Agric Expo 3.0 | Augist 30, 2019

Agricultural Innovationsacross the Value Chain

Recognitions

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.

The OpenFarm Network

www.openfarm.com.ng

$78 Billion Nigeria’s Agriculture Sector Size by 2017 (PwC)

31% Agriculture’s GDP Contribution to Nigeria in 2017

African Food Import Bill

But Let’s Compare

No doubt we are recovering and the Agricultural sector is being revitalized

$313 Billion

Nigeria’s Food Import Bill

$35 Billion

The Agric Sector in Numbers

(AfDB)

(PwC, 2017)$4.5 Billion

45-50% | $9 Billion in Nigeria

Post-Harvest Loss

(GAIN)

• 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

Global Comparative Performance

Thailand (66 Million People)

>Sub-Saharan Africa (800 Million People)

AGRICULTURAL EXPORT

Netherlands (42,508 km²)

>

AGRICULTURAL PRODUCTIVITY

Nigeria (923,763 km²) Niger State (76,363 km² )

• AfcTA Agreement signing; 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 providers.

$200 Billion2015

expected growth

2030

FAO Market Report on Sub-Sharan Agriculture

Total Market (AfDB)

Market

$1 Trillion

The Continental Opportunity

Innovations + Businesses around these Opportunities = New Billion Dollars Businesses

1.2 BillionPeople

1.7 BillionPeople

This is the case for innovation

current state

To Provide Insights on:

•Areas & Opportunities for Innovation with Case Studies and Trends

•Path to Successful Innovation and Success Recipe

•Pitfalls to avoid

Class’ Agenda

Areas & Opportunities for Innovation with Case Studies and Trends

The Agricultural Value Chain

Similar to the activity chain in Power and the Oil & Gas Sector

Each of these components provides challenges & opportunities for innovation

• This is also known as Farm2Fork

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

Farmers &Cooperatives

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.

Extension Services & Input Distribution

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

Financing

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

Agro Support Services

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

Farm Inputs & Insurance

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

Production

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?

Logistics, Storage & Processing

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

Value-Addition

Path to Successful Innovation

The 5Ps

Proposition to a pain point or for an an opportunity

Passion to Execute and Follow through

Proof-of-Concept/Pilot of Solutions and Iterations

Partnerships for Capability and Commercialization

Profit from Scale and Market Traction

Going from idea, concept to market success

Propositions to Pain Points/Opportunities

Availability Accessibility Affordability

• 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

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

• 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

Passion

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

Proof-of-Concept/Pilots

Acquire or Enhance Capacity this may be human resources (domain expertise), physical space & sites, or risk reduction

Public and International Agencies such as IITA (with HarvestPlus & Airtel) or NIHORT

Insurance Companies such as crowdfunding companies and Leadway

Ministries, Departments and Agencies such as NIRSAL for financial interventions or ADPs for extension services on your solutions or train-the-trainers Institute of Agricultural Research & Training has been an incubation hub for startups providing physical space, farms, and expertise

PartnershipsBuilding on your Success Story, you may need partnership to:

Acquire Customers this can provide direct route to market or value-adding services to their customers

Cooperatives & Microfinance Banks access to smallholder Farmers

Banks & Insurance Companies access to Agribusinesses; Owners and Professionals

Institutions access to Agroprenuers (IITA and other Agric institutions)

Required Be definite about roles and expectations

Agri- businesses

Agroprenuers

Smallholding Farmers

• You are either an Agribusiness or innovating for any of these Stakeholders

• They are different customer segments requiring different approaches though they interact

• Pricing is dependent on the customer segment; volume vs price

• Your user is not necessarily your cusomer.

Large Farm Owners & Agribusiness Professionals

(Money hubs)

Youths and Urban-based Farmers

(Digitally savvy)

Rural-based Peasant & Subsistence Farmers

(Populous & at the bottom of the pyramid)

Profit from Commercialization

Pitfalls to Avoid

Lack of Domain Expertise. Passion or Huge investment cannot substitute for it. Build a multidisciplinary team/advisors.

Costly Assumptions which stems from lack of expertise. Test all assumptions. Go to the field.

Lack of a Clear Path to Commercialization. You don’t need to figure it out from the start but work on it.

One Size does not Always Fit All. Tailor the solutions as may be required. Don’t let your sucess be your enemy.

Pitfalls to Avoid

Talk is Cheap, The Future belongs to the Doers!

Agric Expo 3.0 | Augist 30, 2019

Best Wishes. Thank You!