"We are not Uber for tractors"

Why did you not go on working as an investment banker?

Jahiel Oliver: I learned a lot when I started the career, but I decided to work out something that was more meaningful for me personally. It was a better use of my time. First, I continued still in financing, working in emerging markets in Africa and Asia, doing a lot of deal structuring for microfinance institutions – and then slowly transitioning into agriculture.

How did you come up with agriculture?

I saw that most customers in microfinance are farmers, but the banks would not finance farming because it was too risky. That picked my curiosity and led me learning more about agriculture; finally, HelloTractor was born. I saw it as an opportunity to build a commercial business while meeting a massive need.

Did you have a personal history with agriculture?

No.

How was it being an outsider?

It makes me think about things differently. I don’t have a love affair with tractors, for instance. Most farmers love their equipment. They think about it like something that should be owned. And for me it is a business asset that should not sit on your balance sheet unless it is used at an optimal level. I see things with fresh eyes and don’t have any biases.

Do you have an example for existing biases?

The equipment ownership! In the EU, where you have all these subsidies, farmers can afford overmechanize. I don’t see that as a good thing. You will see less of that as the industry evolves, particularly with cereal prices triggering downward and more pressure put on farmers in their profitability – until you make it to a point where no farmer wants to own equipment, similar to the auto industry: people are buying less cars because of Uber. I myself do not own a car, I don’t even have a licence anymore. Carsharing platforms are the future, and the same romanticism with tractors will end.

Did you have to put some biases away when you started to with HelloTractor, going from the USA to Africa?

Certainly. Embarrassingly, when I started with HelloTractor, I probably overly discounted the opinions of my customers and placed a premium on the insight developed in academia, in development institutions – and I was wrong. People in the market inevitably know more than outsiders studying the market. I thought folks with fancy degrees could help guide the business when I really should have been guided by the customer. That was an embarrassing realization.

You started with a long learning curve?

Yes, I thought sitting behind a desk, doing a literature review would give me the information that I needed. And really, I should have started with talking to farmers, to tractor dealers, to banks financing tractors in the market and talking to farmers who are receiving any tractor services. But you learn and adapt.

You began with the company in 2014.  How many tractors are now actually in service?

We are close to 1500 tractors on the platform, and we are close to a deal with John Deere which will bring additional 2000 tractors annually for the next five years in Nigeria.

Why do you see a need for mechanization in African agriculture?

Because of the shortage of labour. When you go these raw markets, what you see is expansive areas of arable land that is uncultivated. And there is not enough manpower. There is literally money being left in the field. The farmers are undercultivating their planting laid, so they are losing income. There is a huge opportunity for equipment to come in, allow the farmers to plant on time and maybe even expand area under cultivation.

Can yields be improved?

Absolutely, across the board. You name the value chain and yields are improved when you mechanize. Not only because you are planting on time, but also properly.

Most African farmers are eating what they harvest. Hence, they are smallholder farmers. Could they afford renting a tractor? They are not in the financial circle. 

Some can. We don’t say that our customers are smallholder farmers. Our target customer is a businessperson who runs a farm as a business, maybe not so sophisticated but they are looking at monetising that piece of land and maximising the money coming off their piece of land. So, they are making investments in the land as well. Some smallholder farmers qualify as farm business owners and some don’t. Those who are eating what they produce probably aren’t customers of HelloTractor because they are less likely to invest, they are probably employing their children and other forms of household labour and there is no cost replacement for free labour.

That means a huge percentage of farmers until now are not a client group for HelloTractor.

I wouldn’t say a huge percentage, but certainly there are portions of the market that would not qualify as a customer for HelloTractor.

And what are the chances of cooperatives and networks of smallholder farmers if they want to make business with you?

We have cooperatives on our platform, the technology helps them manage the equipment, minimize fraud within the cooperative, making sure that the equipment is only serving cooperative members, but then you also have a mechanism that allows farmers the same service at the same time within in the same vicinity to schedule their service and be clustered together. So they are forming some of a digital cooperative. And that data helps service delivery happen at economises scale, so as a tractor owner I am servicing a digital cooperative that is 25 hectars of land together – individually there maybe a hectar a piece, but if it is 25 farmers now driving my tractor 50 kilometers down the road makes economic sense for me.

Tell us more about the network you have established: How can you guarantee that a tractor gets from one place to the other?

So the booking comes in and we see immediately if there is a tractor in the vicinity or not…

…and how is ‘vicinity’ defined?

It is up to the tractor owners. They define how many hectares they need to drive longer distances. If there is a tractor nearby, in one-kilometer-radius, and you only have one hectar, you can book directly or via an agent. But if there is no tractor, you need to schedule. The booking goes over the demand side and then a pairing is made based on algorithms that we developed as a company. That is based of the availability of the tractor, the vicinity, the job, the applicable implement that the tractor has engaged, and then there is a pricing mechanism we are introducing this year.

And how much earns a booking agent?

Ten percent. A typical booking agent is working one climate zone, so they are not moving around, they know the farmers and are doing roughly 1500 Dollars across the three-month-period.

I read that you don’t like the comparison like “Uber for farmers”. Why?

First of all, we don’t take the primary responsibility of bringing the farmers to our tractor owners. We give them tools to manage their internal networking farmers.

First, you started with your own tractors, right?

Yes, and then we evolved technology only. The reason we are not Uber for tractors is: If you are a driver on a Uber platform, Uber brings you all the riders that you need. In our case, we will only bring supplemental farmers. You are responsible for bringing in most of your farmers. And we give you the technology to do that and to manage that. We are a booking agent app.

So it is a much broader service.

And it is more of a Customer Relationship Management (CRM) sales force type. Uber is very much a marketplace of riders and drivers…

…and how do you reduce the risks for the owners of tractors? They have to invest money…

They get visibility on tractor usage, how much work was completed both in time and in area. They manage their operator and can see how much the operator completed in one day, so they can minimize fraud. They can track their vehicle via GPS, too. So when they locate it in an area where it should not be, they can demobilize it and seize the asset. That technology is part of the solution.

In the past, governments tried just to deliver tractors to the people. Most of these projects failed. Why?

Tractor service delivery is complex. Governments typically need votes, that is why they do things. But to build a mechanization ecosystem stretches beyond the political cycle. So, it is a slow, steady effort that requires a lot of failure. And it is much easier for a politician to say: Here are 500 tractors, I did my job, I served my people, get my press releases and walk away. We are still learning and evolving, fixing stuff and improving our service for our customers. I don’t think politicians have the runway to approach the problem that way. What they could do is engage HelloTractor with our technology. We will help insure that those tractors go out and reach the farmers, that they benefit from the services. But beyond that I don’t know if governments should be involved in tractor service delivery. Governments around the world are dysfunctional. I don’t care, if you are in the west, or in Africa: The reality is that governments in the west are equally as dysfunctional, they just put more money behind the problem, so they hide dysfunction better!

Okay… so you mean it is not only a lack of thinking in the long run, but also of an entrepreneurial spirit?

Exactly, governments are defined by bureaucracy, what government doesn’t have that? The last thing you need in a start-up environment, where you are trying to learn and make fast changes to adapt to your customers in the market, is a bureaucracy. You need to move fast. Governments can not be there. It is not even realistic to expect them to. And it is not because they don’t have the right intentions, it is just that they are not engineered to operate that way. I would say big companies also suffer from similar challenges. And that’s why start-ups are relevant, particularly in emerging markets, where things are still to be figured out.

Agriculture in Africa is mostly done by elder people. How do you sell it to the youngsters?

I think they love technology. They are already on their phones, spending all their time staring at Facebook or whatever it is young people are doing these days. I think delivering agriculture through channels they are already in makes a whole lot of sense. We are excited about technology, we love to see what the upside is for taking a practical benefit of technology, but also it is attractive to young people. So, our booking agents are overwhelmingly young people. A lot of people engaging, maybe not as tractor owners, but within the ecosystem are young people, and they love the technological aspects of it. And they also like the fact that you are not engaged in traditional forms of agriculture. It is tough when you are doing it manually. It is literally torture. My ancestors were slaves. Then they introduced the cotton gin in the US, that is the former mechanization. It displaced slavery – I don’t think any of my ancestors were crying about it!