A study by McKinsey and Co. suggests that while sub-Saharan Africa has the potential to increase (even triple) its agricultural output and overall contribution to the economy, the sector remains largely untapped due to a lack of access to quality agricultural inputs Infrastructure such as warehousing and market. This is in an economy that generates 23% of its GDP from agriculture, with 60% of the population engaged in small-scale farming.
Ghana’s Agritech Farmerline has identified critical gaps in the region’s agri-food sector and has stepped in to provide technologies designed to improve farmers’ access to quality inputs and education on best farming practices, including how to better manage the impacts of climate change . Its solutions are also designed to give farmers quick access to markets to generate better incomes and reduce post-harvest losses and waste.
$12.9 million Series A pre-funding
Farmerline was founded in 2013 by Alloysius Attah and Emmanuel Owusu Addai. It’s now poised for a fast start with plans to reach 300,000 farmers in 2022, a nearly 400% increase in growth compared to last year. It will begin its expansion in Ghana before expanding into neighboring Ivory Coast, accelerated by a new $12.9 million pre-financing ($6.4 million equity and $6.5 million debt) .
The funding round was led by the Acumen Resilient Agriculture Fund (ARAF) and FMO, the Dutch bank for entrepreneurial development, with participation from the Greater Impact Foundation. Lenders included DEG, Rabobank, Ceniarth, Rippleworks, Mulago Foundation, Whole Planet Foundation, the Netri Foundation and Kiva.
Attah told TechCrunch that Agtech will use its initial equity funding to build physical infrastructure such as warehousing and distribution networks.
“We see ourselves as the Amazon of farmers…a digital and physical infrastructure that powers a marketplace that enables the movement of goods and services in and out of rural areas,” Attah said.
“We plan to use the funds to strengthen our infrastructure, i.e. warehouses and distribution channels. Having a network of partners who can help us get inputs like fertilizers and seeds to rural areas quickly and produce agricultural products from rural areas is important and part of our job. We don’t intend to bring all the logistics and warehousing in-house, but we do want to be more efficient and that means working with the right partners,” he said.
Farmerline works with agribusinesses (typically small retail stores that carry farm supplies) to ensure farmers have access to quality supplies. These shopkeepers, typically the first point of contact for farmers, are used by Farmerline to distribute training materials and bring farmers together for training. The partner stores use the startup’s Mergdata, a proprietary AI technology platform for supply chain intelligence, to digitize the farmers they serve and generate the data the Agritech needs to predict demand for farm inputs.
“We’re tapping into that network of agribusiness, and in a way, we’re tapping into a network of trust — the relationship that these shopkeepers have with farmers to help us expand,” Attiah said.
The partnership with retailers, Attiah said, came about after Farmerline realized that working directly with farmers would amount to “competing with local companies, and it didn’t make sense. The cost of going door to door to every farmer was really high,” he said.
“Working with the agribusinesses has made our businesses scalable and also helped us have more impact, especially during the pandemic when we were unable to travel – they became our eyes and ears on the ground. We sent them trucks full of fertilizer and seeds, which they then distributed to the farmers. This model worked really well.”
Using Mergdata, Farmerline can measure the performance of its partner agribusinesses (retail stores) and develop a credit scoring program that guides the issuance of business expansion loans.
According to Attiah, the startup more than doubled its direct reach to 79,000 farmers last year, up from 36,000 in 2020 and 8,000 in 2019.
Additionally, through third-party licensing for Mergdata – which is now used by 180 clients including governments, NGOs and agribusinesses to ensure transparency in their supply chain and traceability – Agtech has digitized over 1 million farmers in 26 countries around the globe. Benin in West Africa uses the platform as a national market information system.