Farmers for many years have had little freedom in choosing markets and buyers for their produce. Twiga Foods wants is changing that
By Caroline Theuri
While agriculture remains key to Kenya’s economic growth, farmers still continue grappling with low returns due to the dreaded middle men.
Grant Brooke has nonetheless managed to cut out the middle man in ensuring that farmers and mama mbogas get value for their products. Twiga Foods, a mobile based supply platform brings together farmers with customers using a business to business model.
According to Mr Brooke, Twiga Foods thus helps farmers by providing them with steady markets through an open pricing model that is adjusted from week to week. It thus closes the gap of lack of access to markets for farmers.
Farmers are registered at collection centers nearest to them, which are in, Bomet, Embu, Isiolo, Kirinyaga, Meru, Taveta and Timau. Twiga Foods also enables vendors to order such produce and then responds by making these deliveries to them the next day. Vendors are signed up by the company’s sales representatives.
Mr Brooke further adds that Twiga enables farmers to have a formal business, which they can use to take advantage of credit for input or extension services or taking any forms of finance to formalise their operation.
“We really offer a long term partnership to form viable business. We are not offering the best price in the market but over a year, a farmer will earn 10 percent more with Twiga than with a broker,” says Mr Brooke.
As for the vendors in Nairobi, Twiga Foods helps to deliver agricultural products to their shops, saving them an early morning trip to the market. In addition it also offers them 24-to-48 hours of working capital. This, Mr Brooke explains, helps vendors to avert a massive amount of loss of their products bought from the market owing to damage from improper handling and exposure to the sun, all factors which lead to high food pricing.
In essence, by making things easier for farmers and vendors, Mr Brooke says that Twiga Foods jostles for market share with brokers. Both operate under an imperfect market system of how to price agricultural products due to little regulation of farm products pricing, though Twiga Foods strives for professionalism.
Mr Brooke, however acknowledges that traditional brokers fill an important void in the agricultural system by ensuring that farmers on the one hand get paid, despite lowly, and on the other hand, consumers get their food.
Mr Brooke describes running Twiga Foods as a “fast and intense” business. What led Mr Brooke and his co-founder Peter Njonjo to started Twiga Foods is the motivation that they could treat fresh produce the same way that Fast Moving Consumer Goods (FMCG) companies treat their products and deliver directly to outlets. This would in turn help farmers to find a reliable market for their products and ease the work of those who buy such products, such as vendors.
Twiga Foods started with 15 staff in November 2014 to the over 250 full-time employees it has today. Mr Brooke says that Twiga Foods has also grown to have 3,000 farmers in a month and 6,000 vendors a week in Nairobi.
The company also has farmer collection centers in 25 communities across Kenya and 80,000 square feet of warehousing in cold storage in Syokimau.
Since it started, the company has also managed to raise funding to expand diversify its farm product categories that include vegetables and fruits such as bananas, capsicum, carrots, mangoes, pineapples and potatoes and team. For instance, it managed to raise USD 1.7 million from venture capitalists at the seed stage while last year, Twiga Foods raised a further USD 10.3 million from venture capitalists and are looking for more funding in 12 months’ time.
Mr Brooke says that their target market are small scale farmers. Vendors buy a lot of volume of agricultural produce and pay on delivery.
The company has also made partnerships with organizations such as IBM Research, Mercy Corps, Shell Foundation and USAID. For instance, IBM Research and Mercy Corps help with creating algorithms for credit scoring so that farmers and vendors can access financial services and help formalize their businesses, Shell Foundation funds Twiga Foods’ so that it works on cultivating more partnerships with agro input dealers and financial service providers for farmers and vendors and USAID helps to build collection centers.
Mr Brooke says that in the next five years’ time, Twiga Foods is going to be important to the East African community as the foundational market system for a lot of agricultural and processed food products.
Yet, Mr Brooke acknowledges that it has not been easy to run Twiga Foods. The biggest challenge has been that Twiga is trying to formalize an informal farming sector that is barley regulated in terms of pricing, thus getting farmers and vendors to agree on a common way of understanding what prices should be offered for their products.
The advice Mr Brooke imparts to entrepreneurs is that they should be flexible enough to respond to the market and not stick to the idea of what their business should be. He also gives credit to his employees who have adapted to the way Twiga Foods acts as a supply chain for both farmers and vendors.
“ The people that are around you from the very beginning will define your success no matter what industry you are going into. We got very lucky that our first 10 or 5 hires were excellent people and were able to attract a few great people,” says Mr Brooke.