“Enriching farmers through the creation of rural entrepreneurs set in emerging countries” AGRIBUDDY CEO Kengo Kitaura
AGRIBUDDY CEO Kengo Kitaura tries to solve agricultural problems in emerging Asian countries. The services offered by the company won first prize at the NIKKEI FINTECH CONFERENCE in 2016, the Best of the Future in 2017 and an SMFG award. They recently won first prize in a pitch contest at the New Economic Summit (NEST) in 2017 sponsored by the New Economic Federation. We asked the man with such a record, Mr. Kitaura, about his current business, his overseas business background and his vision towards the future.
《Profile｜ Mr. Kengo Kitaura》
Kengo Kitaura was born in Osaka Prefecture in 1971 and currently lives in Cambodia. He left Japan and went to the United States after graduating from junior high school where he enrolled in Western high school in Anaheim, California. After returning to Japan he set up his own consumer loan company. After winding it up due to changes in regulations that made his business more challenging, he decided to explore global markets, finally deciding on Cambodia in 2010 and is now the CEO of AGRIBUDDY Ltd.
Providing a platform to support the agriculture of developing countries.
Q: First of all, please tell me about AGRIBUDDY and its business.
AGRIBUDDY started out from the idea of making people living in rural areas happy. If you look at the current situation regarding global food production, much of it is produced by small-scale farmers in developing countries, and this proportion is expected to rise by about 80% with agriculture in developing countries being backed by small farms.
Currently, there are 570 million small-scale farmer households and the amount of capital they have to finance about 450 billion USD worth of produce is not enough for them to properly farm. As well, they do not have access to financing or market information.
In order to get them to properly get money and information, the first step we take is to create a “buddy”, a rural entrepreneur, who brings small-scale Asian farmers together. These “Buddies” have a smartphone that builds a network that to gather local farmers who do have access to the Internet. The buddy then obtains detailed personal and rural data. This data has to do with how much and at what time local farmers used their money and how much of a harvest they obtained.
Knowing this information, you can offer credit to each farmer, and you can recruit participants necessary to increase crop yields and income as well as being able to lend materials etc. to them.
Through these platforms, we aim to offer various things for many people living in rural villages to enrich their lives and livelihood.
The impression made by Grameen Bank founder Muhammad Yunus and your experience in finance reflected in your current business
Q: Please tell us about the background of the current project.
I wanted to compete overseas, have a business that is good for society, and I wanted a scalable business. These are the three things that I thought about when starting this business.
Cambodia had nothing in particular when I first visited it 10 years ago. I thought that if I started something there, I could do something good for society. Among other things, there was a food shortage problem due to a population increase, which was also a major global theme. There was a big opportunity for business, and if successful, there were also opportunities to scale up the business. So I decided to try agriculture first, and I did.
What I thought while visiting Cambodia before starting my business, was that the local people are rich even though they don’t have money. When I watched them, they were sleeping during the daytime and didn’t seem to be having trouble finding enough food to eat.
So I thought, if these people were to work properly during the time that they were using to sleep, they could become rich. In this world, there are many problems that can be solved with money. Even if you are sick, you can get medical treatment. If you pay money to receive the good education you can also find a good profession.
I thought that I would like to have a business there and enrich the lives of these people as I could solve such problems like helping them become rich economically.
At first, I tried proper Japanese style agriculture that had not yet been administered by Cambodian people, I borrowed 1000 ha of land, the same size as 20 times Tokyo Disneyland, and I planted a crop called cassava there.
In order to do business, I went and examined the various local agriculture. When I looked it up, the information was just random. Government statistical information that should be reliable was also completely different from actual information.
While doing so, the economy of Cambodia improved and the wages of Cambodians hired to do agriculture rose and doubled. As an employer, if the wages double it causes problems.
Initially, we started business thinking of doing good deeds in Cambodia. However, in the face of the problem of rising wages, this made for a difficult story. And though their wages doubled, their welfare did not change much.
We were making these people work in the scorching sun and although of course, we provide them with an income, I realized that I was not able to enrich their lives with my current business model. In the first place, I realized that I didn’t have the proper information that I needed, so I decided to do something about it.
My previous job history was in finance, and financial business cannot lend money to a client without knowing the other clients’ information.
For example, if a person is from Japan, and went to ○ ○ University and worked for ○ ○ a trading company and if I know that the annual income is ○ ○ 10,000 and the address is t○ ○ ward of Tokyo, then I can trust that person and will lend them money.
On the other hand, farmers in developing countries cannot be trusted because you do not know any information about them. For that reason you no one will ever partner up with anyone and farmers cannot borrow the money that is essential to them.
Because this such a vicious cycle, I thought that it could be possible for us to visualize what at that moment couldn’t be seen. As a result, I came up with the current project.
I think that I came to the decision that I wanted to compete overseas because of the regret I experienced when I dropped out of an American school.
Q: Could you tell me what made you think the way you do? Previously you mentioned three points: wanting to compete overseas, have a business that is good for society, and have a scalable business.
After I graduated from junior high school I went to a high school in the USA, and eventually dropped out.
I still regretted dropping out of school, even after returning to Japan from America. When I was doing business in Japan, I was always thought that I would like to compete overseas someday.
The regret I felt from having run away from the United States and the feelings I had in Japan for a long time manifested into my thoughts of contemplating working overseas.
I wanted to create a business that could do something good for society because my previous job in the finance industry had a bad ending.
The profits of the financial industry come from interest rates. You cannot do business without interest. Of course, even if the customer is a friend, you lend the money with interest. But if the money that was lent isn’t returned, the friendship with that person ends at that point.
Even for people who you have a new relationship, that relationship could end up being broken due to a fight over money. I have experienced such things before.
Of course, my job was profitable because I was working in finance, but I didn’t like the business of money lending.
At this point, I couldn’t work in the financial industry anymore and at that the same time someone in the same financial industry won a Nobel Prize.
This person was Muhammad Yunus, who founded Grameen Bank. I felt something about him was different when I saw him.
I thought about what he was doing differently when I found out about him. Despite the people who he lent money to being insanely poor in comparison to those we were lending money to, he lent them money and gained back interest as expected.
So, as a result of these various considerations, I came to the conclusion that it is important “how the partner uses the money” and “what do they want to do with it”.
Nevertheless, he lent money to those people who he knew could disappear. Like putting money in a pachinko gambling-machine. I lent money because I can earn interest. But to Yunus there was a desire for people to live a better life using the money he lent them.
At that time, I finally felt that even in the financial industry, everything can change based on the aims of the lender.
Next, if I had the opportunity to do something on my own, I thought that I want to aim to do something that would have a happy ending.
I talked about wanting to have a scalable business, but when you have a business there is always that thought. There were two things that I aimed for in business. The first one was to become a craftsman and make a wonderful thing that nobody else could. I truly respect craftsman, but I am not the type that can do one thing thoroughly. As a result, unfortunately, I had no choice but to give up.
The second thing I aimed for was scaling. Because I wasn’t the type to do the former, I thought about doing a business that scales externally.
Real overseas businesses: The importance of repeated communication.
Q: What points are there that you think made it difficult to actually start a business in Cambodia?
I think that communication is difficult. Separately, the language is not a problem as they can speak English to some extent. The problem is that they do not know the causal relationship. Often times you feel a little disoriented when you communicate with them.
Why or to whom, whatever you say, even over a long period of time, they repeatedly go around in circles and end up back where they started.
Q: Under such circumstances, how did you devise a method of communication?
I think that there is no other way to relay information than to keep saying the same thing again and again in a different way if possible. The way we were brought up to understand to some extent came to be because there were adults around us that kept saying the same things from when we were children.
However, they did not go through that same process as us. They are all grown up in size, but they are just like small children when it comes to understanding things.
That’s why it took us 10 years to create and understand. Since these people are all adults now, for them, it will take them another 10 years. It is important for them to go through the same process as we did.
There are people who might be able to manage, and some that will not. Unfortunately, we have to abandon those who can’t. Although it may be a cold Japanese way of thinking, imagine what would happen if the rules of the world suddenly changed. Let’s say that only those with strong boxing skills turned out to be the greatest people in the world starting from today. Even if you teach people who have never done boxing before now how to box, they won’t improve fast enough and won’t get much better in the future either.
After all, not everything is suited to everyone, so it is very important to understand them carefully.
Q: I think that you may run into many problems when doing business abroad, why are you able to persevere?
In any case, I can’t quit because I started doing what I wanted to do.
For example, if you jump into the sea with a splash and say “I can’t swim” and stop swimming, you will die. So I have to keep swimming. As I made the decision to swim a lot, I would like to continue swimming happily.
And as I can see the island while I’m swimming, I think to myself, I want to get to that island.
That’s why it’s tough but I started out wanting to do it. I think am able to continue because the journey to the destination is fun.
Q: Is that so? Next, tell me about the enjoyment you get from working overseas.
I don’t feel like I am overseas anymore. For example, I will live in India for about half a year after returning from Japan this time, So, if India is good as it is, I will probably live in India for a while, and as I’m also doing business in Cambodia, which doesn’t mean I will never go back to Cambodia again.
Because of the way I feel, I think that “overseas” just means something other than Japan.
I think that Japan included, it doesn`t really matter where you go if it suits your behavior pattern at that time. That’s why when “working abroad” the job content doesn’t change. In my opinion, you do not feel the joy or excitement just because you’re overseas.
Create 1 million rural entrepreneurs by 2030
Q: Please tell me about your future vision.
We would like to create one million rural entrepreneurs by 2030.
Strictly speaking, farmers in developing countries are not farmers. They are unemployed people who have land. On the many vacant lots they own, they are just growing their own food there. They try to convert the portions of the crops that they do not consume into money to buy things that can only be acquired with money.
They are not farmers by choice. They would quit farming if they could. But if farming became a profitable profession, they would continue. Which of the options is profitable? This is what is important to them.
So, we sometimes give farmers options other than agriculture to make money, and of course, I want to enrich their lives and consider how they can make money in agriculture.
Even if we make a profit, I am acting with the desire to change a situation in which there is nothing.
There is no supermarket on site, there is no electricity, and there is no water supply. I want to at least change these living standards.
When you want to make a power station to make electricity available in the village, you cannot borrow money unless you know the net income of the village. If you cannot make it because of this, you cannot enrich your lifestyle.
First of all, we want to collect information on their income and expenditures and continue to make a mechanism that will make income swell by giving money to those people.
Q: Finally, please make a comment to the average reader who is about to challenge themselves to create a business abroad!
What makes a great person? It is always a person who chooses the unconventional choice among a number of choices. Whatever direction you choose, the people who become the one and only person, are the great people. That is why it is important not to be afraid and to always choose to be the in the minority.
Always be glad to choose to be in the minority. I think it is really cool to think how nice it would be if you could challenge yourself with feelings that nobody else has.