iFarmer: A bridge between farmers and the capital

Since its launch in August 2018, iFarmer has amassed around 1,000 affiliated farmers and got about 800 cattle financed by sponsors. Sponsors are individuals who purchase cattle as stock and wait for a minimum span of four months to enjoy the benefits. The benefits vary from 8-40 per cent depending on the type of livestock selected by the sponsor to invest in.

How does it work?

You can download their app or visit the website, select your preferred farm from a pool of farms offering varieties of investment options. Upon selection, you transfer the money to iFarmer; it buys the livestock and hands it over to their partner – the farmer.

Once you become a sponsor, you get access to an online dashboard where you get monthly updates on your livestock. The updates include pictures and details of the condition of your livestock.

"We are trying to teach the farmers how to upload data on the dashboard on their own. It will take some time and till then, the field facilitators will keep collecting the data and uploading that on the dashboard," said Fahad Ifaz, co-founder and CEO of iFarmer.

Are the farmers credible?

The farmers are partners of iFarmer – as per their partnership agreement. Trained by the venture itself, the farmers are evaluated based on their previous farming experience and capability.

The farms are categorised according to farmers' capacity, asset, demand, and required capital.
If a farmer is experienced, they get the money and buy the cattle themselves. "The input is very important, if you do not buy the right cattle, its growth might not be effective," said Fahad.

iFarmer provides consultation services to the farmers on how to manage their farms efficiently and nurture the cattle. All the farms get constant support from the local department of livestock as well. "We have six field facilitators who regularly keep interacting with the farmers," said Fahad.

Who are the field facilitators?

The field facilitators are in charge of supervising the farms. iFarmer has six field facilitators who collect and update primary data from the farmers to the database. The field facilitators work under an operations manager who is the link between the farmers and the head office in Dhaka.

"We have selected facilitators who have expertise in handling a large group of a client base. Most of our field facilitators are from microfinance background who know how to deal with a large group of farmers," said Fahad.

Sponsors' benefit

Each farm offers a specific return on investment over a particular period. Taking "Cow Farm Lalmonirhat-6" into account – sponsors can invest in one cow for Tk80,000. Upon crossing six months, the sponsor can avail a profit of Tk12,000 along with their investment of Tk80,000.

The price of cattle varies from farm to farm and the same is the case for the period and the amount of return on sponsorship. For now, a sponsor can avail the highest return by investing in "Cow Farm Lalmonirhat-3" which is offering a 22 per cent return on sponsorship of at least Tk40,000 over twelve months.

Alongside this, a sponsor can avail the lowest return by investing in "Cow Farm Kurigram-2" which is offering an eight per cent return on an investment of at least Tk40,000 over four months. Looking at the investment options, it can be said that the return being offered by iFarmer is comparatively higher than the return on deposits being offered by any bank in Bangladesh.  

Moreover, since October 2019, Green Delta Insurance in agreement with iFarmer is offering insurance for the cattle. "The premium for the insurance is high; we started a pilot with Green Delta Insurance and are working on bringing the premium down as much as possible," said Fahad.

He further added, "If your investment (cattle) gets involved in an accident or gets stolen, it is covered by insurance. So far, there have not been any claims."

Farmers' benefit

Farmers, in general, carry the necessary skills to foster cattle but most farmers lack capital. "We have seen farmers raising cattle by taking credit mostly from informal money lenders and micro-financing organisations. Most number of farmers end up taking money from informal lenders where the interest rates are really high," said Fahad.  

Micro-financing is their next best option depending on availability but the challenge is that they have to pay back monthly or weekly. Thus the repayment cycle might not be favourable for the farmers. 

"The major factor that interests farmers to work with us is the fact that there is no interest rate of capital. It is completely a profit-sharing model. The other benefit is that they are also getting advisory services on how to manage the farms better and instant aid from the local livestock officers. The last thing that they get – the most important thing – is access to the market," said Fahad.

One farmer alone might not get his desired price for his produce but when the number rises from one to one thousand farmers, the scenario changes said Fahad, "When we aggregate all of them together, we can bargain for a price in favour of the farmers."

"The demand for capital is so high that the supply falls short!" said Fahad. Within one year, iFarmer has managed to sum up 800 cattle with 1,000 farmers as partners. The farmers are very interested in this profit-sharing model and they are willing to work with sponsors.

Upazilla Livestock Officer providing training to farmers on the practice of bull fattening. Photo: Collected

Where are the farms located?

iFarmer has four farms that are now operating in Lalmonirhat and Kurigram districts of North Bengal. It plans to expand and launch farms in Rajshahi, Munshiganj, and Mirsharai districts by this year.

"Due to the development interventions taken by the government and NGOs, farmers turned out to be very experienced in terms of agriculture in North Bengal. The huge demand for capital in parts of North Bengal influenced us in starting our operations there," said Fahad.

Challenges for iFarmer

Fahad said that there were less challenges at the farmers' end; except that the farmers are not tech-savvy. However, iFarmer intends to educate the farmers and their household members on the usage of technology specially smartphones. Their biggest challenge was to create awareness at the sponsors' end. "We have had multi-level marketing business models that have manipulated the market many times. We had to spend a lot of time differentiating ourselves from such entities and gaining the trust of sponsors," said Fahad.

Fahad shared that iFarmer is putting technology to good use for clearing peoples' misconceptions by keeping everything transparent; keeping sponsors updated regularly on their investment. "People do not trust the stock market and most of our sponsors have invested online for the first time. But upon getting their returns, they have re-invested," said Fahad.

He added, "Till now, it has been more of a word-of-mouth thing and we have had a good number of recurring sponsors as well. All of our sponsors fall in the group of the middle-income population. All of them want to have a passive income source. Keeping the money in the bank will not bring them returns that they can enjoy upon investing in the livestock."

FAQs about iFarmer

In regards to the agricultural industry, The Business Standard conversed with Fahad Ifaz, the co-founder and CEO of iFarmer and here is what he had to say:

Why did you choose to invest in this sector?

Access to finance has always been a big problem for farmers in countries like Bangladesh, Cambodia, and Myanmar. No matter how much the NGOs are supporting or the government is subsidising, access to finance still holds a huge gap between the demand and supply.

Then again, everyone is celebrating a growing middle-income population who need passive or multiple income source to sustain their economic status. On the other hand, a growing middle income population means a growing demand for quality food. This gave us the idea to connect farmers and people looking for a passive income source.

One hopeful piece of information is, this model of iFarmer is already popular in Malaysia; there are three to four companies following the same model and some of them have raised around USD20 million.

What are your future plans for iFarmer?

We want to work with a diverse set of livestock; we have already included goats in our farms and we are planning on cultivating corn as well. Corn farmers need a good amount of capital upfront and the demand is quite stable in Bangladesh. Around 80 per cent of the corn goes into feed mills keeping a constant demand for the crop.

One of the affiliated farmers of iFarmer, with his child and the cow financed by a sponsor. Photo: Collected

We are also collecting data from our partners (farmers). Financial institutions like banks cannot fund farmers directly because it is expensive for them. They cannot go and identify a single farmer who requires money. That is a lot of work for the bank which includes a lot of expenses and cannot do a full-fledged risk assessment.

From next year, we will aggregate all the produce of the farmers so that we can bypass the wholesaler increasing the profit. We have started a supply chain eliminating the wholesalers from the process. Bengal Meat is already our client."

If banks cannot evaluate risks, how can iFarmer do so?

For us, the costs are low as we are already engaged with the farmers and we have all the data. For now, we are trying to introduce credit-rating systems for the farmers. Things are changing now, banks have to expand their customer base. This is one of the reasons they have initiated projects like agent-banking. We want to do a pilot within the next year. And to support this, we are talking with credit rating agencies in Bangladesh. We are collecting data for the research and a part of it is being jointly supported by UNCDF and UNESCAP.

What would you say is iFarmer's biggest expenditure?

Our biggest expenditure right now is gathering the data. Apart from farmers, our team consists of 15 members and by 2022, we want to work with 30,000 farmers. The number of field facilitators will remain the same. We plan on introducing field agents (input retailers) who will have kiosks of the systems. The farmers can go to the field agents, deliver the data and updates which the field agents can update on our server.

Has iFarmer received any seed funds?

"The entire venture is bootstrapped. Recently, we got seed fund from Accelerating Asia – a Singapore based start-up accelerator. We also got a seed grant from Startup Bangladesh, ICT Ministry in late 2018. We took part in Seedstars – a Switzerland-based start-up competition where we became the winners among 150 countries."

What sort of support are you getting from the government?

"We are at an early stage, there is a scope but we still have to go a long way. For that we will need the support of the government."