Digital Ecosystem for Farm Mechanization in Bangladesh

Farmers across emerging markets lack access to mechanization services that can spur productivity and increase crop yields. This means that they end up planting and harvesting late, while losing money. Most farmers can’t afford to own a tractor, but if they have access to tractors, that’s as good as owning one.

Hello Tractor uses its IoT technology to connect tractor owners and smallholder farmers in Sub-Saharan Africa through a farm equipment sharing application. This application provides equitable and timely access to tractor service to farmers, enabling them to earn more and grow more.

Hello Tractor-connected tractors have already serviced more than 250,000 farmers since the beginning of 2017. Since smallholders across African and Asian markets face similar challenges, our aim is to be able to expand into Bangladesh to fast track our goal of serving 10 million farmers by the end of 2023

Farmers  throughout  developing economies  remain trapped in poverty  despite $6BN in aid spent each  year over the past five decades to  improve agricultural production and raise  their standards of living. This is due, in  large part, to the often antiquated agricultural  value chains that persist across emerging markets. Without proper labor and   financing, farmers struggle to properly cultivate their land and plant on time, leading to  underproduction and lost income.

Across Bangladesh, the rural labour force has started to shift from agricultural to industrial and service sector, creating an acute agricultural labour shortage during peak planting and harvesting times. It is estimated that the agricultural labor force decreased from 63% in 2007 to 40% in 2018. Because of this labor shortage, farm operations cannot be performed in due time, resulting in a reduction in yield.

Collaborative consumption is not a new phenomenon, but collaborative consumption utilizing mobile technology is creating catalytic impact to industries around the world. Applying this phenomenon is hereby vital to serving rural farmers across developing markets. Connecting fragmented farm plots to a sharing economy drives more equitable access to mechanization for farmers who otherwise have to rely on expensive and unavailable manual labor for their farms.

Hello Tractor supports smallholder farmers across emerging markets by connecting them to tractor owners through a farm equipment management and sharing application that seeks to sustainably support mechanization through the reduction of transaction costs between tractor owner and farmer. 

In order for smallholders (who are generally not technology savvy) to benefit from our offering, we engage middle men known as booking agents to bridge the digital divide that they currently face. These booking agents are youth within rural communities who aggregate smallholder farmer demand for tractor services within their community. They measure the farmer’s farm land to ensure that he is only paying for his exact plot size, and send in his booking through our Booking App so he can be paired with a tractor that will service his land in a timely manner.

The Hello Tractor platform enables farmers to request affordable tractor services to plant 40 times faster and 2.5 times cheaper than conventional manual methods. The benefits of tractor services for farmers include: planting on time, 63% average savings and upwards of 3 times increase in yield.

To improve smallholder farming, addressing challenges within the ecosystem is key. Hence, Hello Tractor has developed a fleet management technology solution for the compact tractor segment that enables the shared economy model for smallholder farmers while providing tractor owners with powerful insights to ensure that their tractors are both profitable and properly maintained. 

Hello Tractor’s set of solutions includes the following tools and software:

1. Low-cost monitoring device & Tractor Owner app: This device can be fitted to any brand of tractor in the market to glean insights on tractor operation and maintenance. Hello Tractor worked closely with tractor owners to develop mobile and web apps that provide full reporting on tractor and operator activity, performance, and maintenance needs. By giving tractor owners access to these types of information, they are able to extend the lifespan of their assets while saving costs and making profits. 

1. Scheduling app & Booking Agents: To ensure that smallholder farmers are receiving the much needed service, Hello Tractor’s platform also offers a scheduling software that allows smallholder farmers demand for tractor service through booking agents within their communities. These booking agents play a pivotal role in aggregating demand of farmers in close geographic proximity, so that service delivery can happen faster and at economies of scale for the tractor owner

Our platform creates transparency and efficiency in the market by connecting tractor owners to farmers at each stage of the process. This makes service delivery more secure, efficient, and profitable for all stakeholders involved. As our customers have expressed, access to mechanization services increases yields, income, and improves overall livelihood. Our business leverages:

Best in class technology: We maintain a laser-focus on addressing the constraints facing tractor dealers, contractors, and tractor owners looking to serve smallholder farmers (i.e., managing costs and aggregating demand to grow revenue). 

Market building for all stakeholders: In addition to organizing supply, we drive revenue opportunities by developing agent networks that engage with farmers, cooperatives and out grower schemes to build demand. We also work with downstream processors and buyers to create markets for additional yields cultivated as a result of mechanization.

Innovation in a local context: There is an increasing willingness across our customer base to explore new, innovative models to address mechanization challenges. We capitalize on this momentum by thinking outside the box and leveraging our technology to assist our customers and increase our impact

Hello Tractor’s platform creates transparency and efficiency in the hired services market by connecting tractor owners to farmers at each stage of the process. This makes service delivery more secure, efficient, and profitable for all stakeholders involved. As our customers have expressed, access to mechanization services increases yields, income, and improves overall livelihood. To maintain our innovative edge, our business leverages:

Best in class technology: We maintain a laser-focus on addressing the constraints facing tractor dealers, contractors, and tractor owners looking to serve smallholder farmers (i.e., managing costs and aggregating demand to grow revenue). Like Salesforce, our technologies enhance existing businesses by providing insights and efficiencies needed for scalability.

Market building for all stakeholders: In addition to organizing supply, we drive revenue opportunities by developing agent networks that engage with farmers, cooperatives, and out grower schemes to build demand. We also work with downstream processors and buyers (i.e., food and beverage companies) to create markets for additional yields cultivated as a result of mechanization.

Innovation in a local context: There is an increasing willingness across our customer base to explore new, innovative models to address mechanization challenges. We capitalize on this momentum by thinking outside the box and leveraging our technology to assist our customers and increase our impact. These new models and partnerships have provided Hello Tractor with the on-the-ground experience needed to unlock the promise of mechanization across the continent

Our technology has made it possible for tractor owners to increase the size of their tractor fleet, resulting in more smallholder farmers across our markets of operation being served. Additionally, tractor owners allow their machines to roam the country in search of demand instead of keeping their tractor close to home base for fear of fraud and lack of trust with their operators. By providing products and services to support the supply and demand-side of the market, we are introducing efficiency into the mechanization ecosystem and reducing the cost of service delivery. 

Insights from the Field: Independent Customer Survey Implemented by Lean Data: 

• Farmers value that Hello Tractor is easy to use, and that the quality of tilling work is high. Most customers rated quality of tilling work at Hello Tractor 5 / 5.

• Nearly 95 % of customers said their quality of life has improved to some extent as a result of access to Hello Tractor tractor services, and cite productivity and income increases as the reasons behind their answer. Separately, 94% of customers report an increase in productivity, saying they experienced better harvests and the ability to plant on more land. 

• Only 13% of customers had prior access to tractors before working with Hello Tractor and that 95% of all farmers used Hello Tractor services to facilitate their top income source. This appears to indicate that there is a unique value-add of Hello Tractor to customers: they value mechanization services, but previously had low, or no, access to them.

Hello Tractor-connected tractors have serviced more than 250,000 farmers since the beginning of 2017.  This technology has made it possible for tractor owners to increase the size of their tractor fleet, resulting in more smallholder farmers across the country instead of keeping their tractor close to home base for fear of fraud and lack of trust.  By providing products and services to support the supply and demand-side of the market, we are introducing efficiency into the mechanization ecosystem.

Our immediate goal for the next year is to have provided services to 947,000 farmers through the anticipated 6,000 tractors we would have on-boarded on our platform.

Due to our success in supporting the tractor contractor ecosystem, Hello Tractor has been able to form a strategic partnership with John Deere, after an extensive due diligence process. This partnership will result in 10,000 new tractors in Nigeria over the next five years, which John Deere estimates will bring 9 million hectares of land into production, creating 37 million metric tons of additional food and adding over 2 million direct and indirect jobs.

We anticipate that our partnership with iDE and Metal in Bangladesh will create a similar catalytic effect, allowing us to touch the lives of thousands of smallholder farmers across Bangladesh.

Over the next five years, we intend to position ourselves as the leading telematics solution provider for sub-100HP tractors globally. To do this, we have set the following business and impact goals:

• Build Market Leading Technologies and Products: We started off by launching the first version of our technology (Hello Tractor Version 1.0) which was a big learning opportunity for us and provided a clear picture of what fixes were needed to address customer needs.

We recently launched Hello Tractor Version 3.0 which not only addresses the majority of our customers’ core needs but also addresses larger market concerns which has helped increase our relevance and value among stakeholders in the value chain.

• Expand to 15+ New Markets: We have been quite successful in our operations within Nigeria and are excited to take our solution across to other sub-Saharan Africa and Asian markets. We intend to penetrate into, and properly establish ourselves within the following other markets over the next 5 years:  Bangladesh, Tanzania, Nepal, India, China, and Indonesia.

• Achieve impact target of 10 million farmers reached:

We expect that by the end of 2019, we will have achieved more than 6,000 tractors on our platform across our three core markets and the select expansionary markets that we are targeting. By the end of 2024, we expect to fully have more than 100,000 active tractors on the platform with more than 10 million farmers served.

For the next year, we have identified the following as potential barriers that we may face even as we continue to scale up:

• Operating: Operating costs could exceed budgeted allocations; Leadership team may not be equipped to deliver success

• Technology: Competing product development on time and within budget is key to our credibility; Less than optimal technology may be developed; competitors could leapfrog us in key market; mobile carriers could pull out of key markets

• Capability: Scaling capabilities quickly are key to growth and we may be slow

Over the next 5 years, barriers we are likely to encounter include:

• Economic: External economic forces drive private and public sector agricultural investment and financial firm participation

• Legislative and Policy: Regulations could change and pose a negative impact to our current and future operations

• Funding: We need funding to be available at a level and timing required for success

• Supply side: Actual market demand for our product may not yield projected sales volumes

• Reputational: Highly visible potential missteps could negatively impact our ability to grow

For the next one year,

• Operating: Enhancing internal controls, developing active forecasts for monthly and quarterly key investment needs, and hiring a financial/accounting staff are key levers to better understand our OPEX and cost realities. 

• Technology: We are using software project management tools like Trello to ensure we deliver superior training to internal staff and generate the feedback needed to turn field insights into technology development quickly. 

• Capability: We are filling out our team increasingly with personnel with analogous experience. Receiving funding is key to being able to attract the type of talent that can enhance our internal practices and prepare us for future growth

For the next five years,

• Economic: Hello Tractor targets customers and partners with firm, organized, and professional management teams. We look to spend a considerable amount of our resources working with relatively established, stable organizations like Deere (OEM), TATA (dealer), and the World Bank (financing). By being smart about the relationships we have in place and working with some of the more capitalized players in the industry, we minimize risk.

• Funding: Hello Tractor anticipates building a growth model that can attract venture capital to the company. Over the next 5 years, we will go to the markets at least twice, seeking to raise $12 million in funding. 

• Supply side: Africa is a growth market and we are committed to its development. But we would also be making strategic bets to sell solutions in large volume markets like those in South Asia.

In Bangladesh, Hello Tractor is piloting its digital solution for tractor usage alongside iDE and The Metal (Pvt.) Limited in the country’s southwest delta which faces greater food insecurity and lower crop productivity than anywhere else in the country due to a combination of high energy costs, labor scarcity, low crop intensity and minimal access to and use of innovative agricultural technologies.

Under this pilot, we outfitted 100 tractors sold by The Metal and being operated by Local Service Providers (LSPs) with our telematics device allowing the LSPs track important details about their machines such as hectare coverage and fuel consumption to enable them adapt their business strategies to reach more farmers and make more profits. On our end, we are conducting remote monitoring of these 100 tractors over the course of a few agricultural cycles in the country to determine the scope of introducing additional functionality into the Bangladesh service provision environment, including but not limited to: maintenance support, job booking, or the market booster strategy we employ in our existing markets.

Our GPS devices are also de-risking The Metal’s loan facility as their machines can now be traceable and could be repossessed later in case of default. This implies that more vendors can now be financed, increasing the number of tractors in the market that are available to provide tractor service to smallholder farmers across Bangladesh.

Hello Tractor currently employs 18 individuals with technical expertise across agriculture, hardware engineering and telemetry, software engineering, data science, sales, and customer relationship management. We also have two advisory board members - Abe Hughes (General Manager, Agriculture Division, Trimble) and Harry Plant (VP Social Impact, Aeris) - seasoned professionals who provide advice to our management team.

The Hello Tractor team is spread across the United States, Nigeria and Kenya. Our founder, Jehiel Oliver, was an advisor to two sitting U.S. presidents on business in Africa and has worked in global finance and agriculture for over a decade. His co-founder, Martha Haile, brings deep experience in global development and management consulting (NDI and Booze Allen). 

Hello Tractor prioritizes talent of the highest caliber from the markets served. Our team believes in our mission and strives to empower communities to create shared benefits and transform the agricultural ecosystem, creating efficiencies that generate inclusive growth, reduce poverty, and help build stronger, more stable economies. Building a strong, dedicated ground team has allowed us to better understand the local market, optimize our technology and maintain our competitive advantage.

Hello Tractor has cultivated strategic, cross-sector partnerships that aid our ability to scale. Hello Tractor has already partnered with Aeris, the Nigerian Federal Ministry of Agriculture and Rural Development, CalAmp, John Deere, IBM, iDE and Metal. 

• Development Finance Institutions - We’ve seen firsthand that bilateral and multilateral engagement provides critical funding and serves as an important screening function for government related projects. Over the past two years, Hello Tractor has been in discussion with the World Bank regarding its FADAMA project and was just recently brought onboard as a partner. 

• Agriculture industry stakeholders -  Input providers represent an attractive market   opportunity for us to engage farmers, create new revenue opportunities, and bolster our agents’ product offerings. In turn, by our platform can provide these companies with critical data on input usage at the farmer level.

• Foundations and NGOs - Hello Tractor has worked extensively with philanthropic partners to engage/train booking agents and to link our tractor owners to coordinated farmer groups/cooperatives. We have a number of NGO partners across each market that we are operating whom we would consider prospective partners.

Hello Tractor seeks to create holistic solutions for the market and high-quality customer experiences, while differentiating on simplicity, design, and our focus on adaptability. Our solution cuts across the following customer segments:

Smallholder Farmers: The target smallholder farmer customers are farmers who, on average, have less than 5 hectares of farmland. These farmers plant late, under-cultivate their land, and lose out on much-needed income. While these farmers are unable to purchase their own tractor, they do have the means to pay for mechanization services. By accessing our services, they are able to plant 40x faster at 1/3rd the cost

Booking Agents: Our commission-based booking agents, primarily young people from rural farming communities, perform critical market-aggregation, ensuring idle tractors can connect to farmers desperately in need of service, all while earning a sustainable livelihood they otherwise may not be able to access. We target active, commission-based booking agents to be trained and closely supported by Hello Tractor under this program. As bookings are entered into the system, our technology aggregates them into groups profitable for tractor owners to service. 

Mechanization Service Providers: Our service providers are contractors that purchase our IoT devices which are fitted to their tractors to enable them monitor their assets and  receive smallholder farmer service requests. Hello Tractor targets contractors who have achieved scale or are building with scale in mind. While these contractors may differ in size, experience, geographic area of focus, brand affinity, and services offered, all are highly cost conscious

Hello Tractor has emerged as a true agricultural mechanization platform. Our scaling partners include top companies such as John Deere, IBM, Calamp, and Aeris. For Africa, Deere has positioned Hello Tractor as their exclusive telematics partner. This means direct access to their dealer networks on the continent as well as strategic partnership opportunities on large projects like the 10,000 unit NAMEL deal in Nigeria and the 500 tractor a year deal in Ethiopia.  

In addition to John Deere, Hello Tractor has launched partnerships with Aeris Communications and Calamp, both global leaders in connectivity and telematics. This opens up very exciting sales channels at the tractor dealer and existing tractor owner levels. 

As we mature as a business, Hello Tractor will diversify its revenue sources beyond the monitoring device and software revenue to include the following:

• Analytics: For customers with significant tractor holdings, Hello Tractor will provide a business analytics team to work alongside the customer's management team and provide solutions. 

• Transaction Fee: Our booking services provide real value for managing the interactions between the farmer and the tractor service provider. Hello Tractor takes a 2% fee for every tractor service managed on the platform.

• Dealer Advertising: Dealers seek a closer connection to their customer base. Hello Tractor offers dealers an opportunity to provide a simple advertisement on it's platform

By the end of 2023, we anticipate generating more than $10 million USD from these new revenue sources which will account for just under 25% of our revenue.

Tiger IT Foundation can provide us with some funds needed to fuel our activities to improve our operational capacity and systems to scale the business in new markets such as Bangladesh through our demand as well as supply side engagement.  Majorly, we are implementing a new digital transformation strategy to enable more cost-effective and reliable sales and after sales support mechanisms for our customers and increase our reach to scale. Hello Tractor will work with nine strategic areas to implement the strategy. For the demand-side we will work on: brand building, product development, distribution network and service excellency.  On the supply side we will work on: sales excellency, product and service development and customer portal. We intend to use funds received to support our supply side strategy to enable the on-boarding of more tractors across Bangladesh.

In addition, being able to leverage Tiger IT Foundation's community of experts is key for us. Being able to receive feedback on our model and see ways we can improve on it even as we expand into new markets such as Bangladesh can make a huge difference in the amount of impact that we can achieve.

We have identified the following kind of organizations as critical to our growth and success as a company:

• Development Finance Institutions

• Agriculture Industry stakeholders

• Food and Beverage Companies

• Foundations and NGOs

We believe that using a collaborative approach, which takes into account the resources and expertise of established partners, will enable our company to grow efficiently and effectively, driving sustainable impact for all of our stakeholders