Editor’s Note: Van Jones is head of strategy and cofounder of Hello Tractor, a technology platform connecting Nigerian farmers with tractor services. Previously selling tractors to farmers on credit, which you can read about here, Hello Tractor has since pivoted a little to sell its software to tractor owners to monitor their fleets, market their services to smallholder farmers, and enable pay-as-you-go agreements between them. In the wake of a deal with John Deere and the Nigerian government, we asked Jones to give us an update on where the business is today.
Mechanization in the developing world is not going to play out as it has in the developed world. In markets characterized by large populations of small growers, the common farmer is managing a plot of land too small to justify investing in heavy equipment. Further compounding these challenges are small farmers’ lack of liquidity and access to capital. In these markets, it’s far more common for tractors and other farm equipment to be purchased by entrepreneurial men and women who view tractor ownership as a business opportunity. With some capital in hand, these contractors purchase tractors with the intention of servicing the local small farmer population. These businesses can be fairly successful within a targeted geography, but the challenge is reaching the fragmented smallholder population on a broader scale. As the number of tractors multiply and owners seek new customers to offset costs, the complexities of operating the business profitably grow. Often, a small-scale tractor owner’s first instinct may be to grow only by onboarding additional staff to monitor, operate and repair tractors. Owners may also hire salespeople to find farmers that are interested in hiring them out for service. However, managing a business by linearly increasing staff will not increase efficiencies and is not a platform for scale.
Stakeholder Case Studies
Take for example Tractor Owners Hiring and Facilities Association of Nigeria (TOHFAN), a member-driven tractor management organization composed of tractor owners, mechanics, and agents. Agents act as an on the ground salesforce for tractor owners, who lease their tractors to be managed remotely to agents who organize demand from farmers. In 2016, TOHFAN had approximately 250 tractors under management across multiple states in Nigeria. As agents source demand, tractors move up to 400 km from farm-to-farm, based on rainfall patterns and the number of farmers requesting service in a given area. As TOFHAN’s model grew in popularity, they increasingly faced challenges managing the ever-growing number of tractors in their portfolio.
In 2017, TOFHAN approached Hello Tractor seeking to use our technologies to assist in the management of their fleet. Hello Tractor’s proprietary tracking device and software platform enabled TOFHAN to double the number of tractors under management efficiently and effectively. Similar to how Salesforce provides customer management enhancements for businesses across the United States, Hello Tractor’s technology allows tractor owners across the developing world to securely monitor and deploy their fleet in a way not previously possible.
With Hello Tractor, customers can remotely view their tractors from the comforts of their home, office, or any place in between. This remote viewing is critical in markets where personnel and assets are often separated by significant time and geographic. For example, while TOHFAN’s base of operations is in Kaduna, the company deploys dozens of tractors in Oyo – 11 hours away. As a result, concerns about operating costs (fuel and other inputs) and security dominate decision-making. Recently, another customer, Atman Corporation, was surprised to learn that their primary diesel provider, in the face of falling sales, would be forced to close his business. Atman could not understand how this was possible, given just their own level of purchasing. Using Hello Tractor’s technology, Atman analyzed their historical tractor activity data and quickly discovered that a few of their operators had stolen diesel for re-sale secondhand. The fact that dishonest operators had been able to re-sell enough diesel to potentially put their provider out of business was shocking – but Atman’s ability to tie production with consumption ultimately enabled them to identify and correct the problem. Hello Tractor’s technology continues to provide Atman with comfort and peace of mind, regardless of how far away their tractors may be. Over time, not only has this prevented Atman from incurring unnecessary costs, but it has allowed them to invest in expanding their business – to new geographies, they would never have before – all with the goal of servicing more farmers.
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Technology is not only critical to tractor management, but also in creating connections between farmers who require service and tractor owners that can provide it. In Nigeria, we have deployed our own network of Hello Tractor booking agents, trained in our software platform and able to book services for farmers in need. We’ve learned that many farmers we hope to serve are not comfortable with app-based technologies. Our commission-based booking agents – primarily young people from rural farming communities – help bridge this gap. They perform critical market-aggregation, ensuring idle tractors can connect to farmers desperately in need of service, all while earning a sustainable livelihood they otherwise may not be able to access.
Working with a booking agent, a farmer can enter her request, have her land GPS-located and sized, and schedule the required service. As bookings are entered into the system, our technology aggregates them into groups profitable for tractor owners to service. While the economics of serving the average 1-hectare farm may not be attractive, 40-50 collective farms within a 20 sq. kilometer radius represents a visible and serviceable market. Immediate value is created for the farmer, and for our booking agents as well. And we only take a transaction fee for a requested booking when those bookings are organized by us directly; we do not charge a fee for any booking organized by a tractor owner or a booking agent directly.
Our technology is helping small ‘agripreneurship’ blossom. Take Blessing Agu – a young woman in her 20s from a farming community north of Nigeria’s capital. Thanks to her efforts, more than 250 farmers within her territory will receive tractor service this coming August. Blessing will receive a commission of 10%, but more importantly for her is the ability to help farmers in her community thrive.
Or consider Alhaji Auwalu Rabah, a young man from Northern Nigeria near the border of Niger. As a Hello Tractor Booking agent, Auwalu provided access to tractor services for dozens of farmers. Before becoming an agent, Auwalu performed small jobs around his community and was barely able to piece together an income. Now, through Hello Tractor, he earns $200 per week – considerably higher than the National Minimum Wage of $50 a month. He recently shared that his earnings helped him pay for his wedding.
We believe Hello Tractor’s technology and insights can help the array of new business models being purposefully crafted to address challenges to mechanization across emerging markets. In Nigeria, John Deere recently signed a significant deal with Nigeria’s Federal Ministry of Agriculture and Rural Development to bring 10,000 new tractors to the market over the next five years. As part of this 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. PAYG will lease tractors for a defined period of time before allowing them to be re-sold at a discount to new tractor owners. 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. Hello Tractor’s technology is instrumental to its success, by providing enhanced security, tracking capabilities, and accurate value prediction. With Hello Tractor’s technology, private and public sector players leasing tractor assets can continuously monitor for usage, assess farmer impact, receive an alert when service or repair is needed, enforce good governance, ensure safe use, and predict asset value changes.
The lessons learned over the past few years on how to integrate intelligence into mechanization are applicable far and wide. The software revolution has come, and with it agriculture will never be the same.