Innovative Irrigation-as-a-Service for Food System Resilience in East Africa
As pressure on food systems grows, so too does the opportunity to serve East Africa’s 20 million smallholder farmers. Stable Foods is building a food production system for farmers in Kenya through an end-to-end platform that includes an innovative irrigation-as-a-service offering. This brings drip irrigation to plots as small as 1/8 of an acre for the cost of $5.25 a month (17 cents a day) so that low-income farmers can drive production gains, boost their income, and become more resilient to local climate impacts.
Written by Dan Block, Partner at Mercy Corps Ventures.
“There are two themes we very much care about at Pyramidia: climate change and inequality. And inequality starts really with food security - can you afford and access three nutritious meals a day.”
Ruth Bertens — Managing Partner & Founder, Pyramidia Ventures
In East Africa, the total productivity of the current food system is capable of reaching up to 3X the current levels through yield improvements alone, but significant investments in inputs, infrastructure, and markets are required. Many solutions exist to improve smallholder farmer productivity and drive their resilience, particularly against the increasing volatility introduced by climate change. For example, drip irrigation has been known to increase productivity by up to 4X alone, enabling farmers to achieve additional crop cycles during dry periods, withstand droughts, and achieve robust yields in the generally weaker second harvest period.
Smallholders, who contribute the vast majority of domestic food production and employ 70–80% of the population in East Africa, have volatile incomes. With an average plot size of under five hectares, investing in needed improvements often remains inaccessible. While there are at least four companies selling solar drip irrigation products to farmers in Kenya, product pricing is out of reach and typically begins at over $2,000 per acre, according to our research. This means that despite only 17% of Kenya’s arable land being deemed suitable for rain-fed agriculture, still only 2% of Kenya’s total area under crops is irrigated.
THE STABLE FOODS SOLUTION
Stable Foods is building a smallholder food production system through an end-to-end platform that creates greater margins across the value chain. Their solution includes an innovative irrigation-as-a-service offering, which is supported by a complementary market access program, and a land leasing program to offer farmers a way to stabilize and diversify their incomes. This introduces multiple layers of efficiency for farmers while driving down the costs of food for end consumers.
“Stable Foods works successfully within already existing community structures to solve the major problems that limit smallholder farmer yields using climate-friendly practices. Together, not only are we reducing food insecurity in marginalized populations, we are sustainably creating jobs and increasing community resilience at the same time.”
Andrew Massaro - CEO & Co-Founder, Stable Foods
(Pyramidia Ventures is a venture studio and Stable Foods is its first company)
Stable Foods estimates that it can increase farmer incomes by up to 7X via their model, by working with farmers via three modalities:
1) Irrigation-as-a-Service
by leveraging close-proximity networks of farmers to offer low-cost networked irrigation for a unit fee for plots as small as 1/8 Acre for the cost of $5.25 a month (17 cents/day). Stable Foods is able to achieve sustainable unit economics at these price points by leveraging central water micro-reservoirs to serve multiple farmers in close proximity, thereby dividing the cost per user into smaller fractions than other solutions on the market;
2) Market Access
by providing access to organic, regenerative, and high-quality farm inputs and guaranteed off-take;
3) Lease & Operate
by leasing fallow land from small landowners at a fixed rate, Stable Foods irrigates and operates the farms themselves while paying land owners a steady income stream and providing technical training to adjacent plots of land managed by the farmers. The income land owners earn through this model also has the potential to cover the upfront costs to farmers who also want to participate in the irrigation-as-a-service offering.
Starting in Kenya, the company aims to target the 20 million smallholders across East Africa with their comprehensive set of solutions. This will support smallholder farmers to increase their resilience and climate-smart practices that deliver higher yields, secure offtake, and organic and regenerative practices to improve food security.
Stable Food’s solution also creates positive spillover effects to the entire food system. For instance:
- By vertically integrating through strategic partnerships, Stable Foods is able to amass data from farmgate through to end consumer purchase preferences and can direct production to focus on higher value crops serving deeper demand
- Stable Foods intends to leverage its data on farmers to help secure access to credit (either via Stable Foods or a third party), as well as to adapt to optimal seed and agronomy practices
- Stable Foods’ platform will creatively integrate new solutions over time to better serve farmers, such as group insurance, credit, education and training, bulk-purchase of goods/services in high demand amongst their farmers, and other items such as meteorological or pest management systems
- Stable Foods is exploring the potential to include delivery of precision nutrition inputs and pest control through the drip irrigation line in the future, which they anticipate can further strengthen yields and increase crop resilience
While Stable Foods is still in the early stages of implementing their tech roadmap, the inclusion of smart metering and data inputs from across their farms could allow them to deliver actionable data-driven insights which can be delivered to farmers via IoT in real-time, and perhaps even automated through the drip systems. Lastly, given the lack of land titling in rural areas in Kenya, Stable Foods may be able to work with farmers to help them obtain proper deeds to their land and increase their access to financial and other services as a result.
Why We Invested
For many decades, providing affordable access to drip irrigation has been the holy grail for transforming the viability and competitiveness of smallholder farming. With subsidies all too scarce, many irrigation providers have deemed smallholders unreachable and instead focused on irrigation solutions for mid to large farms. This in turn has put pressure on farmers to sell their land at low prices to intensive agriculturists who have been consolidating plots and degrading soil.
Refusing to accept the status quo, Stable Foods’ innovative networked drip irrigation solution places irrigation and agency back into the hands of smallholder farmers. Beyond irrigation, the company’s comprehensive and growing menu of products - from inputs and market access to land leasing - allows farmers to choose which services they are interested in purchasing, rather than presuming what consumers should purchase and pressuring them to buy a pre-set package, as is often the case in smallholder delivery mechanisms. In this way, Stable Foods is more than just an irrigation company, it is helping shift the balance of choice and opportunity back to those who have called the land their home for generations.
Stay tuned for more updates on our portfolio here.
