From dirt to dollars

Hey, Sheriff here 👋 

Did you know that one industry supports the livelihoods of 90% of Africans, but it’s also one of the lowest paying?

I’m talking about agriculture.

Today, I’m going to take you on a journey through Africa’s smallholder farms and how a handful of startups are helping them get more from of their crops.

But first… have a look at this week’s upcoming Tech Safari Events 👇️ 

Now, let’s get into the story….

Africa should be the food basket of the world.

• More than half the population works in agriculture

• It holds 65% of the world’s uncultivated (and arable) land

• And it gets 300 days of sunshine each year and has lots of freshwater

But somehow, Africa is struggling to feed itself.

Every year, 298 million Africans are undernourished.

The continent makes less food per person today than 50 years ago.

If the trend goes on, the future could be worse - with more people starving.

And for a continent that could feed the world, it’s worth asking…

Who’s stealing the bread?

Turns out Africa and its farmers are stuck in cycles that keep the continent starved and farmers poor.

And it’s because:

1. Farmers themselves are unproductive

Agriculture is Africa’s biggest employer.

But there’s a productivity gap.

African farmers are only making 36% as much food as they could.

And it’s because most of them are held back by the subsistence trap.

80% of Africa’s food comes from smallholder farmers who:

• Live in rural areas and can’t easily access markets to sell their produce

• Can’t afford machines and end up using traditional farming methods

• And earn just enough to feed their families, with no clear way out of poverty

This keeps farmers trapped in a loop where they live from harvest to harvest.

And it affects the whole continent.

2. All African farmers do is farm

Agriculture is much more than just farming.

It’s also storage, transport, and processing.

Giant food brands like Kellogg’s and Mars are built on turning raw crops like maize and cocoa into cereals and chocolate candy.

And they make billions of dollars a year selling processed products.

Beyond selling their harvest, African smallholder farmers don’t do much else.

Case in point — Ghana.

Ghana makes 25% of the world’s supply of cocoa beans.

In 2022, Ghana made $1.08 billion exporting cocoa beans.

In contrast, the chocolate industry will hit $133 billion this year.

Processing alone can produce 100x the value of many raw crops.

But because of Africa’s low processing power, it still spends $78 billion importing food back into the continent.

3. Africa has a food waste problem

While we don’t make enough food, we also waste a lot of it.

Roughly 40% of what farmers harvest never makes it to market.

And it’s all due to spoilage.

Big commercial farms have cold rooms and storage units to extend shelf life.

But a standard cold room costs anywhere from $6,700 to $30,000, which is too pricey for a farmer earning minimum wage.

The result? Farmers either sell at bad prices or lose their harvest to waste.

Feeding the African farmer

In 2018, Uka Eje’s friend had a problem.

He was running a soybean processing factory in Lagos and his supplier had just sent in a notice that he was shutting down.

He needed to find a new supplier, fast.

But getting good soybean seeds in the towns around Lagos was hard.

Farmers were scarce, and good soybean seeds were even harder to come by.

So, he called up Uka to ask for help.

Uka had lived in a farming town in Northern Nigeria as a kid and knew farmers in his town were losing 40% of their harvest because they couldn’t find buyers on time.

He thought, if he could connect the farmers to his friend, both sides could win.

And he could make some money off the middle.

So, he raised $6,000 from his family, bought three trucks of soybeans from the farmers and delivered them to his friend.

But spending time with the farmers opened his eyes - they wanted to do more:

• They wanted to expand their farms

• Process their crops easily

• And find buyers quicker and even export their produce

So, Uka decided to serve them himself.

He connected farmers with buyers and exporters to help them earn more.

He started teaching them better farming methods.

And linked them to financing to buy seeds and fertilizers.

An operating system for African agriculture

Uka’s plan worked.

Soon, his small project went beyond his farming town. And more farmers wanted in.

So, he decided to take everything - the methods, connections, and financing - and put it into an operating system.

The operating system had:

• An agent app that helped ThriveAgric agents collect information from farmers, track their farming progress and offer them loans

• And a warehouse app to help store farmers’ harvests, track their produce, and connect them to buyers.

He called it ThriveAgric - and it took off.

Last year, ThriveAgric reached 820,000 farmers, disbursed $40 million in loans, and helped them produce 2.3 million metric tons of grains.

As a result, these farmers earned an extra $4,200 in annual revenue - a far cry from the national average of $500 a year.

One of them is Aliya Dannomo - a corn farmer from Northern Nigeria.

Before ThriveAgric, Aliya was harvesting 15 to 20 bags of corn each season.

Now, he gets up to 150 bags of corn a season.

And it’s thanks to ThriveAgric.

When he joined, ThriveAgric offered loans, storage, and a quick way to sell what he made.

Now, he gets up to 150 bags of corn a season.

But ThriveAgric is not the only one sticking out for African farmers.

• One Acre Fund helps farmers out with good seeds, cheap loans, and training. To date, they’ve helped farmers earn $421 million in profit.

• Releaf, a Nigerian agritech, is turning smallholder farmers into food processors by giving them access to machines

• And Pula is helping farmers easily insure their seeds and fertilizers in case their harvest goes bad

Putting money food on the table

The first step to fixing Africa’s food crisis is to increase the productivity of African farmers.

And so far, these agritech startups have made progress.

They’re helping farmers escape the subsistence trap and be more productive.

And in the process, they get to grow more, sell more, earn more, and keep more.

The result?

This productivity gains trickle down to the table of African homes in the form of cheaper foods, and more nourishment.

Do you know any other startups fixing agriculture in Africa?

Tell us here.

That’s it for this week. See you on Sunday for a breakdown of this' week’s top stories in African tech.

Cheers,

The Tech Safari Team

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