Business Model Case Study: Volta Irrigation
Volta Irrigation is a small agribusiness started by five young entrepreneurs. Their mission is to provide smallholder farmers with irrigation services to manage the effects of climate change, such as drought and dry spells, while solidifying a food source and a source of income through commercial agriculture. Traditionally, Volta’s customers can’t afford to irrigate because the cost is far too high — both fuel cost and the up-front cost of equipment. Volta works around these constraints by providing farmers an innovative irrigation unit, the Alma Volta, which has a battery powered pump that is charged through pedaling a bicycle-like unit. They pair this system with a business model that lends farming inputs pre-season to ensure a profitable harvest for the farmers. Volta then receives a share of the revenue post-harvest.
Insights on Business Model:
Value Proposition
Volta’s model uniquely offers a full package of irrigation and horticultural inputs at zero upfront capital cost to the farmer. This allows farmers that otherwise can’t afford irrigation to access the service.
Cost Structure
Since customers do not buy the Alma Volta, much of the financial risk remains on Volta to maintain and service the irrigation equipment as well as obtaining and lending inputs to farmers.
Customer Segment
Volta’s primary customer segment is cooperatives of small farmers.
Additionally, Volta is exploring the customer segment of an individual “water entrepreneur” who would purchase the Alma Volta and provide irrigation services to nearby farmers or cooperatives.
Revenue Streams
Incentives are aligned among farmers and Volta Irrigation due to their revenue sharing model. Thus, it is in the interest of the company for farmers to best manage their irrigation for maximum profits.
Originally, Volta was using a 10 percent revenue sharing model while only providing irrigation. They pivoted, according to customer needs, to a 30 percent revenue sharing model to include provision of all in-puts for high value crops.
Farmer View: Giscard
Giscard has switched to growing French beans along with peppers for export, in-stead of less profitable vegetables he grew before. The low marginal cost for irrigating with the Alma Volta allowed Giscard to grow crops that required more water and brought in greater revenue — while saving on production costs.
“we diversified… last time we were based on chili farming, but this time, due to the system we also introduced French beans for export… their system helped us a lot.” — Giscard
