Agricultural Innovations across the Value Chain Agric Expo 3.0 | Augist 30, 2019
The OpenFarm Network Every week, OpenFarm reaches a n a growing audience of more than 2,000 Agribusiness Owners, Professionals, & Key Decision Makers across Agribusinesses, Government Parastatals, Agric Agencies, and International Organizations. Recognitions www.openfarm.com.ng
The Agric Sector in Numbers Nigeria’s Food Import Bill $4.5 Billion $78 Billion (PwC, 2017) Nigeria’s Agriculture Sector Size by 2017 (PwC) African Food Import Bill 31% $35 Billion (AfDB) Agriculture’s GDP Contribution to Nigeria in 2017 Post-Harvest Loss 45-50% | $9 Billion $313 Billion in Nigeria (GAIN) No doubt we are recovering and the Agricultural sector is being revitalized But Let’s Compare
Global Comparative Performance AGRICULTURAL EXPORT AGRICULTURAL PRODUCTIVITY > > Nigeria Netherlands (923,763 km ² ) (42,508 km ² ) Thailand Sub-Saharan Africa Niger State (66 Million People) (800 Million People) (76,363 km ² ) • Sector performing extremely below it potentials and global counterparts • Not a competion of Land Size or Farmers’s Populace. Can’t continue to do what we are doing expecting the same result or miracles • A brave new world where ideas; innovation; solutions; compete, win & drive value
The Continental Opportunity 2030 $1 Trillion expected 1.7 Billion growth • AfcTA Agreement signing; People Total Market (AfDB) a threat and an opportunity. • Ideas rule the world today as the a scaleable property not limited by geographic boundaries. • The present & future belongs to the innovators and solution 1.2 Billion $200 Billion 2015 providers. Market People current state FAO Market Report on Sub-Sharan Agriculture Innovations + Businesses around these Opportunities = New Billion Dollars Businesses This is the case for innovation
Class’ Agenda To Provide Insights on: •Areas & Opportunities for Innovation with Case Studies and Trends •Path to Successful Innovation and Success Recipe •Pitfalls to avoid
Areas & Opportunities for Innovation with Case Studies and Trends
The Agricultural Value Chain • This is also known as Farm2Fork Similar to the activity chain in Power and the Oil & Gas Sector Farmers & Cooperatives Each of these components provides challenges & opportunities for innovation the farther right you go; the less risky & the more profitable, but also the more the competition Hence, the preference of Financial Institutions for Traders, Processors & other Agribusinesses
Extension Services & Input Distribution Challenges/Opportunities • Information services for Farmers for the provision of GAPs, weather, and market information. • Access to inputs • 1 Farmer: 5,000 - 10,000 Extension Agents in the Country Innovations and Players • Mobile based extension services; IVR, SMS, USSD • E-Wallets Considerations • Competition is with Government and input suppliers who have an access advantage (partnership can help) • Need for context and personalization (high technical expertise) • An economy where we don’t really pay for information • Monetization is a challenge especially when it involves telcos.
Financing Challenges/Opportunities • Underfunded sector • High risk for Financial institutions • Low penetration of Agric Insurance Innovations and players • Crowdfunding as investments in Farming Cycles; Farmcrowdy, EZ Farming • Kenyan Fintech company making it easier to lend to farmers • Derisking by NIRSAL with Credit Risk Guaranteee • Rise in Impact investment Considerations • Agency banking for reaching Farmers at the last mile has a lot of potentials • Cluseters such a cooperative societies to derisk • Input financing over direct cash transfer
Agro Support Services Challenges/Opportunities • Cutlasses and Hoes still in use making farming unattractive attractive • Undermechanization; some states in the SouthWest have less than 15 working tractors • Low buying power of Farmers; many cannot even afford power tillers Innovations and Players • Infrastructure as a service; tractors, storage etc. to aggregate demand and lessen cost • NAMEL (service providers) and HelloTractor (on demand) partnership to access tractors on demand and estimate cost per usage Considerations • High outlay of investment • Needs to be demand-driven for sustainability • Need for technical skills and Human Resources
Farm Inputs & Insurance Challenges to Opportunities • Low buying power • Unavailability of inputs • Low yield • Climate change Innovations and players • Sachet sized input • Index insurance for input • NIRSAL Comprehensive Index Insurance (NCII). Considerations • Competition against GAPs • Result-driven, requiring thorough control experiment • Last mile distribution is a challenge • Inputs may be subjected to use of other inputs
Production Challenges/Opportunities • Too many smallholding and subsistence operations • Unpredictability of harvest • Massive post-harvest losses and Uncertainty on when to harvest Innovations and players • Nucleus/Out-grower programme to aggregate supply • Satellite imaging for harvest prediction • Direct to Farm startups connecting Farmers to Buyers like Ninjacart Considerations • Huge upfront investment in provding inputs and infrastructure • Loyalty of Famers to contracts in the face of market realities
Logistics, Storage & Processing Challenges to Opportunities • Massive post-harvest loss (almost 50% in the case of tomato) • Unavailabilty of fresh produce round the year • Underpricing of poorly stored produce Innovations and players • Plastic Trays over Woven Baskets • Solar Driers & Cold Chain • Processing into Chips and flour Considerations • Opportunity for innovation in agro-focused logisitcs, maximimum utlization of trucks on the road and data-driven logistics • Who is the customer? Who pays? Farmer? Trader? Supplier?
Value-Addition Challenges to Opportunities • Low buying power of Customers yet High Competition • Growing global population leading to high food demand locally and internationally Innovations and players • Pricing strategy for availability and affordability e.g noodles pricing-strategy for Nigeria’s sachet economy. • Changing the form of the produce for better export value e.g. Poundo yam flour vs raw yam which is 80% water; heavier; takes more space, susceptible to damage Considerations • Dilemma: export require premium value vs a local market sensitive to price
Path to Successful Innovation
The 5Ps Going from idea, concept to market success Profit from Scale and Market Traction Partnerships for Capability and Commercialization Proof-of-Concept/Pilot of Solutions and Iterations Passion to Execute and Proposition Follow through to a pain point or for an an opportunity
Propositions to Pain Points/Opportunities • Pain Points revolve around unavailability, inacessibility or unaffordability • You must answer WHAT it is, WHO has it, WHO it affects, HOW you intend to solve it • Ideas for an solution must must meet one or more of the criteria below Availability Accessibility Affordability Recurring Trends: • Availability of mechanized services based on Aggregation of Demand for invesment in infrastructure & provision of services e.g NAMEL’s distribution of farm service centres • Access to fund based on Aggregation Supply of funds and interests as investments into farming cycles e.g. Farmcrowdy and Thrive Agric’s • Affordability based on as Service-on-Demand over full cost of ownership e.g HelloTractor that makes mechanized services available, accessible and at an affordable rate. • Technology eases these processes
Passion • Takes you beyond the idea • Keeps you going before profit • Fuels you throgh the journey when there is no instant result • Propels you to acquire the required capabilities as agriculture is not savvy
Proof-of-Concept/Pilots The Need: • Think Big. Start Small. • Proof of Concept (PoC) used in Technology | Pilots used in Sciences • Your small experiment to test your assumptions and make adjustments • Risk management before scaling A good Proof-of-Concept/Pilot focuses on: • a single pain point • clearly defined outcome e.g. productivity, cost reduction • a specific or few commodity value chains. Need for comparison with control group for pilots or industry benchmark for PoCs Expectations from a Pilot/PoC: • Collect data • Evaluate Impact • Craft Success Stories
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