Home East Africa Can Selling Drip Irrigation Supplies to Smallholders be Big Business?

Can Selling Drip Irrigation Supplies to Smallholders be Big Business?

AgBusiness Lab Farm VisitBy Deborah B. Hamilton
Feed the Future Partnering for Innovation

Most companies want to “do well by doing good,” and Jose Jaar, president and founder of DelCampo Soluciones Agricolas, proves this is possible. Over the past two decades he has built an agribusiness that earns nearly $2 million per year selling drip irrigation supplies to smallholder farmers in Central America.

Jaar recently attended Feed the Future Partnering for Innovation’s AgBusiness Lab in Tanzania to discuss his business model with African drip distributors. The Lab was an interactive event featuring system design simulations, expert-led discussions, site visits, and farmer interviews all aimed at identifying profit-driven opportunities for African drip distributors to engage a largely untapped smallholder market potentially worth billions of dollars.

So, how did Jose Jaar build a profitable business in a smallholder market?

Business success depends on knowing the target market, creating products that fit the customers’ needs, providing excellent customer service, and pricing products to sell. Over the years, Jaar and his team of agronomist salesmen have cultivated customer relationships built on trust. They started by visiting the farms, listening to smallholders’ needs, and then providing training, advice, and support along with equipment sales. Today more than 60 percent of DelCampo’s sales are repeat business, and its sales representatives earn nearly 80 percent of their competitive salaries from commission.

In 2009, to build momentum, Jaar used funds from the Millennium Challenge Account-Honduras to offer credit to farmers to finance their purchases, which allowed many to access irrigation equipment for the first time. Today, DelCampo provides $250 in revolving credit to its regular customers, which they repay after the growing season.\

Approximately 40 percent of the world’s food producers are smallholder farmers, and estimates of potentially irrigable land in the developing world top 110 million hectares. So why do only 3 percent of the world’s one billion smallholder farmers have access to drip irrigation? Because, as Jaar notes, most irrigation systems are too large and too expensive for smallholder farmers.

Feed the Future Partnering for Innovation is a USAID program that helps to commercialize agricultural technologies and promote sustainable partnerships that benefit smallholders. Its sponsorship of the AgBusiness Lab included providing participating drip distributors with extension advice, and system design and cash flow tools, in addition to highlighting the Del Campo model as one that successfully adjusted in products to meet smallholder size and budget requirements – and made a good profit doing it.

Partnering for Innovation recognizes that drip irrigation is a critical piece in solving the food security puzzle, and projects that increased access will double yields and incomes for millions of African farmers. The program has additionally invested almost 20 percent of its total grant portfolio in companies that are scaling drip technologies to meet smallholder needs.