The water-energy-food nexus faces many challenges – climate change, unsustainable use of water and energy, and unequal access to resources, to name a few. The nexus needs creative thinking and collaboration across local, regional, and international levels to have a positive impact and help smallholder farmers grow more food with less water and energy.
For this year’s World Creativity and Innovation Day, Yogeeta Sharma, CKM Specialist for S/SEA RIH, spoke with Mr. Hujjat Nadarajah. In 2017, Mr. Hujjat Nadarajah co-founded Tun Yat, an agritech startup in Myanmar that connects farmers with agricultural machine suppliers. He led the pilot design to establish proof of concept, securing partners and fundraising to finance Tun Yat operations.
What do creativity and innovation mean to your company in terms of water-energy-food solutions?
Creativity and innovation mean a lot of service-design work, customer and user proto-typing. We map out products and services, and conduct field visits and workshops to listen to and engage with our farmer, agent, and machine owner clients to see if these fit or not, and then modify them until there is a fit.
For example, in agriculture, there is always a chance that some products like tomatoes are left to rot or waste. We worked with farmer groups and hired a food technology team, who helped to develop products like ice cream, energy bars, and tomato paste.
What end-user financing product do you offer?
We offer credit for smallholder farmers who need some time before they can pay for a harvesting service with our machines and for others we match-make cutting their paddy, maize, groundnut, and sesame crops. Similarly, we sell our services over an extended 3-4 month credit period for farmers who want farm inputs. Farmers pay us once they’ve sold their crops to a wholesale broker or agent, which is normally around harvest time.
What customer need/gap sparked the desire to provide this product?
We primarily work with farmers that do not use or do not have access to any traditional financial services and are in rural areas, so it is hard for them to access capital to cover input costs at the start of each season.
In our first three years, we found that delivering a reliable mechanization service that is affordable and on-demand is itself a foundation on which to first build and gain farmers’ trust. This is followed by delivering additional services and then afterwards adding on the technology layer. Once farmers see the actual machine on their land harvesting or tilling their crops, they become more interested in the next upgrade of value-added and efficient services, and they are more open to learning and using the tech.
Was there a need to be innovative in designing/implementing your end-user financing model?
Yes, we had to incorporate the lessons drawn from lending, agri-finance, and service design into this work. We used off-shelf software to create digital profiles for farmers that tied to their lending/credit and transaction history for our input purchases.
Tun Yat has partnered with several development organizations including USAID and World Bank, and INGOs including International Cocoa Organisation and Cordaid, to conduct research into digital agriculture technology solutions for smallholder farmers across Southeast Asia – including Laos, Cambodia and Myanmar. The company has co-authored reports on rice, fisheries, and pulses food systems and actively engages in pilots with agri-lending institutions to explore digital agriculture solutions and business models that can be applied and scaled.
Why did you decide to create a partnership?
We needed financing to cover the longer four-month credit cycle, as it was a more significant cash-flow gap for bulk orders of fertilizer purchases. Also, by bringing in more prominent donors, non-bank financial institutions, and digital platforms linked to lenders, we can crowd in investment towards this financial instrument for farmers.
We are working on a partnership with the Western Sydney University to develop a longer shelf life for our products. This will help farmers from developing countries to go straight from growing crops to actively supplying food products.
What complementary value has the partner brought into implementing the end-user financing model?
GSMA’s research identified how our service delivery model could form a basis for a credit score of farmers that lenders may be interested in. PACT allowed us to test the system with a group of sesame farmers through a grant mechanism to cover machine owners’ costs upfront. Then next, Daung Capital, for the second trial, provided the short-term financing for this. For the third version, Agrigat8 brought in a survey/digital profile for generating a transaction history needed for a credit profile.
How has WE4F supported you on this product?
WE4F played a role as a sounding board for these agri-finance discussions. It then helped spearhead our efforts to re-develop our own software/platform to capture these farmer input purchases and machinery rental transaction points. Now we can kick off the first stage of a 450-man day software development cycle, with the first phase financed by WE4f. Having it developed and having the intellectual property on this and source code means the company’s overall value goes up. It also means the platform can automate more lending, credit, and payment transactions, so it will be able to scale from 100 machine owners linked to our forum, to thousands matched, to thousands of paying farmer customers.
Tun Yat is an on-demand farming-as-a-service (FaaS) platform connecting farmers to machine suppliers, fertilizer and seeds, solar water pumps and agri-lenders. It focuses on how to use mechanization and other inputs to improve farmer yields. Tun Yat offers a standardized service across a fragmented market, offering affordable, reliable and high-quality tractor and harvester rental services. Tun Yat enables greater yields through machinery, provision of inputs, crop buy-back, linkages to agri-lenders, and food ingredient sourcing and production.
Yogeeta Sharma is a Communications and Knowledge Management Specialist for the WE4F South and Southeast Asia Regional Innovation Hub. Previously, she has worked with various USAID programs and gained essential experience in the development sector. She loves bringing innovators’ vision into a virtual reality here at WE4F.