yields.

Farmcrowdy is trying to fix this by connecting farmers directly with local investors with the aim of generating a healthy return for both the ‘farm sponsor’ – as the platform calls investors – and the farmer.

“If we keep ignoring smallholders we will certainly go hungry one day,” Mr Akumah tells This is Africa.

“Most of these small-scale farmers are abandoning their farms and migrating to the cities because they cannot commercialise their operations due to lack of finance, poverty and access to markets.”

Established in September 2016, the digital platform encourages Nigerians to participate in agriculture while going about their normal day jobs.

Farm sponsors select the kind of farms they want to invest in via the firm’s website shop, and then release the funds to Farmcrowdy to set it up. Options for investment include maize, poultry, cassava and tomato farms.

A one acre, six plot maize farm – the priciest option – will cost an investor 211,200 naira (or $671), with Farmcrowdy advertising a 20 percent return every 6 months. After the investment cycle, farm sponsors can choose to cash out or reinvest on the platform. The investment also includes insurance coverage.

Currently, there are some 500 farmers working on farms managed through Farmcrowdy and over 200 farm sponsors, mostly working class urban dwellers.

Upon receiving investor funds, Farmcrowdy hires farmers, leases land, and helps source seed or buy animals. The farm partners get bi-weekly updates about their farm progress via text, pictures, or video.

At the end of farming cycle, the platform coordinates getting the harvest to market through pre-negotiated offtake deals with buyers and processors. The farmer gets 40 percent of the profit, the farm sponsor gets another 40 percent and FarmCrowdy takes 20 percent.

The investment cycle can run from four months to 12 months depending on the type of farm, with return on investment ranging between 13 to 25 percent according to FarmCrowdy’s website.

Agriculture used to be the mainstay of Nigeria’s economy, but the discovery of oil in the Niger Delta in 1956 shifted the country’s focus to hydrocarbons to the detriment of other industries.

In the 1960s, Nigeria was a major exporter of agricultural products like palm oil, cocoa and groundnuts. Now it relies heavily on imports to feed its population of 182 million.  The ministry of agriculture estimates the country spends about $22bn annually on food imports.

Nevertheless agriculture still employs about two-thirds of the country’s labour force and contributes 40 percent to GDP, according to the International Fund for Agricultural Development. Despite this, Nigeria remains a food-deficit nation, with most farmers still operating at subsistence level and constantly battling poverty.

Across Africa, investment in agriculture also remains low. Estimates show that only 3 percent of funds loaned by African banks went to agriculture. Small-scale farmers receive little of this meagre financing, their farms deemed too small for investment by financial institutions.

Mr Akumah says Farmcrowdy plans to expand into markets in west and east Africa. it already has farms in four states in Nigeria, and it intends to add another soon. Ambitiously, he would like to have 10,000 farmers on the platform by the end of 2017.

But while Farmcrowdy’s model takes on some of the key issues facing smallholders, there is only so much it can achieve without more government support for agriculture.

“Farmcrowdy gives the farming sector a business coloration, but there is also a need for favourable policies which will enable the growth if the sector,” says Professor Oladapo Dipeolu of the Federal University of Agriculture in Ogun state.

Source: This is Africa Online Magazine

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