* Safaricom under pressure to accelerate revenue growth
* Digifarm could increase revenue by 25 billion shillings a year
* Hopes to replicate the success of M-Pesa with the agriculture app
BOMET, Kenya, June 15 (Reuters) – Rachel Bor’s neighbors chatted, laughed and shared milk tea from her tarnished kettle as they celebrated their biggest maize harvest to date at her one-year-old plot of land. half acre in Kenya’s Rift Valley.
The secret to this successful harvest was the credit they received to buy better quality seeds, fertilizers and pesticides after registering on the Digifarm mobile phone platform, the latest innovation from the largest telecommunications operator in the region, Safaricom.
“Since Digifarm arrived in our region, we have been happy. We hadn’t been able to harvest corn for six years,” Mercy Rono said as she plucked a ripe ear of corn from its golden yellow stalk.
Safaricom, part-owned by South African Vodacom and Britain’s Vodafone, is under pressure to create new revenue streams as its voice business matures.
Digifarm bypasses middlemen, giving smallholder farmers direct access to low-cost seeds and fertilizers, credit providers and bulk buyers of their produce.
After a successful two-year pilot, during which it registered 1 million farmers of which 42,000 are active, it is in the process of hiring and looking for new logistics partners.
Like M-Pesa, a mobile payment system for small traders and Kenyans without bank accounts, which has been very successful on Safaricom, Digifarm charges a small percentage per transaction.
Internal Safaricom projections predict revenue of between 25 billion and 250 billion shillings a year ($235 million to $2.35 billion) within five years from the platform, a company source said. which accounts for up to 10% of annual agricultural transactions in the country.
And M-Pesa’s market dominance means Safaricom sees no problem attracting major backers for Digifarm.
Its biggest challenge is probably the fragmented nature of the market, said Professor Jane Ambuko of the University of Nairobi’s Faculty of Agriculture. Companies like Digifarm need to find a reliable way to bring produce from small farms together for wholesale.
“The food supply chain is very inefficient. Until we can streamline the supply chain…it’s a tough problem to solve,” she said.
Although agri-tech has been limited by the low availability of mobile data in the countryside, the market is huge.
Agriculture employs more than a quarter of the world’s workforce and is the largest employer in nearly all of the world’s poorest countries, where farmers routinely face poor quality seed, cartels price fixing and climatic disasters.
A study funded by the European Union last year estimated the African agricultural technology market to be worth $2.6 billion a year, and Digifarm is not the only newcomer. In Kenya, where agriculture accounts for a third of annual economic output and more than half of the workforce, tech start-up Twiga is also connecting farmers with bulk purchases and raising $55m in three years with global investors such as Goldman Sachs. Meanwhile, the Nigerian market is teeming with startups like Farmcrowdy and Thrive Agric.
Digifarm also offers farmers weather insurance, training programs and advice on soil testing to increase yields. About 1,000 farmers registered with Digifarm are receiving payments after floods destroyed their crops, said Safaricom director Michael Joseph.
Digifarm farmers receive 10,500 shillings of credit per acre of maize, which they repay with 15% interest when the crop is sold. Once the maize is collected, Digifarm engages a buyer who pays 33.3 shillings per kg of maize – 3.3 shillings more than traditional brokers.
Wilson Kibet, a 50-year-old farmer in Bomet, harvested 30 bags of maize from his farm after partnering with Digifarm, compared to just one bag or less in previous seasons.
Farmers in the area said they could not afford quality seeds and other supplies before Digifarm released the funding. The training also made a huge difference.
“I…did all the training lessons,” Kibet said, standing outside a Digifarm maize collection center, where farmers brought sacks of maize on donkeys and motorbikes. “They even told us not to plant beans in the middle of the corn rows.”
$1 = 106.1500 Kenyan shillings Editing by Katharine Houreld and Kirsten Donovan