Interview with Carl Jensen
CO-FOUNDER AND CEO, GOOD NATURE AGRO

Lives in: Zambia

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How American-born Carl Jensen and his co-founders at Good Nature Agro built a business with $10 million in revenue by collaborating with smallholder farmers in Zambia.

Agriculture in Africa is dominated by millions of small-scale farmers who cultivate modest parcels of land. Smallholder farming on the continent is often synonymous with low yields, limited use of quality seeds and fertilisers, minimal mechanisation, and general hardship and poverty. Yet, one company, Good Nature Agro (GNA), has tapped into the latent potential of Africa’s smallholder sector, establishing a business with $10 million in revenue by collaborating with farmers in Zambia.

At its core, GNA contracts over 20,000 small-scale farmers to grow legume seeds and commodities – such as cowpea, soya bean, and groundnuts – and then purchases these products from the farmers to sell at a profit. However, GNA’s integrated business model extends far beyond simple trade. It provides farmers with loans to buy high-quality seeds and other agricultural inputs, offers continuous farming support through private extension agents, and delivers financial and digital literacy training. GNA is also involved in financing assets for farmers, ranging from agricultural equipment to mobile phones.

The smallholders are both the company’s suppliers and customers. “We knew that farmers needed quality inputs [and] they needed financing in order to be able to access those inputs. They needed technical support throughout the year in order to maximise what came out. And then they needed a guaranteed market – they needed sureties, like farmers anywhere in the world. And so we built a business model around fulfilling all of those needs,” explains GNA’s co-founder and CEO Carl Jensen.

Besides making money for itself, GNA has significantly increased the earnings of the farmers it works with. Before GNA’s involvement, they earned an average net income of $113 per hectare. GNA’s aim has always been to raise this to $600 per hectare, which, considering the average farm size of 3.3 hectares, amounts to about $2,000 per farmer family. Last season, for the first time, GNA surpassed an $600 average for the farmers in its network.

“We’ve had farmers who have succeeded to the point that they’ve quit farming, which I think is a fantastic thing – farmers that have gotten enough to purchase a shop in Chipata, like they’ve always wanted to do,” says Jensen.

From America to Zambia

American-born Jensen, who grew up on a large wheat farm in Idaho, began working from a young age. Like many farm kids, his early tasks included driving a tractor and truck and picking rocks from the fields, responsibilities he undertook even before his teenage years.

After completing high school, he pursued architecture at university but ultimately graduated with a degree in agricultural economics. Uncertain about his career path, Jensen spent a year in Cambodia volunteering with rice farmers, an experience which sparked his interest in working with smallholders. Upon returning to the US, he worked on various farms, extending his knowledge beyond his family’s farming practices. In 2012, he enrolled in a master’s programme at the University of California, Davis, to study soil science and international agricultural development.

During the summer break of 2013, Jensen participated in the International Development Design Summit (IDDS) in Zambia. This six-week programme assembled individuals from diverse backgrounds to develop technologies and enterprises aiding those in poverty. The programme entailed extensive interaction with farmers in rural communities. It was here that Jensen encountered many of the farmers he would later collaborate with through GNA.

He also met his future Zambian co-founder, Sunday Silungwe, who was his roommate throughout the programme. At that time, Silungwe worked for the non-profit organisation Heifer International. The pair immediately hit it off, spending countless hours discussing issues related to smallholder farming. One key insight from the programme was the interconnectedness of farmers’ challenges which formed the basis of their business idea.

After the summit, Jensen returned to the US to complete his graduate studies, while Silungwe continued with Heifer and began laying the groundwork for their business in Zambia. Kellan Hays, a fellow UC Davis student, joined as the third co-founder. Their proposed venture won two business plan competitions – one at MIT and one at UC Davis – securing a total of $25,000, which, along with founder investments of $50,000, funded the launch of the business in 2014.

Once Jensen completed his year at UC Davis, he relocated to Zambia to start the business full-time with Silungwe. Hays, initially working part-time while employed elsewhere, joined the team full-time in 2018.

Early days

Jensen and his co-founders started small, largely because they had limited money and were still fine-tuning their business plan. Initially, the business had two main components.

The first involved contracting smallholders to grow crops, which GNA would then purchase and sell at a profit margin. To kickstart this, the company gathered a group of 40 smallholder farmer families located about 90 minutes from the city of Chipata, near the Malawi border, and enlisted them to grow maize and cowpea. GNA actively assisted these farmers in improving their production.

The second component centred on agricultural equipment and tools. This range included special bags to prevent crop mould during storage, manual groundnut and maize shellers, and a new type of treadle pump.

But the initial stages were fraught with challenges. The team found that maize was not a suitable crop for the farmers they were collaborating with. The depleted soils required substantial investment, especially in fertiliser, to yield good maize crops. However the cowpeas showed more promise.

And while there was demand for GNA’s tools, many farmers lacked the savings for even a $50 purchase on assets. Consequently, GNA discontinued the equipment arm of the business after about a year.

“We definitely lost money,” says Jensen, speaking about the early days of business. “Barely paying yourself and cutting costs wherever you can. You’d be renting a beat up old minivan instead of buying a car. Forty farmers – it’s not a lot. And as we were figuring different things out we had a lot of school fees to pay along the way.”

Becoming a seed company

As GNA approached its first harvest, an NGO inquired if the company could produce high-quality legume seed. Legumes, including beans, peas, and lentils, are valued for their edible seeds in pods. Facing a scarcity of good legume seed, the NGO turned to GNA, which accepted the challenge. Consequently, GNA shifted its focus, encouraging the smallholders it partnered with to cultivate seeds. Legume seeds are produced by allowing plants to fully mature and form dry pods.

Jensen says producing seeds was a good fit with the company’s operations. “Contrary to what many people think … working on small plots, and working with smallholder farmers, you can actually get really exceptional quality produce … And so once that opportunity came along to do a seed sale … we realised that it was a pretty good fit with … the capacities we’ve developed in just a year … Seed requires traceability, seed requires attention to detail, it requires being able to move through your entire field and pull out anything while it’s growing that’s of the wrong variety. Essentially, it requires commitment to a really high-quality, final product. And that’s where we felt we could carve out a niche.”

In addition to the original NGO which sparked the idea to become a seed company, GNA soon started adding other seed clients as well.

Jensen notes that although most of the global seed companies are present in Zambia, none were focused on legume seeds. “We saw that the market was big enough … to start growing pretty aggressively as a legume seed company.”

The company subsequently expanded its network from 40 to 400 farmers, diversifying into soya bean and groundnut seeds alongside cowpea.

GNA sold its seeds to various clients, including white-labeling for other seed companies. American commodities trading giant Cargill, which had a soya bean oil processing business in Lusaka, became a big customer. Cargill supplied GNA’s seeds to smallholders, who then sold the harvested crops back to it for oil processing.

GNA’s secret sauce: private extension agents

GNA’s private extension agents, or PEAs as the company calls them, have been crucial to its success so far. Each PEA works with a group of 40 smallholder farmers, teaching them about the best farming practices and providing training in financial and digital literacy. These services are offered free of charge. PEAs have the potential to earn significant income, which is why their positions are coveted in their communities. PEAs receive a fixed salary plus 2% of the revenue generated from the produce grown by the 40 farmers they oversee. They are, therefore, incentivised to maximise the farmers’ output.

Becoming a PEA is not easy. Candidates are meticulously selected by dividing each group of 40 smallholder farmers into smaller units of 10. Each group nominates a potential PEA, ensuring that candidates already have the community’s trust. The four shortlisted candidates undergo a thorough interview process to evaluate their farming skills, leadership abilities, capacity to engage with other farmers, and a passion for improving their communities. “A lot of smallholder farmers are farming because it is the only thing available … we wanted people who loved farming and wanted to continue farming and grow their operations,” Jensen explains. Ultimately, the company selects one candidate.

Jensen believes the personal relationships the company has with smallholder farmers has been a key difference maker.

Expanding into food crops and beyond

After several years focused exclusively on seed, the GNA team realised there was a limit to the number of clients it could reach in this market. In 2018, to secure future growth, the company began contracting with new smallholder farmers to supply it with legume commodities for consumption. GNA then sells the commodities to a variety of buyers. These farmers receive the same support as GNA provides to those producing seed.

Securing buyers for these food crops initially posed a challenge, as the company needed to establish itself as a reliable supplier. Jensen explains that many buyers were wary due to “trust exhaustion” from past experiences with suppliers who delivered poor-quality produce. He reveals that food crops now account for 30% of the company’s farming revenues, with the rest coming from seed sales.

GNA has also started basic processing of the commodities it sells, operating three factories across Zambia. “We don’t do fast-moving consumer goods – we don’t turn peanuts into peanut butter. We take the products that come from farm gate, and we process it to where we can send it to a peanut butter company … And they just go ahead and roast it right away … We process for international trading spec,” Jensen notes.

A new line of business for GNA is the financing of assets, from agricultural equipment to mobile phones, capitalising on its close relationships with farmers. This side of the business is still relatively small, accounting for $400,000 of its $10 million turnover.

“We want to work with these farmers and provide whatever is necessary to grow their operations … to make them more profitable at any scale. And ultimately to get farmers well out of … the cycle of poverty and into the middle class where they have savings, where they can invest in long-term goals. And where a single year shock is not going to throw them all the way off track,” Jensen adds.

Navigating growth

Over the years, GNA has attracted considerable international investment to fuel its growth. In November 2023, the company announced a $8.5 million Series B equity round, with contributions from Goodwell Investments, Oikocredit International, and Global Partnerships.

Reflecting on the company’s trajectory, Jensen admits he would have tempered the growth ambitions if he were to start over. Particularly in its early years, GNA aimed to expand too rapidly. “We had big ambitions, we wanted to reach as many farmers as possible, we had huge numbers on our financial projections and pitch decks. But the longer we’ve been operating, the more we’re kind of leaning into the importance of engaging really deeply with farmers, even if it means you’re working with less of them…”

“Especially in those years when we didn’t have consistent customers and we didn’t have consistent financiers, we could have made our lives a lot easier if we had put a little more realism in our financial planning and made sure that the customer base was strong and the investor base was strong … we should have done more not to put ourselves in those positions of needing money and needing it now,” he adds.

Weathering Zambia’s macroeconomic headwinds

Jensen identifies macro-economic issues, particularly those related to currency, as the main challenges the company has faced. He says he has been surprised by how much the company’s direction has been impacted by forex-related matters. Over the past decade, the Zambian kwacha has lost over 300% of its value against the US dollar. Additionally, a scarcity of US dollars in neighbouring countries has also impacted GNA. A case in point is Malawi, where GNA was developing a strong customer base until a US dollar shortage in the country led to a significant decrease in imports.

Zambia’s heavy debt burden has been a pressing issue over the past few years. In November 2020, the country was the first in Africa to default on its debt repayments amidst the Covid-19 pandemic, as the nation’s external debt climbed from $4.8 billion in 2014 to $11.2 billion in 2019.  Three years later, Zambia is still negotiating with its creditors.

Jensen says it has been a “rough ride” but says he has confidence in the country’s current trajectory. “We’re still riding a depreciating kwacha but in large part it’s because some of the tough points are being addressed. The kind of out of control borrowing that took place years prior has left the country in a really rough spot … The government is working hard to restructure all of those and progress has been good. They’ve been cutting back on several programmes that were just kind of bleeding money … So even though it’s a little painful right now – with quite a bit of inflation, continued depreciation, higher costs where subsidies have been removed on things like fuel – I think it is all for the good.”

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