Thrive Agric, the presently embattled agritech investment company, has released a statement detailing its plans for paying subscribers.
The agritech startup has had issues with paying out farm subscriptions over the last eight months. This has led to disquiet with customers whose investments are due for payout. Many have taken to social media to express their discontent with the organization's actions, stating that their investment plans were a promise to be kept.
We spoke to Hansel Peter, one of Thrive Agric's customers. He has experienced delays in payments for two subscriptions with the company. When asked how he felt about the current delay with payments, he had this to say:
Personally, I was very upset at the beginning because I had my first payout in March, but it did not come through. I had another in April, and it was stories I kept hearing. I kept calling but to no avail. Till they sent their first email then I realised that the business was going through trying times and I had to be patient with them - Hansel Peter
Why is Thrive Agric in distress?
In its statement to customers, the company revealed that the present financial straits it finds itself is an unfortunate outcome of the COVID-19 pandemic. Many companies and economies have been affected by the pandemic. Even the global economy is predicted to shrink by 4.9% for 2020.
The pandemic and the subsequent lockdown that followed had dire financial consequences for farms around the country. The restrictions on movement meant that access to farms and farming markets was limited during the thick of the pandemic.
The magnitude of the pandemic is something many companies were not prepared for, including Thrive Agric. The company's primary revenue source is the sales of harvest from partnering farmers to off-takers. The sales have to happen promptly so that the company can meet up with financial obligations to subscribers.
The border closure led to a disruption in the arrival of farm inputs, which meant that the company missed out on two harvesting seasons ( May & July 2020). The company qualified for COVID Essential Services Permits, which were announced at the beginning of the lockdown. However, it claims the permits were not readily available in time for them to make the required arrangements.
Coronavirus lockdown restrictions caused a loss of harvest, which had a domino effect on Thrive Agric's capacity to pay subscribers.
Before this period, the company says it has been consistent in keeping its promises to customers over the last three years. Hansel has been a subscriber with Thrive Agric for two years, and he corroborates this claim. According to him, "They have always kept to their end of the deal and paid out on the due date."
However, for new customers like Mohammed Akinyemi, having a good track record counts for very little. Mohammed made his first investment of N510,00 in March and another of N200,000 in April. His payouts were supposed to be in September and December. He believes the company might be running a Ponzi scheme - using the money of new investors to meet older obligations.
The company also faced a backlash from what customers deemed a lack of adequate communication when the cracks started to appear. According to a Twitter user, the company's last tweet before an October 2 release was on August 1 - a timeline of 61 days. For Hansel, this company's response was poor. He remarked that "They woke up after people started staining their brand online."
The latest tweet on Thrive Agric’s timeline before today was on August 1, 2020.— Babajide (@Babajide_Ajayi) October 2, 2020
In a situation where you owe subscriber payouts, you should know that constant communication via all your channels is key!
August 1 - October 2 is terribly poor!!!
The Insurance conundrum
Many customers including Mohammed have pointed out that the company claims to have insurance for investors funds. As such, there shouldn’t be problems paying off investors capital, at the very least.
The Dadaben blog investigated the Thrive Agric website for claims of insurance protection. True to what the customers said, the company claims that investors capital is insured. Here’s the full statement from the “is my money safe” section of the company’s FAQ:
Take our word for it, your funds are safe, but more than just our word, all of our farms are fully insured by LeadWay Assurance.
Therefore in the event that something remotely goes wrong with our harvest, which has historically not been the case, your capital is insured, there is nothing to worry about.
The statement was interpreted by many customers to mean their capital was insured by Leadway Assurance. However, on Tuesday, October 6, Leadway Assurance issued a statement denying that investors’ capital was insured with them.
According to Leadway Assurance, their contractual obligation is only to Thrive Agric and not its individual investors. The insurance company only provides cover for the farm assets owned by companies under its agritech partnership program.
What Thrive Agric is doing to solve the problem
According to its statement, Thrive Agric is committed to meeting its obligations to customers. Revenue is dependent on harvest operations commencing in a few months as well as sales to off-takers, some of which it is still awaiting payment for.
The company has also communicated new repayment timelines to its subscribers spanning up to 24 months for some. Although it hopes to beat the timeline, the extension was necessary in order to avoid further breaking promises. The new timeline is one they are confident of keeping.
Thrive Agric has also expressed its understanding of subscriber's frustrations. Just like its customers, the company has been severely affected by the change in schedule. However, it assures subscribers that it is still a viable business and committed to its goals.
Customers like Hansel have reluctantly embraced the new timeline. In response to a question about the timeline, he reiterated that he didn't have much choice although he wasn't comfortable with it. "What can I do? They're the ones with my money, " he said.
For Mohammed though, the timeline is unacceptable. He had planned to use the money to settle some business expenses. Now, his payment timeline has been extended by 12 months.
When I wanted a 1 or 2-year investment portfolio, I know where I sent my money. I needed this money back in 6 months - Mohammed Akinyemi
The Dadaben blog contacted Thrive Agric for comments on the insurance debacle and this was their response:
Our farms are fully insured against challenges in the pre-harvest period (when the livestock or crop is still in production). However, pre-operational challenges (like delays in movements of inputs) and post harvest challenges (like delays in off-takers paying) as experienced due to lockdown restrictions caused by COVID19 are not covered by insurance.
Notwithstanding, we are keenly following the process and closing out on insurance for farms that had challenges in the termed durations and cover range; theft, flooding, pests and natural hazards of any kind.
In a bid to address the breakdown in communications, Thrive Agric has now implemented multiple points of contact for customers including putting up additional phone numbers on the website, and extending customer support hours just to make sure they are at the least upfront about communicating the business’ challenges as well as how they are being resolved. An FAQ page for questions relating to delayed payments has been created on their website. The company has also scheduled calls with customers to clarify concerns over its viability and the new payment timelines shared.
Implying that Thrive Agric's problems were avoidable will be using hindsight to judge the issue at hand. The coronavirus pandemic left many companies and governments blindsided. The recovery of some industries is still uncertain as of now.
However, the company must take responsibility for its poor communication. Subscribers were mostly agitated by the company's lack of proper correspondence as to why their funds were delayed.
One thing is clear - Thrive Agric has a broken reputation with its subscribers. The road to fixing the company's reputation will be long and difficult. It will also depend on how well the company can manage the expectations of customers like Mohammed and Hansel over the next couple of months.