Twiga Foods is one of Kenya’s biggest tech startups dedicated to helping the country’s smallholder farmers sell to consumers. The company’s mobile phone-based business-to-business platform connects farmers with urban retailers, bypassing layers of middlemen who add to costs and prices.
Chelenga Bartaai is one of the 17,000 farmers across 12 counties in north-western Kenya who have signed up with Twiga to use its app to secure orders. Bartaai belongs to the millions of smallholder farmers who eke out an existence selling crops grown on small plots of land. She grows collard greens, cabbage, tomatoes and maize, and with little access to irrigation, has to rely on Kenya’s two rainy seasons to water her crops.
Other start-ups trying to connect farmers and buyers include Farmshine and M-Farm. They are aiming for a slice of the $1 trillion African agriculture sector that the World Bank estimates will exist by 2030, up from just over $30 billion in 2010.
“There are markets further from here where you can fetch a better price but getting there is a challenge,” 35-year-old Bartaai tells the Financial Times as she turns over the soil on her two-acre smallholding. “With sukuma wiki [collard greens] and cabbage, you only earn in the off-season, otherwise the market is flooded, so most times I don’t make any profit.”
Twiga lists what’s available from farmers on its app. Retailers order what they need and have it delivered. E-commerce does what wholesalers cannot – aggregate demand and also supply from a highly fragmented patchwork of smallholder farmers. Poor transport links, a shortage of proper storage for perishables and the high costs of collecting small amounts from many farmers act as significant barriers.
Farmers also have to overcome the problem of trust, or lack thereof, with wholesalers.
“For farmers in Kenya, the biggest problems are reliability and predictability,” Kikonde Mwatela, Twiga’s chief operating officer, told the Financial Times. “Their thinking is: ‘If I offer my product for trade, will it be purchased, or are you going to shaft me tomorrow and not come to pick it up?’”
The fragmented supply chain has led to inefficiencies and higher prices. This has led to consumers in Nairobi, Kenya’s capital, paying more for a bunch of bananas sourced 300 kilometers away than someone in Washington DC pays for imported bananas from the Philippines, Mwatela said.
Globally, smallholder farmers in many developing countries also suffer from the same information asymmetry between buyers and growers that has depressed rural incomes. In China, rural e-commerce has greatly enhanced the stability of agricultural supply chains and promoted the rapid growth of farmers’ incomes, according to Fan Shenggen, a chair professor at the China Agricultural University.
Smallholder farmers like Bartaai have struggled to break free from the endless cycle of subsistence. It remains to be seen whether the new wave of tech start-ups can do better than previous attempts to uplift farmers and break the back of rural poverty.