1/ iFarmer, the Dhaka-based agriculture and fintech startup, has entered into a partnership with Hello Tractor, a Kenya based software company that helps “agriculture equipment owners manage their entire operations, from monitoring their assets, scheduling jobs and managing their crews, to route optimization and fuel management.” The partnership will allow Hello Tractor to launch its service in Bangladesh and iFarmer to get into the agriculture machinery space.
2/ In a blog post on its website, iFarmer explains that the new partnership will allow the company to get into financing agriculture machinery such as tractors and combined harvesters enabling farmers to access these machines. Similarly, using Hello Tractor software funders will be able to track and monitor these machines and their performance. The move will allow iFarmer to improve access to agriculture technology and machines for its farmers and thus improve overall efficiency and productivity.
3/ Over the next one year, Hello Tractor will expand their service in Bangladesh and connect 1,000 smallholder farmers to mechanizations while creating opportunities for tractor operators and booking agents.
“One approach to view iFarmer development is that the company is building an ecosystem with an ambition to maximize benefits for both farmers and retail farm investors who invest in these farmers through the iFarmer platform.
It begins with input financing. iFarmer works with retail and institutional investors and collects investment that it uses to finance farmers in the form of providing them agriculture inputs. In exchange, it gets a share of the profit from farmers which it then shares with the retail investors who originally invested in these farms through iFarmer and keeps a commission for itself.
In order to make the entire thing work, iFarmer has to ensure that the farmer makes a profit. Unless farmers make enough profit, they will not be able to repay iFarmer expected returns and iFarmer will fail to provide a return to farm investors.
The key predicament for the majority of farmers to earning a good margin is middlemen and access to the market. Farmers often have to rely on middlemen for selling their products. As a result, farmers can keep very little of what they earn. This is a challenge for iFarmer as well. Hence, iFarmer gets into creating access to the market for farmers. The company has been working with businesses to supply grocery and agriculture products in Dhaka. It coordinates between businesses and farmers to enable the market. Today, iFarmer has built a strong B2B agriculture produce supply business and aims to get into the B2C business in early 2021.”
iFarmer aims to build an ecosystem. To that end, getting into agriculture machinery financing cuts both ways. It creates a new vertical for the company where it can fund. Similarly, it helps improve overall output for farmers. Again from iFarmer: Enabling investment and creating wealth through farming and agriculture:
“The entire ecosystem creates a virtuous cycle of good returns for every participant. iFarmer gets a commission, which gets bigger as farmers make more profit. Farmers make more money and thus can share more profit with iFarmer which iFarmer can share with its retail investors. Similarly, it creates a layer of protection for the retail investors who invest with iFarmer by ensuring not only monitoring but also the right market price and return.”