Who can benefit from this study?
Organisation responsible for case study:
Name: Agro Supply Ltd
Org. type: For-Profit/business
Agro Supply: Financing agricultural technologies through mobile micro-savings
Post Status: Complete
Main Project Location: Kampala
Project country/countries: Uganda
Project dates: 2017 –
Last updated: 9 December 2022
Brief overview of the Case Study
Agro Supply aims to end poverty in Africa through an agricultural technology approach. This is a layaway technology that allows farmers to use the USSD code (Dial *284*43#) to access their mobile micro-saving. Through the save-to-buy layaway menu, farmers can scratch card and mobile money for micro-savings. Moreover, farmers can also save for other inputs like organic fertilizers, and solar irrigation systems. Presently, Agro Supply’s field agents conduct on-site training for their registered farmers prior to the planting season. They have also designed a digital extension training system sending messages about Agronomy directly to farmers’ phones and there are developments of an AI training system that will use interactive voice response (IVR).
The challenge or problem
Credit is pretty limited in its reach when it comes to smallholder farmers. Agro Supply is addressing the gap in the market for financial services suited to the needs of smallholder farmers. We work with smallholder farmers in Uganda and East Africa (over 45% women), who are mostly locked out of microcredit and government lending programs and are not able to easily purchase seeds and fertilizer. Financial tools are simply not designed to help smallholder farmers save money when they have it. Farmers’ income at harvest time runs out by the time they need cash the most during planting time for seed, fertilizer, and other farming inputs. When farmers do have cash, they tend to spend it down over the year instead of prioritizing farm investments that they won’t need until months later. This behavioral loop doesn’t help them break the cycle of poverty each season they are left looking for cash to purchase seeds or fertilizer and oftentimes plant with poor quality inputs that result in low farm yield. Smallholder farmers produce 70% of the world’s food. With agriculture regarded as unprofitable, rural areas are losing young farmers to urban migration.
The solution that was implemented
Agro Supply allows farmers to save and invest in farming inputs rather than relying on loans and credit. It’s a 21st Century mobile-enabled layaway plan. Through the Layaway system, a farmer creates an account. Using the scratch card, they start making micro-savings for inputs in denominations of UGX 2,000, UGX5,000, UGX10,000, UGX15,000, and UGX20,000. A farmer is required to keep saving until they accumulate the amount required to buy inputs for their land, at times farmers can present physical cash if they had saved less amount. Our Agent initiates a withdrawal in the Layaway system, the farmer approves it and then seeds or farm input is given to him or her. This prevents farmers from borrowing money to invest in farming.
Step 1: Mobile layaway: Agro Supply’s unique mobile layaway platform allows farmers to use their mobile phones to purchase seeds and fertilizer and other farm tools in small increments without taking credit, farmers can make small payments toward their farming needs for the coming season digitally using mobile money or using scratch card sold within the community by Agro Supply Agent.
Step 2: Input Delivery: Agro Supply delivers inputs to locations within walking distance of every farmer we serve.
Step 3: Agronomy Training: Farmers receive training throughout the season on modern agricultural techniques, training is done both digitally through SMS and an AI system and in-person through the network of our village Agents spread across Uganda.
Step 4: Market Facilitation: We connect farmers to large buyers, who provide our farmers with better prices than the middlemen and teach farmers about market fluctuations and post-harvest handling, so that they can time crop sales to maximize profits, during crop sales our village Agents capture the transaction between the farmer and the buyer and feed the information into our Layaway system to help Agro Supply determine the impact of our work on each farmer.
What results were achieved?
In 2019 this service served 7,000 smallholder farmers directly, distributing 45,000 kgs of inputs. By the end of 2021, we will supply over 25,000 smallholder farmers across Uganda distributing more than 100,000 kgs of inputs. For more information on some success stories of farmers' see here: https://agrosupplyltd.com/success_stories.php
Lessons and recommendations
The Agro Supply case shows how supporting small-scale farmers in Uganda is possible and does not have to rely on traditional models of credit or micro-financing. The multiple success stories of the farmers involved in our initiative illustrate the value of providing a platform for micro-savings, alongside agricultural training and capacity development. Agro Supply has enabled many farmers to strengthen their economic livelihoods by expanding their agricultural yields. These positive outcomes have ripple effects in the surrounding communities by strengthening food security.
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