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A Kenyan mobile phone platform is offering local farmers access to a transparent marketplace that offers higher prices for their goods. Twiga Foods sells bananas and other produce from small-scale farmers to local vendors and markets, paying farmers more and selling to vendors for less has been a winning formula—with ripple effects across the entire supply chain.
Mobile Marketplace Offers Higher Prices for the Farmers Goods
Farmers who sell produce to Twiga now have access to a fair, transparent, mobile marketplace that offers higher prices for their goods. In the past, they often lost money, time, and products because sales depended on multiple layers of brokers to get their goods to markets and wholesale vendors. Each mediator took a cut that ate into their family’s income.
Before Twiga started, the farmers had their brokers, but the price varied greatly, and they often don’t get the right price for their products. Twiga is more organised in a way that gives more stability.
Besides earning more for their crops, farmers can increase their farms’ productivity as they receive technical advice and financial offerings geared to their specific needs. On the other end of the supply chain, vendors benefit from fast, free delivery of produce.
Since 2014, Twiga has been bridging gaps in food and market security through an organised platform for an efficient, fair, transparent and formal marketplace. Today, Twiga source quality produce from thousands of farmers, providing them with a ready guaranteed market, and deliver from the pack houses to thousands of vendors, at prices fair to everyone.
The system is transparent and straightforward:
- The farmer signs up to join Twiga:
- Twiga visits and assesses the farm then adds farmer onto the system.
- Twiga issues a purchase order to book the produce and indicate the date of harvest.
- Twiga harvests and weighs farmers produce and issues you with a receipt.
- Farmers receive payment within 24 hours.
The vendor signs up to join Twiga:
- Twiga sales representative visits the vendor and registers them onto the system.
- Vendor places the order with the sales representative.
- Twiga delivers products directly to vendors shops.
Besides earning more for their crops, farmers can increase their farms’ productivity as they receive technical advice and financial offerings geared to their specific needs. On the other end of the supply chain, vendors benefit from fast, free delivery of produce.
Since Twiga’s founding in 2014, the company has sold 200 million bananas through its mobile-based supply platform. It now offers a variety of fruits and vegetables and will add other goods including flour, sugar, and rice by 2019.
Kenya is well-positioned for good progress: it has the largest GDP in East and Central Africa and one the most conducive environments for private sector expansion in sub-Saharan Africa. But the country still faces challenges related to accelerating growth and boosting shared prosperity. Poverty among rural farmers has been a particularly tricky problem to solve. That’s where Twiga’s mobile platform can make a difference as it reinvents both ends of the retail value chain.
Long Distance to the Market
Traditionally, lack of reliable market access for smallholder farmers has impeded the economic development of rural areas because farmers often live far from the wholesale markets, and it is not feasible for them to deliver their produce directly. Highly fragmented systems encourage farmers to navigate through farmer groups or brokers to get their produce to markets. Fluctuating, non-transparent prices are often the result.
One of Twiga’s most significant achievements has been to increase vendors’ access to markets—a process that has transformed business. Traditionally, fresh-fruit and vegetables are delivered by brokers to four Nairobi wholesale markets overnight. Informal vendors arrive before dawn to source produce before paying for a manual cart-pusher to deliver them to their stall. The process is inefficient, time-consuming, and expensive for informal vendors. But because Twiga delivers products directly to the vendors’ stalls, vendors save time and money.
Over 13,000 farmers and 6,000 vendors in Kenya now work with Twiga—which pays 20 to 40 per cent more than brokers and farmer groups and delivers payment in full within 24 hours through mobile money transactions. This helps farmers anticipate income and aids in financial planning.
Strengthening Food Security
Twiga also plays a critical role in helping Kenya achieve its sustainable development goals to make food security and promote sustainable agriculture. Its robust logistics and distribution system—including 12 collection centres, a distribution centre with cold storage facilities, five depots, and trucks and vans for collecting and distributing produce—reduce food waste. The smooth logistics system limits Twiga’s post-harvest losses to under 5 per cent, compared with 30 per cent at open markets, where farmers typically sell produce.
Twiga’s collection centres, which serve as transaction points for farmers, are staffed with agronomists who provide services that help farmers improve crop yields—and, by extension, their incomes. The company plans to add agricultural inputs distribution networks, farmer financial services networks, and access points for other essential goods. IFC helps ensure that Twiga is providing safer, more sustainable food for Kenyan consumers by providing training and on-site coaching to Twiga’s farmers. This will raise standards for domestic products, a new development in a country where previously only foreign goods set the standards for quality.
References:
Twiga (https://twiga.ke/)
Lucubrate Magazine, Issue 50, December 21st, 2018
Categories: World, Magazine, Entrepreneurship, Development
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