Twiga Foods: using cell phone technology to establish reliable markets for Kenya’s farmers

Summary

Twiga Foods is improving Kenya’s agricultural market by helping address key economic issues: high food prices, food safety and the need for established, sustainable markets. Using a mobile-based platform through which vendors can buy their stock - instead of travelling to wholesale markets at 4.00am and haggling for goods - the Twiga solution allows vendors to access better quality produce at competitive prices from their cellphones, which are then delivered directly to their city shops and stalls. Twiga’s all-year-round aggregation of demand for fresh fruit and vegetables (FFV) serves to create a sustainable market for farmers.

Challenge/problem

Kenya's informal food supply chain largely comprises middle-men and women - often called brokers - who collect fresh produce at the farm-gate in an ad hoc manner, delivering to municipal wholesale markets for sale, either directly or via a series of other intermediaries. Farmers are vulnerable, often having to accept whatever price the brokers offer, however low. Multiple intermediaries further erode returns to the farmer. Additionally, municipal markets are often poorly regulated for hygiene, safety and quality, and lack mechanisms for product traceability. They constantly fluctuate between over- and under-supply, oscillating prices and have high volumes of waste. Formal FFV supply chains in Africa are few, and are mostly based on large-scale commercial farms targeting exports, only selling surplus or off-spec produce to local markets. Formal companies find it too complex and costly to source from millions of small farmers and distribute to tens of thousands of small vendors in urban centers. The losers are local consumers, vendors, and the farmers themselves.

Solution

Twiga uses mobile technology to aggregate demand from thousands of small vendors, enabling cashless transactions to match supply and demand with precision, while taking out the middlemen. The business model uses data and predictive analytics to provide small farmers with a ready market and a predictable price - the single most important factor determining their growth - while also reducing food waste that arises from the lack of a steady buyer and poor storage conditions. This creates a margin that allows Twiga to offer farmers better prices, an assured market and a formal buyer, improving the livelihood of rural farmers. 

From generated data, financial institutions are able to track farmers’ revenue and therefore provide access to credit. Twiga farmers know what to grow according to consumer demand, rather than being subject to the self-interested whims of brokers. Furthermore, Twiga has increased food security in Kenya by using mobile technology to ensure year-round supply of fresh quality produce in the urban areas of Nairobi, delivered to their vendors’ doorstep at lower prices than alternative channels. The company has now developed an upgraded version of their original data management system to include vendor and farmer mapping, allowing them to reach farmers who are not visible on current maps. To assist the sourcing process, this technology has enabled scouts who register farmers to plan better for harvests and anticipate how they will fulfill supply orders. In addition, Twiga will rollout fintech to both farmers and vendors at scale through partnerships with financial institutions, to link farmer cash advances to booked harvest, and vendor credit to delivered goods (see https://twiga.com/2020/08/12/you-can-now-self-register-on-soko-yetu-platform). Twiga has been working with the GSMA Ecosystem Accelerator Innovation Fund; USAID on collection centers; Mastercard Foundation on upgrading their current technology for credit scoring of vendors and farmers; and the Shell foundation to run Twiga Labs, a team of design thinkers constantly developing new, innovative solutions using human-centered creativity.

Results

Since 2014, there has been exponential growth on both sides of the value chain: 

• In 2016, Twiga sourced bananas from 422 farmers. 
• By 2017 this number had risen to 2,749.
• In 2020, 11 different FFVs are sourced from over 7,000 farmers

Twiga is now serving 4,500 outlets on a daily basis across Nairobi, Kiambu and Machakos counties through 60 routes. There has been an expansion in sourcing areas owing to the increase in the number of collection points from two locations in 2015 to 48 collection points in 2018. Traditionally, post-harvest losses in the local supply chain exceed 30% in the case of bananas and tomatoes, 10-15% on potatoes, and 5% on onions. Twiga has average post-harvest losses of 4.4% for all sourced fresh fruit and vegetables – a major boon to food security and resource efficiency. Informal supply chain losses are exacerbated by the fact that they typically involve 5-7 intermediaries. Twiga eliminates these middlemen by sourcing directly from over 7,000 farmers through collection points and from some larger farms across the country – and then supplying to small vendors. 

Next steps

In the next 10 years, Twiga will roll out across African cities that lack a market platform and logistical network. They will use their platform to enable access to financial services for both farmers and vendors; and are looking to move gradually into the FMCG space by leveraging their key strengths, such as having an effective inventory/warehousing and logistics system. Agronomic advice and technology solutions will be offered at Twiga collection centers which serve as rural connectivity hubs, empowering farmers to become more capable, self-reliant and less susceptible to brokers’ whims.