November 1, 2016
by Samuel Gebre
A U.S. startup that sells solar-powered irrigation kits to small-scale farmers in Kenya plans to expand in East Africa, where regular droughts often result in food shortages.
SunCulture, which started business in New York four years ago, has sold almost 1,000 units of the equipment that costs as much as 248,000 shillings ($2,400) in deals that also solve key challenges for growers in Kenya: access to finance and a steady off-take market. It plans to take operations into Somalia, Uganda, Ethiopia and Burundi in coming years, Marketing Director Kathryn Weichel said in an interview in Nairobi, the Kenyan capital.
“The first thing we did when we started SunCulture was to spend the first seven months with farmers piloting in the field because we needed to test the product and make sure it worked for farmers in Kenya,” Weichel said. “We try to provide them not only the irrigation system, but seeds, fertilizer, agronomy services, after sales services and financing.”
As many as 1.3 million people in Kenya face hunger in coming months as the rainy season that normally commences in October is expected to be below average, according to the state-run National Drought Management Authority. In an effort to boost food security, the government is planning to double the area under modern irrigation methods to 1 million acres (405,000 hectares) within five years.
Only about 5% of African agriculture is irrigated, according to the International Water Management Institute. In Tanzania, for example, the government says it has a 6.8 trillion-shilling ($3.1 billion) irrigation funding gap.
Less than 4% of Kenya’s 5.4 million acres of arable land is under irrigation, and four-fifths of that territory requires artificial watering to sustain farming, according to the World Bank. Agriculture makes up about 30% of Kenya’s $63.4 billion economy.
SunCulture has already sold kits to farmers in seven East African countries and is exploring distribution partnerships in other parts of the continent, Weichel said. The company is also working with a non-profit organization, the Norwegian Refugee Council, to set up 150 acres of solar-powered irrigation in Somalia
With startup funding from organizations including the Shell Foundation, SunCulture sold its first kit in Kenya in 2013 in a trial period that runs until 2018. Farmers receive the solar-powered pump and irrigation equipment after depositing about 15 percent of the purchase price and the balance in installments of between 5% and 10% each month until harvest time. The equipment can irrigate an acre of land in about an hour, Weichel said.
SunCulture has arranged for farmers to purchase the gear outright through loans from Equity Group Holdings Ltd., Kenya’s biggest lender by market value. It also gives growers access to inputs from different providers, such as Syngenta Seeds Inc., which has helped boost yields by as much as fourfold. After the harvest, growers can sell their best produce to Nairobi-based grocery chain Zucchni under an off-take agreement, Weichel said.
To contact the reporter on this story: Samuel Gebre in Nairobi at [email protected]
To contact the editors responsible for this story: Paul Richardson at [email protected]
© 2016 Bloomberg L.P
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