Usomi Limited (Usomi) is a Kenyan technical service provider and aggregator of raw agricultural commodities established in 2013. Usomi started as an agritech business with a focus on data analytics and precision farming through mobile platforms for smallholder farmers producing both animal and plant-based produce. However, as market access is key for the viability of supply chains, Usomi recently expanded their approach to market linkages and virtual aggregation of finger millet and indigenous chickens. Usomi intends to grow their model and expand its current millet and poultry farmer base of 2,000 in the two counties Siaya and Busia to around 20,000 farmers by 2024 located in six counties. Usomi currently sources around 29,000 chickens per month and 2,000 MT millet annually. Annual sourcing volumes are expected to grow to 27,000 MT of millet and 5,300,000 chickens by year 2024.
By offering a holistic bundle of services on credit (incl. training, inputs, mechanization, farm diagnostics, farmer organization, poultry vaccinations and access to markets) adapted to fit each farmer segment’s needs, Usomi is able to more than triple annual millet production per farmer and encourage farmers to simultaneously engage in poultry farming, thereby significantly boosting household incomes within 3 years.
This report analyses Usomi’s strategy and business model; the financial performance of both company and farmers; and identifies opportunities in overcoming barriers to scale and mitigating business and farmer-level risks. The main recommendations to improve the business model and reach intended scale are for Usomi to:
- Implement a clear farmer segmentation and graduation strategy. One way to significantly increase farmer loyalty, to ensure the desired productivity is ensued and to operate an efficient and effective SDM is to align the farmer segmentation and graduation strategy with each segment’s needs and investment capacity.
- Optimize field staff to farmer ratios. Since the SDM serves a demand driven business model, the main bottleneck for scaling-up is the number of farmers required to meet the demand targets. Number of farmers required, in turn, drives the amount of field staff that Usomi has to deploy. Therefore, it is key to balance the clear benefits associated to close farmer relationships i.e. decreased side-selling, increased yields and improved farmer retention, with the costs associated with increasing numbers of required field staff. By determining the number of farmers needed per unit of millet volume sourced, Usomi can optimize its scaling trajectory.
- Establish in-house service provision capacity. By internalizing the agro-input provision instead of continuing the current outsourcing strategy, Usomi could not only improve reliability of its provision operations and reduce its associated service provision costs. It would also allow Usomi to offer further reduced agro-input prices to its farmers thereby improving the farmer’s livelihoods and increasing their impact.
- Integrate millet and poultry value chains. By further exploring the synergies between poultry and millet focused operations (e.g. appointing hybrid Usomi staff that can operate in both value chains, designing joint trainings and using waste streams from one value chain in another), Usomi could improve their financial sustainability and simplify their model for easier scale up.