Since we started offering irrigation services in 2019, we’ve seen great demand for the service. 2021 was another huge step in growing the demand base. We saw 26 times growth in 2020 vs 2019, and still increased by another 3 times in 2021 on 2020. At the same time, we’ve been able to increase margins greatly, and keep on track to greater scale.
When we started offering our service, we were not sure if farmers would be for it at all. We quickly found out that they were. But would they be able to pay for a reasonable margin on the service? We have been ramping up the prices and margins to find this out. We can now say with confidence that they can pay a unit price per service that gives us the margins we need. The reason why is the value we add. Even at slightly higher unit prices, we still provide the best value in irrigation for a smallholder. This is another milestone showing this is the way to provide smallholder farmers with irrigation.
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So we’re wrapping up Season 2 as the rains get started in Eastern Uganda. Here’s the summary.
As the graph show, more than 4x growth in service from the first season to the second. We weren’t even able to keep up with demand this season, and think this could be significantly higher, possibly double what we were able to provide with our current set of equipment. We need to get more and open more branches to keep up the trend.
Last year was the first season we rolled out a irrigation services on a commercial scale. In this first season, there was far more rain than typical. Most of the farmers we registered lost their plots due to flooding early in the season, and others did not plant for the dry season due to the ongoing rain. Despite this, in the short dry season of 2019-2020 we were able to prove farmers were willing and able to pay for our service, and earn over 200 paying customers. After this, we have been waiting for this year’s dry season to see how we can grow the customer base in a normal dry season.
The 2020-2021 dry season is now underway, which really got started after Nov. 20th. We can say for sure now that there there is wide scale demand for our service. In the first two weeks of the season, we have done almost as many hours of service as the whole of last season. Every day we have a waiting list for services to be done, as we don’t have enough equipment to serve all the demand. We’ve had to double the number of field staff that provide irrigation to our farmers. And we have not done any marketing, this is all word of mouth.
Having worked in smallholder agricultural and irrigation projects for over 10 years, I have never seen anything like this. The extent that farmers are putting us on pressure and eager to pay for our service is frankly unexpected. We are thrilled, though our branch managers are exhausted.
Based on this initial performance, we are confident that the demand per branch is feasible at the scale we need to be profitable and scalable. We still have to see how the rest of the season goes. We hope to show the same scalability of the unit economics per customer when all is said and done.