In a significant move to bolster agricultural productivity in Kenya, FarmWorks Agriculture, a Nairobi-based agritech startup, has secured equity financing from the Netherlands-based impact investor, Truvalu Group. This investment follows the startup's previous pre-Series A funding round in 2023, where it raised $4.1 million led by the Acumen Resilient Agriculture Fund, with participation from the Livelihood Impact Fund, Vested World, family offices, and various angel investors.

Founded in 2020 by Yi Li and Peter Mwangi, FarmWorks aims to unlock the agricultural potential of Africa by establishing clusters of mid-sized farms and collaborating with thousands of smallholder farmers. The startup focuses on creating direct linkages to both local and international markets, thus enhancing productivity and market access for African farmers.

Enhancing Farmer Livelihoods through Sustainable Practices

The landscape for supporting smallholder farmers is fraught with challenges, with only a handful of startups successfully navigating the complexities of securing and growing the livelihoods of approximately 500 million farmers and their families. Yi Li, co-founder of FarmWorks, emphasizes that the key to building a profitable business in this sector lies in a stringent focus on operational costs.

“We are really good with cost control,” Li stated, highlighting the meticulous attention given to various operational metrics, such as the fuel efficiency of their trucks. This careful management of resources has enabled FarmWorks to support over 4,000 Kenyan farmers in improving agricultural practices and increasing sales of their produce.

FarmWorks sells around 1,100 tons of staple crops like onions and tomatoes each month within Kenya and exports high-value products, including French beans and snow peas. The startup’s model involves farmers bringing their harvested goods to designated drop-off centers, from which these products are transported to local markets. For farmers with trucks, there are additional opportunities to earn income through pick-up and delivery services.

Adapting to Market Demands

The company’s approach extends beyond local sales to include exports, as it contracts with buyers and oversees the entire growing process to ensure that the produce meets international standards. “It’s a much higher-touch model, but we have high enough margins to maintain a bigger workforce on the contract farming side,” Li explained.

Navigating the agribusiness landscape is no small feat, particularly for high-touch models that rely heavily on resource-intensive operations. Factors such as the remote locations of many farmers, the perishable nature of agricultural goods, unreliable infrastructure, and climate change add layers of complexity. Several startups, including Nigeria’s Hello Tractor and Kenya’s Twiga Foods, have pivoted their business models, while others like London’s WeFarm and Kenya’s iProcure have shut down due to these challenges.

FarmWorks itself started as a farm in 2020, cultivating local staples and export crops. However, it soon pivoted its strategy to support local farmers rather than compete with them. “If I compare our partner farmers’ costs and yields with our farm’s from that time, theirs are better because they’ve been doing this for much longer,” Li acknowledged, reflecting on the steep learning curve in the early days of the business.

Digital Transformation and Future Growth

As FarmWorks scales, it is also prioritizing the digitization of its field operations to enhance efficiency. Li notes that while direct digitization of farmers can be challenging, it is feasible to digitize internal operations for accurate and timely data collection from the field.

Truvalu Group’s investment further underlines the belief in FarmWorks' vision of fostering a new generation of regenerative and climate-smart farmers. According to Truvalu’s Peter Owaga, FarmWorks is at the forefront of developing sustainable practices that not only boost productivity but also address the challenges posed by climate change.

The recent funding secured by FarmWorks highlights a growing recognition of the vital role agritech plays in enhancing agricultural productivity and supporting local economies in Kenya. By focusing on sustainable practices, operational efficiency, and market access, FarmWorks is poised to make a significant impact on the livelihoods of smallholder farmers. As the agritech sector evolves, startups like FarmWorks represent a promising path toward unlocking the agricultural potential of Africa, driving economic growth, and ensuring food security for the continent’s future.