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Many farmers in sub-Saharan Africa often lack the capital to buy their own machinery and equipment and have had to innovate to find solutions.

One particularly well-suited business model is the provision of hire services, which can increase access to sustainable farm power and boost the productivity of smallholder farmers. Increasingly, digitalization is playing a key role in this.

During a special session of the 8^th World Congress of Conservation Agriculture, FAO unveiled a new publication that compares five different private sector-driven business models for agri-hire services. 

The publication, Agri-hire in sub-Saharan Africa: business models for investing in sustainable mechanization, was produced by a team from the FAO Investment Centre and FAO Plant Production and Protection Division. It draws on experiences shared by service providers during regional workshops in Côte d’Ivoire and Uganda, organized with the African Conservation Tillage Network.

Geared to policy-makers, investment practitioners and financial partners, the publication looks at factors behind the success of these business models and identifies entry points for investment.

FAO Investment Centre Service Chief Alberta Mascaretti noted the importance of making sure sustainable mechanization technologies – from everyday hand tools to more sophisticated motorized equipment and digital technologies – are appropriate, readily available and affordable.

“Investments need to address the bottlenecks preventing people, especially women and young farmers and young entrepreneurs, from accessing agricultural mechanization hire services,” she said. 

“That means looking at everything from capacity development, awareness raising and more evidence-base knowledge on what works and why, to developing the right infrastructure and creating business opportunities for women and youth to become service providers,” she added. 

Comparing business models

All five business models analysed are led by the private sector, including farmers, cooperatives and small and medium enterprises.

One model is the farmer group service provider. In this model, farmers pool their resources to increase their access to agricultural machinery and equipment at all stages, from tilling their fields to processing and transporting their goods. 

The motivation for such groups, like the Farm Machinery Cooperative of Benin, with its 82 agricultural production cooperatives and 64 processing cooperatives, involving 1,465 farmers, more than two-thirds of them women, is to meet their members’ needs equitably.

Another model known for involving women and youth offers diverse services not limited to mechanization but also including, for example, access to fertilizer and seeds.

And another model is one run by entrepreneurs who act as intermediaries between the owner of the machinery and farmers. A good example is TROTRO Tractor, an on-demand platform in Ghana and Zimbabwe that connects farmers with tractor owners in the vicinity. Using mobile phones and GPS, farmers can request, plan and pre-pay for tractor services to prepare their fields. 

The FAO team used a business model canvas tool to compare the five models.

According to Karim Houmy, an FAO agricultural mechanization expert and co-author of the publication, this tool “gave us a better understanding of how mechanization service providers operate, interact with their customers, cover costs and make a profit, and also where there is room for innovation and improvement.” 

“Normally these canvas tools are developed for big companies, but this analysis shows that it is also relevant for smaller enterprises,” he added.

Finding what works

According to the analysis, skillful staff and leadership, diverse mechanization services and the involvement of farmer organizations are some of the factors behind a business model’s success.

Others include the presence of suppliers of agricultural machinery and equipment and repair services, profitable agri-food value chains, access to finance and infrastructure, from roads to electricity.

These factors give a good idea of what type of business model could work and why in a given local context, said FAO Agricultural Engineer Josef Kienzle, who led the analysis.

“Sustainable agricultural mechanization is about boosting farm power through technologies that are environmentally, economically and socially sustainable and adopting agricultural practices that are resilient to the effects of climate change and that promote an efficient use resources,” he said.

He added that the publication can guide the development of mechanization strategies and policies that provide incentives for farmers to adopt Conservation Agriculture practices and invest in sustainable agricultural mechanization. This would also help strengthen the private sector’s contributions.

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Agri-hire in sub-Saharan Africa: business models for investing in sustainable mechanization is published as part of the Directions in Investment series under the FAO Investment Centre’s Knowledge for Investment (K4I) programme.