Farmers across Mexico are pivotal to the economy, with agriculture employing 13 percent of the country’s labor force, and essential to helping ensure food security. They grow many of the world’s most popular foods, with tomatoes, grains, and citrus fruits among Mexico’s main crops.
But while Mexico’s agriculture sector is diverse and robust, numerous challenges impede its productivity and impact. The sector is largely comprised of disaggregated small and medium size farms. Small-scale farmers are often disconnected from the industry and excluded from accessing up-to-date information, innovations, or formal credit. More than 90 percent of Mexico’s farmers can’t access formal financing, according to INEGI, and 86 percent sell their products through intermediaries and buy inputs from resellers, according to Verqor’s own market research. At the same time, farmers face greater climate-related shocks, which put our food supply at risk.
Verqor is working to change that by digitizing and centralizing the flow of agriculture-related cash, goods, and information. In the process, they’re empowering a new generation of farmers. Verqor’s digital platform makes it easier for farmers to access financing and high-quality supplies, such as seeds and fertilizers, and connect with buyers while supporting sustainability, data gathering, and digital literacy.
Verqor is Accion Venture Lab’s latest investment in Mexico and expands our portfolio of agritech startups, which includes Agrim in India, Apollo in Kenya and Zambia, Pula in markets across the globe, TerraMagna in Brazil, and Semaai in Indonesia. Verqor’s work to digitize and evolve agriculture may prove crucial for boosting food production and opening new economic opportunities for small and medium-scale farmers in Mexico and beyond.
Verqor was founded by CEO Hugo Garduño, who has worked in real estate investing, and COO Valentina Rogacheva, a former consultant and Cartier Women’s Initiative Fellow. To date, the company has reached nearly 1,200 farmers in Mexico and facilitated over $6.8 million in loans, underwriting farmers across many regions and various crops. Accion Venture Lab is proud to invest in Verqor as they:
Improve farmers’ livelihoods through access to formal credit
Verqor puts small and medium-scale farmers front and center in its work. Many of these farmers have been excluded or underserved by traditional financial providers, leaving farmers to resort to expensive, informal sources of credit to purchase the supplies needed to plant their crops. Small-scale farmers have little say in the prices of their crops and struggle with low and inconsistent incomes — 58 percent of Verqor’s customers live in poverty.
To increase farmers’ crops and incomes, Verqor has digitized the agricultural value chain which enables them to reach underserved farmers and obtain better data that unlocks access to credit. Through Verqor’s digital platform, farmers can apply for and receive credit so they can buy high-quality agricultural inputs like seeds, fertilizers, and pesticides.
Their platform also digitally connects small-scale farmers to major players across the industry, including financial institutions, agricultural inputs suppliers, and corporate produce buyers. By bringing everyone onto the same digital platform, Verqor can ensure productive use of financing on crop inputs and obtain direct repayment from corporate buyers — factors that de-risk the loans they provide. This process also generates valuable supply chain data, such as farmer track records and input traceability, which is much needed in this fragmented industry.
Acquire underserved farmers efficiently
Because the Mexican agriculture sector is disaggregated, small and medium size farmers are often difficult to acquire as customers. By partnering with produce buyers, Verqor can work through their supply chains to reach farmers at scale. Most of these farmers typically would not qualify for formal credit from traditional financial providers. Verqor leverages data that would otherwise be hard to obtain — like their sales history, contracts for the purchase of crops, and records of inputs used — to create a more comprehensive credit profile for these farmers and their harvests, allowing them to offer tailored financial solutions.
Because farmers must follow seasons and weather patterns, they can’t afford to wait months or weeks for the credit needed to plant their next crop cycle. Verqor’s credit approval process leverages a tech-first infrastructure to provide much faster decisions than other credit solutions on the market, meaning that farmers can get the funds they need when they need them. By leveraging data and partnerships, Verqor is reaching more underserved farmers with timely financial services.
Boost harvests with an innovative and sustainable approach
Verqor’s innovative full-stack digital solution also provides benefits beyond financing for small and medium-scale farmers, with innovations throughout the agriculture supply chain.
Better inputs, better harvests
Verqor leverages its connections with agricultural input manufacturers to provide high-quality, organic inputs that farmers can quickly purchase when needed during the crop cycle. Because brand name and high-quality inputs are often too expensive for small-scale farmers, they must purchase lower-quality products, or fewer inputs than what is needed, which leads to worse yields. Verqor works directly with top agricultural input companies, giving farmers both the access and the credit needed to source high-quality inputs. Access to formal credit through Verqor’s platform allows farmers the chance to transition to higher-value crops, such as tomatoes and berries, by helping bridge the higher input costs these crops require.
Higher-quality inputs mean better harvests and a stronger food supply. So far, 74 percent of Verqor’s growers say they’ve experienced an increase in yields after their Verqor credit. One farmer, who began growing barley 25 years ago, saw a 20 percent increase in margins after applying for financing through Verqor. “A 20 percent increase in margins means I can now invest in more tech upgrades for my field, so I can use more sustainable practices. I can grow my operations, and in agriculture, it’s all about volume and quality,” he says.
Climate resilience and sustainability
As farmers face increasing challenges related to climate change, like unpredictable weather patterns, Verqor is taking steps to build resilience and drive sustainability. Verqor requires farmers to buy crop insurance in case of a failed harvest due to climate events. So far, 56 percent of Verqor’s producers say their climate resilience has improved, and 48 percent of farmers use organic products. To encourage resilience in the agricultural supply chain, Verqor also connects farmers with buyers who prioritize traceability and transparency by tracking traceable inputs and sharing prices paid for harvests.
The future looks bright for Verqor, which has ambitious goals, including helping 5,000 small-scale growers access their first formal financing by 2025 and continuing to develop its digital tools and embedded financial services to better serve its customers. We’re excited to join Verqor as they work to revolutionize the agriculture industry in Mexico with their farmer-centric approach.