Why John Deere invested in Africa’s Hello Tractor
American ag machinery behemoth Deere & Company— more commonly known as John Deere, recently invested in Hello Tractor, a Nigeria-headquartered marketplace and fleet management technology for African farmers to rent tractors.
The startup was one of the first participants in John Deere’s Startup Collaborator program, which launched in 2019 to help the company engage with tech startups and trial their innovations with customers without a formal partnership. Another early participant was Bear Flag Robotics, which was acquired by John Deere earlier this year. [Disclosure: AgFunder, AFN’s parent company, was an investor in Bear Flag Robotics.]
John Deere’s director of Ag & Turf Sales & Marketing in Africa and Asia Jason Brantley, told AFN that Hello Tractor aligns with the business’s “Leaps Ambition” which aims to see 100% of small ag equipment connectivity enabled by 2026. He said the deal also presents an opportunity for Deere “to learn from Hello Tractor about how it connects with customers and helps solve problems in Deere’s Region 1 markets of Africa and Asia.”
“Sustainable food security in these regions will require new solutions to persistent problems in agriculture, but at the scales and costs that match the market and the mechanization levels of the farmer’s production system. It’s exciting to see the energy and efforts that new startups are directing towards production agriculture and we think this will increase as more connectivity is established,” he said.
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He added that the partnership with Hello Tractor is really aimed squarely at increasing access to affordable mechanization for small farmers and to help mechanization contractors run more efficiently and profitably.
“As contractors and customers become more connected, we are most interested in innovative ways to help the small farmer increase yields and reduce inputs in their production systems. This is challenging because most small farmers haven’t yet mechanized every step of their production system, which means many existing precision ag approaches aren’t applicable.”
“This is going to require new technologies and approaches and that’s exactly what we hope our drive towards connectivity will inspire,” Brantley added.
Closing the mechanization gap in African agriculture
Agricultural mechanization generally has two profound effects for farmers. One is that farmers can cut costs on hiring laborers, which ultimately saves on time and increases output. It also helps to produce higher crop yields and greater efficiency, which should increase their incomes.
But machinery is expensive for smallholder farmers and access to platforms or contractors to serve this segment is lacking. Africa is particularly wanting as the least mechanized of all continents. A comparison of India and South Africa for instance, shows that while the former has 128 tractors per square kilometer, the latter has 43 for the same area.
Hello Tractor took up this challenge in 2014 when it was founded to make mechanization accessible for smallholder farmers. The startup first started out in the Nigerian market.
“Farmers need mechanization, but they’re operating with too small a plot to justify owning their own tractor,” Jehiel Oliver, founder and CEO of Hello Tractor, told AFN.
Hello Tractor’s solution was to create a marketplace for tractor owners to lease their equipment to these farmers in need of mechanization. It also offered an internet-of-things-based fleet management services to enable fleet owners to locate, monitor, and manage their fleets. This includes tracking how much work a tractor has done, how much fuel it’s consumed, checking the tractor operator’s performance and any maintenance needs. There was no such service before, according to Oliver.
While the marketplace was an immediate success, Oliver realized that to scale it, he’d need to make it even more efficient for the fleet owners and created a booking application that Hello Tractor sales agents could use to group farmers together, aggregating their demand for tractors. In doing so, fleet owners could lease their machinery for lengthier terms and avoid the logistics of working with multiple smallholder farmers.
Today there are 3,000 fleet owners on the platform leasing and managing their tractors to groups of farmers via mobile and web applications.
More recently, Hello Tractor launched a financing program to help high-performing agents with enough demand to own and lease their own tractors.
The program is using a Pay As You Go financing model and has already disbursed $4 million in funding. Hello Tractor is aiming to disburse $15 million in loans by the end of the year.
Hello Tractor’s Impact
Hello Tractor has been able to provide tractor services for around half a million farmers with 55% of them receiving their first mechanization services through Hello Tractor, according to Oliver.
Around 87% of these farmers have reported an increase in income due to mechanization access.
Hello Tractor has also introduced new forms of innovative agriculture to its farmers to ensure that its customers are responsible stewards of the land they use. Top among them is conservation agriculture. The startup is in partnership with organizations like the World Food Program and Farm to Market Alliance, which facilitate education programs to help Hello Tractor teach their farmers about conservation agriculture practices.
Further, the startup has developed a credit-scoring methodology that will give fleet owners a higher rating in their financing program if their pre-booked farmers practice conservation agriculture practices.