Ricult: Providing smallholder farmers easier access to capital

Farmers in Pakistan learn to use the Ricult mobile app ©Ricult

Based in Pakistan and Thailand, Ricult’s mobile app platform provides advanced weather forecasting, easy loan applications and direct market access to help farmers increase productivity and profits


Despite producing a large portion of the world’s food and agricultural products, many smallholder farmers continue to face challenges such as pests and extreme weather, as well as business problems, including unfair prices and lack of funds.

Pakistani entrepreneur Usman Javaid believes that two basic issues are at the root of these problems: access to capital and information. “The formal banking system doesn't have an efficient way to determine the risk profile of farmers so it can’t serve them effectively," Javaid told CompassList in a recent interview. "Meanwhile, farmers can’t find out what is happening in the market so they don’t know the fair prices for their products.”

Inspired to solve this problem, Javaid and fellow Massachusetts Institute of Technology (MIT) graduate Aukrit Unahalekhaka established Ricult, an agritech startup that aims to help farmers solve the shortage of capital and information through its mobile app. Since Ricult was launched in 2016, its app has been used by more than 360,000 farmers in Pakistan and Thailand, while 2.1m hectares of farmland are now registered and monitored on Ricult’s mobile Android app platform.

Ricult’s mission to help farmers has attracted interest from local and global investors. To date, Ricult has raised roughly $4.5m in funding from the Bill & Melinda Gates Foundation, 500 Startups and the VC arms of two Thai banks. The company is planning to raise $10m in a Series A round as it looks to expand beyond Pakistan and Thailand

Credit scores and fair prices

When a farmer starts using Ricult’s app, they begin by entering basic information about their farm. This includes the location of their farm plots, the types of crops they plant and when they sowed the seeds. The farmer can then get hyperlocal weather forecasts, with rain predictions for a nine-month period, and crop and cultivation suggestions based on these weather conditions.  

Crucially, the data is also used to generate a credit score for the farmers. Using the score, farmers can apply for bank loans through the app. Ricult’s partner banks will assess the application and channel the loan. The loans are not provided in hard cash, but in the form of farming inputs. “We have calculated an optimal mix of inputs for each type of crop and we provide the inputs to the farmers based on this data,” Javaid said.

Besides credit scores and bank loans, farmers also gain access to an e-commerce marketplace where they can purchase farming inputs such as fertilizers and pesticides, and sell their produce directly to offtakers and mills. The farmers can see spot market prices for agricultural commodities and avoid selling at unfairly low prices to middlemen. Ricult claims that farmers using its platform have seen up to a 12% increase in yield and a 17% increase in profits. 

Farmers can see spot market prices and avoid selling at unfairly low prices 

Farming data gathered through the app isn’t just used by farmers. Banks, insurance companies, supply mills and agribusinesses selling farming supplies purchase data from Ricult to better understand their market. For example, crop insurance companies can validate claims by using satellite imagery and weather data. Agricultural offtakers and mills can manage their supply chain with data on how many farmers are planting certain crops and when they will harvest. Ricult also earns revenue and transaction fees from farm supplies manufacturers who place advertisements and sell their goods on its e-commerce platform.

As only 30% of farmers in Pakistan have smartphones, Ricult is developing an interactive voice response (IVR) version of the Ricult app to enable farmers to use any kind of mobile phone to access the platform. “Almost all of the features will be available, including weather forecasts and loan applications,” Javaid said.

Alternative crops

Although sufficient capital and adequate information are crucial for smallholder farmers, some farmers may also need to move from staple crops to lucrative cash crops like durian, sunflower or barley. For these farmers, Ricult provides recommendations for crop alternatives based on local conditions.

© Ricult

“One of the reasons we recommend a crop like durian is that it is more climate change-resistant,” Javaid said. “We don’t recommend every farmer to switch, but in some cases it might be better to grow durian or other crops based on the weather and soil conditions."

“The agriculture industry is going through a shift because of climate change and this is going to affect smallholder farmers more adversely than larger farms,” Javaid said. “If farmers are not prepared for adverse weather conditions they will not be able to produce food at sustainable rates. The loss of income would also trigger mass migration to cities all around the world.”

As some crops require more time and resources to grow, farmers can use Ricult’s platform to take out a loan and support their new planting efforts. However, Ricult does not force farmers to make the change and does not expect every farmer to follow its recommendations. 

“At the end of the day, farmers are smart people. They will always choose to cultivate the crop that gives them maximum returns,” Javaid said.

From 54% to nil default

Javaid and Unahalekhaka first met at MIT at a class on development ventures where the two presented similar ideas for a startup to help farmers in their respective countries. They eventually decided to partner and develop that idea into Ricult. When the company was established in 2016, Ricult received a grant from the MIT Delta V accelerator program. Javaid, who was reading for an MBA degree, graduated ahead of Unahalekhaka, who attended a master’s program in engineering and management. 

Ricult first started in Pakistan with a credit program for farmers, with Javaid as the company’s CEO. Initially, the default rate was as high as 54%. “We didn’t have enough data and so the credit scoring model wasn’t very accurate,” Javaid said. “We ended up lending to people who might not have been the right candidates.”

As the company gathered more data it was able to improve its risk assessment algorithms. The platform is now able to select better loan applicants and takes into account more risk factors such as extreme weather. In 2017, Ricult brought the default rate down to zero, which according to Javaid, remains the same till today.

Unfazed by competition

Ricult wants to increase its total number of users to 3m within three years and expand to other Southeast Asian countries such as Laos, Vietnam and Indonesia.

Javaid is not worried about competition in the new markets. The global agricultural market, he said, is very large in terms of market size and the number of people employed. In Pakistan alone, the agriculture, forestry and fishery industries contribute roughly $60bn to the nation’s GDP. 

“Many companies can exist at the same time. I don’t think competitors coming in are going to greatly affect the dynamics.” He added that there are still not many players in the agritech sector and he does not see many competitors exploring Ricult’s business model. 

“Agriculture is a very difficult market to operate in. Firstly, it’s not glamorous; you have to go out in the field and work with farmers in the hot sun. Secondly, it’s a very complicated market. There are lots of micro segments that change as you move from one geographic area to another, from one crop to another and from one seed variety to another.”

Planned $10m Series A

In 2017, Ricult raised $600,000 in seed funding, which included a $100,000 grant from the Bill & Melinda Gates Foundation. The following year, Unahalekhaka started Ricult’s operation in Thailand, taking the lead as the country CEO. The company raised $1.85m from 500 Tuktuks (the Thai fund of global VC firm 500 Startups), Wavemaker Partners, and an unnamed Thai company.  

In August 2020, Ricult raised $2m in a pre-Series A round, adding Bualuang Ventures and Krungsri Finnovate to its list of investors. Bualuang Ventures is the subsidiary of Bangkok Bank, while Krungsri Finnovate is a subsidiary of the Bank of Ayudhya. 

Ricult is now aiming to raise $10m in a Series A round, which the company plans to close in 2022. Javaid added that Ricult is looking to work with investors who can connect them with a broad network and provide strategic advice. In particular, the company is looking for investors that have invested in agritech or are focused on fintech or adtech.

“We are looking for investors who can help us beyond just providing funds,” Javaid said. “They would be institutional investors who have already invested in startups within our field, or who have a big network in the developing world.”  

Javaid acknowledged that the company will have to commit manpower and resources to field research, including on regulations, local culture and crops, and other preparatory steps to adjust its product to fit local conditions. “There could be certain crops in Indonesia, for example, that we don’t have in Thailand or Pakistan. So we’ll have to build new models from scratch using the data we collect.”

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