Agsol is an award-winning social business created in 2016 by long-term collaborators and friends, Matt Carr and Greg Denn. Combined, they have worked more than 40 years in the agricultural and renewable energy sectors across three continents. Agsol is committed to providing agricultural and energy access solutions to off-grid farming communities across the world. As a social enterprise, Agsol keeps its drive for social impact at the core of what it does and commits to reinvesting the majority of any profits into furthering its social mission.
Tell us a little bit about AGSOL: how did you start out?
We started in 2016 and our primary focus is developing agri-machines for the solar industry. We specialize in the post-harvesting processing of foods and making higher-tier energy access more affordable through the productive use of energy.
We learned early in our journey that adapted or even greatly improved versions of off-the-shelf machines didn’t work in solar format from a customer perspective. It didn’t make sense because they only saw a return on their investment after many years. It wasn’t much of an improvement versus more traditional solutions in that sense. What was needed was a much more efficient machine for the customer unit economics to work and that required entirely new innovation.
We specialize in staple food processing of cereal grains like maize, sorghum, and millet. These are of course the lowest value food crops anywhere in the world and consequently have minuscule margins. Meanwhile, essentially everyone in rural areas depends on these foods and they need to process them, which they are doing with century-old technology. If we can crack the code on a new technology solution – and just fyi we have – this has immense impact potential. Our challenge now is to scale our product so that it makes sense in the market beyond grants and we still have a way to go before we realise that.
You mentioned grants, how important are they right now for you?
We have been 95% grant-funded to date. GOGLA, by the way, was critical for this. We joined in 2018 right before the Global Off-Grid Solar Forum and Expo that took place in Hong Kong. There was a strong interest in promoting productive use of energy so we got a special invitation to raise awareness for appliances and productive use. This was game-changing for us: we met with similarly motivated organisations as well as funders.
As a direct result of our networking there, we got our first round of funding that kickstarted the product development work we’ve been doing for the past 4 years and has resulted in us developing the world’s most efficient, smart and affordable milling machine.
Can you tell us a bit more about this work?
Within productive use of energy, there are generally three technology categories viewed as the most important for catalysing change at scale: refrigeration, water pumping and agri-processing. The first two deal with higher-value products, thus have more margins to work with, and are more market-ready technologies. We deal with basic staples.
So, right now a small farming family spends approximately $50 on processing per year, so a household-level machine would need to be manufactured for $20 for the numbers to work, which is impossible. So we know a single household-level machine doesn’t make sense. Our machine is designed to serve 50-150 households. From a tech point of view, our mill could run 24/7. What we want to see is a mill owner processing 100 kg or more a day. That’s when it becomes attractive – i.e. 2 hours of daily runtime to make $5 of income.
Based on this, our target customer is an entrepreneur who wants to run a milling business, larger-scale farmers or, of course, cooperatives of multiple smaller farmers. The opportunity is immense. There are hundreds of millions of people who rely on dirty processing machinery today.
How are you marketing and selling your products?
At the moment, we are currently launching the MicroMill. It’s the culmination of 4 years of development and 5 major product iterations. It’s an awesome machine. We’re manufacturing 100 of these to prove the business case for this product and Agsol. For the moment, we are selling cash. We recognize it’s difficult for customers to be able to make that payment upfront because the machines are costly. However, if we wanted to do PAYGo, it would be a challenge to calculate the creditworthiness for this type of machinery, and there are many more external factors that can impact the process versus a solar home system or other PUE products. We know finance will be an important piece of the puzzle in the future and we want to work with external financing partners that can be a plug-in to our business.
Currently, we have a pipeline of interested customers all across Africa, but we are trying to rationalize it and not spread too quickly. We would like to concentrate on Kenya and its surrounding countries so we can better leverage these markets to gain as many learnings as possible to continue improving. We’ve exhibited at two rural agricultural shows in recent weeks and the response has been quite overwhelming. We are going to have a supply problem very soon and need to ramp up manufacturing quickly.
What do you think has been your impact in the energy access space?
It’s hard to quantify because no one actually knows how many diesel mills there are in the market. Almost everyone living off-grid is dependent on subsistence agriculture, which would mean about 600 million people at least? In Kenya, the majority of farmers grow their own food. The potential is immense. And there is a clear need for more appropriate processing tech.
There have been no changes to the fundamentals of mills for the past 100 years. They are very heavy machines, you need to be quite tech-savvy to be able to use them, they are very noisy, male-dominated, large and meant for continuous use, which makes them very inefficient for small-scale farmers’ needs.
In almost every tier in the region, everything is geared for small-scale and day-to-day living: you buy just what you need to get through the day. However, when it comes to milling the most important staple foods, current diesel or even electric milling technologies are totally at odds with this economy. We have a unique value proposition. Our mill is small, powerful, clean, and incredibly easy to use. The processing itself is a bit slower than bigger mills but because it’s so efficient, an owner makes double the profit per volume milled.
How do you think GOGLA has supported you and the sector?
From our individual company perspective and as a young company, as I mentioned, the exposure and the networking to access financing were key but I think it really depends on the stage you’re at as a company. For example, the reinstatement of the Kenya duty and VAT exemption for solar products last year was a game-changer for the sector that GOGLA made happen. That didn’t affect us then as we were in R&D, but now as we commercialize this is so important to us. Policy reform is a huge area where GOGLA can have a big impact and as an appliance company, I hope that GOGLA’s objectives include similar action to exempt import duties and VAT for machines like ours and associated components.
And what does the future look like for your company?
I’m optimistic. Agri-processing is an important tool within the off-grid solar toolkit to make higher-tier energy more affordable, so I hope we are the ones to make this happen.
I see signs of evolution within the international development space, from the idea that development needs to be market-based to be sustainable in the 2000s to seeing more honestly that subsidy is not a dirty word, and that subsidies are important instruments to level the playing field and get products like ours to those people who need them.
As a company, purely on a market base, you can’t compete with 50-year-old companies that have been receiving subsidies themselves and developing their technologies for 50 years. For example, standard induction motors are one-tenth of the cost we pay for our specialised brushless DC motors. We need these prices to come down, which they will in time. But in the meantime, solutions like results-based financing (RBF), social impact credits and subsidies are and will be game-changers so we can compete.