AgriTech Startup Armada is Building a Marketplace for Farmers to Get Mechanized Services  

Agriculture accounts for the bulk of Ethiopia’s GDP. However, most agricultural production occurs on small and widely dispersed farms (smallholder farms).

Smallholder farmers are farmers who cultivate less than 2 hectares of land. This land owned by Ethiopian small-scale farmers accounts for about 95% of the total area under agricultural use, and they are responsible for more than 90% of the total agricultural output.

These often family-run farms face more than just geography. They are also increasingly finding themselves affected by unpredictable weather-related patterns like drought and unexpected heavy rainfall, making it impossible to cultivate a sufficient yield of crops to support their ever-growing family size.

These demographic and environmental pressures have resulted in various negative knock-on effects, ranging from chronic food insecurity to widespread rural unemployment and mass migration.

Modernizing agriculture through greater mechanization coupled with access to affordable, timely, and high-quality field operations holds the key to solving some of these big challenges facing rural communities in Ethiopia. This is where Armada Agriculture comes in.

Armada is an agritech startup that provides diversified agricultural mechanization services, offering machinery rental, mechanization personnel training, spare parts, and maintenance services to Ethiopia’s farmers, agricultural machinery owners, and agricultural input providers.

To be accessible through a mobile application, a website, a call center and agents, the platform connects farmers with nearby mechanized service providers such as tractors and implement owners.

Among the co-founders are, Meron Tesfaye and Semegn Tadesse and the startup has nine team members. The co-founders are also the ones behind Freelance Ethiopia, the telegram channel that connects businesses and individuals to freelancers, independent professionals, and agencies for hiring needs.

Armada is currently in a pilot phase and is operational in Amhara and Gambella Regional States, providing mechanization services on around 450 hectares of land. Armada hopes to be able to provide service on 5000 hectares of farmland within a year, with a product launch expected to take place in two months.

“Farms of all types, from large export-oriented operations to small subsistence-level family farms, consistently encounter obstacles to reliable, profitable, and sustainable mechanization,” said Semegen Tadesse, co-founder, and CTO of Armada.

“These range from machinery breakdown problems that are expensive and time-consuming to the pervasive shortage of spare parts. As a result, it is not uncommon for larger farms to abstain from full mechanization and for smaller farms to avoid mechanization altogether,” he added.

How it works 

Armada provides farmers with access to mechanized services for plowing, harrowing, planting, and harvesting.

Farmers can register with Armada through the mobile app, contacting the call center, or through agents who act as a bridge between farmers and the platform.

The startup works with tractor and implement owners and helps them manage and facilitate their machines and connects them with farmers that need their services. Tractor implements are useful accessories designed to perform certain tasks and include tools such as ploughs, harrows, planters, sprayers, trailers, etc.

Agents or farmers can use either the mobile application or the Armada call center to register farmers, aggregate demand, and put in a request for mechanized services.

On the other hand, tractor owners register at Armada in two ways. Those who own tractors and implements and have the technical know-how on how to operate and can onboard the platform with their farming machines and tools.

Meanwhile, those who own a tractor and implements but don’t know how to operate them or don’t want to can rent their machinery to Armada. The startup onboards the tractor onto the platform operates it and takes care of its maintenance. Tractor and implement owners receive rental fees from Armada.

“This model is for people who have money and are looking for investment options. Automobiles are being sold in the capital for over 2 million birr while tractors have a price tag of 1.5 million birr. But the agricultural sector has a much higher return on investment than ride-hailing,” added Semegen.

Armada’s platform does not set prices but instead serves as a marketplace. Owners can set their own price per hectare or per hour. The team believes this creates a free market and competition, with farmers getting the best prices.

Owners who choose to enlist on the platform themselves, as opposed to outsourcing their tools to Armada, pay a subscription fee.

Currently, Armada has around 4 tractors, three of which they own, 12–15 implements, and 2 operators per tractor. They are also in the process of adding more tractors and farming implements and training more operators.

According to Armada, they have a payment plan for farmers for their rental services to increase affordability.

In addition, on Armada, farmers’ demand gets aggregated, and the mechanized farming tools are sent to service requesting farmers living in close range at once, avoiding the need for each farmer to bring the tool and pay its price alone.

According to 2021 research by Seife Ayele titled The resurgence of agricultural mechanization in Ethiopia, agricultural mechanization is the key to reducing harvest and post-harvest losses and contributing to food security.

It is also a great way to increase productivity with less energy wasted and improve the timeliness and efficiency of farm operations.

The ease of access to the farming machinery that Armada provides to the farmers, along with the reduction of the cost that is required to own and maintain the machinery, can be a way to reduce the loss that farmers have with human and animal labor farming.

Further, at Armada, everything from demand aggregation to hiring tractors and booking repairs can be easily, quickly, and cost-effectively done through mobile devices and the software that underpins them.

“In recent years, mobile technologies have proven themselves to be critical catalysts in rural development in areas ranging from financial inclusion to public health. Over the same period, these very same technologies have emerged as equally valuable in the effort to modernize farming in the developing world,” said Semegen.