Transform speaks with Jehiel Oliver, founder and CEO of Hello Tractor, a company using digital tech to make African farmers more productive.
What is Hello Tractor?
It’s a simple concept. Most small farmers can’t afford to own their own equipment, but they can afford to pay for services. Hello Tractor is a platform that facilitates that. Currently we operate in 15 African countries, as well as Cambodia, Bangladesh, Pakistan, Guatemala, Thailand, and Jamaica.
How does it work?
When you book the service, you don’t get a tractor. Instead you get someone on a tractor who shows up to service your field. Most farmers own small plots of land, so the work can be done in just a few hours.
Ordinarily, it wouldn’t be economic for a tractor owner to pay someone to drive his farm equipment a long distance just to do a bit of piecemeal work. Also, farmers don’t typically whip out their smartphone to book tractor services, so they’d be unlikely to get the help they needed, even if it were available.
For that reason, we use agents to book the tractor service for the farmers. The agents group the demand from individuals into batches. This creates a large group of farmers who need a tractor in the same place, at the same time. That, in turn, makes it efficient to drive your tractor 100 or more kilometers to service large plots of land covering hundreds of acres.
What gave you the idea for Hello Tractor?
I was interested broadly in sustainable economic development in low-income regions, with Africa being at the top of my interests. Agriculture forms the bedrock of African economies. It makes up between 30% and 40% of Africa’s GDP and accounts for 60% of its labor force.
But it’s hard to finance agriculture, and one of the biggest missing elements is tractors. When you look at this business on a spreadsheet, owning a tractor in a low-income community can be a good business. You just have to divide the cost of ownership among enough paying customers that it becomes workable for users and profitable for the tractor owners.
What kind of tech do you put on the tractors, and what does it do?
We started out in 2014 selling white-label tractors made by a contract manufacturer in China. We installed some tech in the tractor and put the Hello Tractor brand on it.
But we soon learned that we enjoyed no competitive advantage in that space, which had razor-thin margins and high fixed costs. You have to be able to service the tractors, and supply spare parts – it was just way too complicated.
Where we did have an advantage, though, was in the underlying tech. We recognized that, in emerging markets, small-engine tractors are sold to entrepreneurs delivering services called contractors, not farmers. Contractors need to protect their equipment – it’s the biggest investment they’ll make often in their life.
Tech can monitor and protect the equipment, while making sure it’s in constant use. We embed tractors with GPS and sensors to capture various data points. We process that data in the cloud, and we’ve built algorithms to help tractor owners make sense of that data.
Once you protect the tractor, you can ask the next obvious question, “How do I make more money with this asset?” Start with booking the tractor. We realized that most of our customers weren’t digitally enabled. So we started with booking using SMS. But it’s hard to make that work.
So, we developed a mobile booking application for agents who could be trained to digitally book the many farmers in their community. We also needed to ensure that the agents had a commercial incentive, so we designed commission structures to promote more booking
How does Hello Tractor make money?
Tractors behave differently in different environments. The data pulled from the tech we embed in the tractors is made available to the owners – our customers – by subscription. We make money on subscription fees, and also on commissions charged by the booking agents and the tractor owners.
Is Hello Tractor an NGO?
No, we’re a for-profit company. We get called a social enterprise a lot as well. I started my career in investment banking and developed an appreciation for how commercial capital markets can scale a solution, unlike philanthropy, which is typically how non-profits are funded. Philanthropy plays an important role in our market as a catalytic capital source, but it is with commercial capital that we expect to scale the solution fully.
Did you grow up on a farm, or work on one?
No, I grew up in Cleveland, Ohio. My understanding of the tractor business and agriculture more broadly was born out of desk research and truly uncovering the attractive unit economics of tractor service delivery. This was done using Excel, a very basic financial tool. But it allowed me to look through all the bias that exists regarding businesses in African agriculture. People gave me a million reasons why starting Hello Tractor was a bad idea. But those reasons weren’t quantitative, they were just someone’s opinion. Basically, it was like, “Oh, farmers are poor.”
Just like the household I grew up in, farmers in Africa were thought to be low-income. But just like my family, we still bought stuff. Oddly enough, Hello Tractor services are replacing things that farmers are already purchasing, but at a lower cost. That’s what gave me the impetus to push ahead with the business. If I had been a farmer myself, I probably would never have started this business.
What are your plans for the future?
Most people see Africa as a philanthropic story. We see it as a commercial opportunity. If you want a tractor on your field, and you can afford it, we want to make sure you have it. That’s our goal. By clustering farmers together, we can increase their productivity and make small farmers just as productive as big farmers from a productivity perspective. By closing the productivity gap, we believe we can strengthen resilience in the global food system and help make Africa the next global breadbasket.
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