Zooming in on real-life agricultural crowdfunding

Crowdfunding is particularly suited for rural start-up businesses which are often more distant from the conventional urban-based money lenders

In some large countries, farms may be located thousands of kilometres from the major financiers and social media is the only way for their ideas to gain the necessary exposure for investments.

FarmCrowdy Nigeria

Farmcrowdy was founded in 2016 as Nigeria's first agricultural crowdfunding platform. More than 80% of the country’s farms are classified as smallholdings and so the industry is relatively disparate. Farmcrowdy’s aims were to connect the farms to funding sources to modernize the industry and to improve the long-term food security by promoting the industry as a possible career.

In under two years the platform has revolutionized the local agriculture sector by connecting more than 2,000 small-scale farmers with 1,000 sponsors. The sponsors are as close as nearby cities and as far away as Europe and the United States. Each one invests between $200 and $750 in production cycles which can be as little as three months long for poultry businesses or up to nine months for a cassava crop.

The money raised pays for equipment and training via agricultural experts who help the farmers to use more modern production practices and encourage them to grow a wider range of crops.

Under the debt-type funding arrangement a percentage of the profit generated from sale of the produce is given to both farmers and sponsors who receive between 6% and 25% returns on their investments.

Typical of the deals available is a soy bean growing venture on 50 hectares of farmland in Plateau State. The soy bean farm will provide much-needed work for 200 people and produce food from otherwise neglected land.

As with all such projects the area is divided into investment units and prospective sponsors are told the contract length which in this case is nine months. The expected return for investors from the soy bean venture is 8%.

Cash crop grower Bhagya Ramachandra, India

Farming provides nearly 80% of rural earnings in India and the crowdfunding platform Rang De has 13,000 contributors who provide funding for individual farms.

One farmer who has benefited is Bhagya Ramachandra a paddy cultivator and mixed cropping grower in Hulahalli, Karnataka. Like most farmers in India, who are forced to take out loans to tide them over between planting and harvest, she was struggling to overcome a yearly-debt cycle and cashflow problem.

Attracting financial support through traditional lenders was extremely difficult because repayments are high and difficult to meet particularly during the lull in earnings. Instead Bhagya worked with VILD, Rang De’s financial partner in the region and secured a loan from its global community of contributors. The crowdfunding effort provided a 25,000-rupee loan with manageable terms and she used the loan to buy all the necessary inputs including the related labour costs.

Water Management Platform USA

The Sustainable Water and Innovative Irrigation Management (SWIIM) software package was developed at the state universities of Colorado and Utah with backing from the US Department of Agriculture and attracted a $3m-dollar investment after it was profiled on the AgFunder crowdfunding platform.

The investor goFARM Australia is an agricultural property developer and manager and made an equity-type investment. The company saw a valuable venture that could help farmers in Australia who have struggled with severe droughts in the past few years.

The package helps farmers conserve and use water more efficiently by providing an accurate measure of how much moisture their crops are taking up. Developers said farmers could use the software to create specific crop plans based on the individual aspects of the land, different crop types and the available water resources.

The technology also helps farmers sell conserved water to other users, including local water companies.

Click here to learn more about crowdfunding

 

Farmcrowdy was founded in 2016
Farmcrowdy was founded in 2016 as Nigeria's first agricultural crowdfunding platform
Bhagya Ramachandra
Bhagya Ramachandra, a paddy cultivator and mixed cropping grower in India, has benefited from the Rang De platform who provide funding for individual farms
The SWIIM water management software package was developed in the USA
The SWIIM water management software package was developed in the USA and attracted a $3m-dollar investment