Technology

Techies helping farmers access markets, cut losses

radava

Radava co-founders Josephine Adeti (centre) with her colleagues Ivan Otieno and Isaac Wachira. PHOTO | POOL

When she attended an event in Kigali, Rwanda, Josephine Adeti did not know that she would come up with an idea that would give birth to a startup offering tech solutions to farmers in Sub-Saharan Africa.

With two others, they formed Radava Mercantile, an early-stage startup that provides various critical services to smallholder farmers. These include an agricultural commodity exchange market, alternative financing, and post-harvest technologies.

Other co-founders are Ivan Otieno who is the chief operations officer, and Isaac Wachir, the chief financial officer. The three were part of the Jasiri Talent Investor Programme by the Allan & Gill Gray Foundation.

“We co-founded Radava Mercantile last year around November after we first met in Rwanda at the Jasiri Talent Investor programme that identifies and selects high potential entrepreneurs to find solutions to Africa’s most pressing problems,” says Ms Adeti who is the chief technology officer.

“Our different backgrounds and experiences complement each other, a fact that makes our team very unique,” says Ms Adeti who is the chief technology officer.”

The company is currently serving about 650 farmers in the Western region of the country and over 10 major off-takers. They seek to expand into Uganda, and they already have a team there. They have seven permanent employees and about 45 temporary staff who are engaged in grading, drying, sorting, transporting, loading and offloading processes.

“We narrowed down the problem we were exploring to the agricultural sector since our research pointed out that due to lack of structured markets. We also realised that small-holder farmers in Sub Sahara Africa fail to market their produce and manage price risks effectively. We were particularly keen on reducing post-harvest losses.”

Radava Mercantile provides a digital platform that seamlessly allows off-takers to source agricultural commodities and helps farmers access to easily access markets. Radava also enables retail and institutional investors to invest in agricultural commodities.

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“In addition to buying produce at competitive prices, we provide farmers with the opportunity to store their produce under the Warehouse Receipt System. Once their yields get to the warehouse, they are issued with an electronic receipt that is tradable and can serve as collateral,” Ms Adeti reveals.

She adds that they use warehouses certified by the Warehouse Receipt System Council (WRSC). Currently, they use the National Cereals and Produce warehouses since they are the only ones certified by the WRSC.

To engage farmers, they have agents on the ground who help in onboarding them to the platform. Currently, such teams are in Western Kenya and Uganda.

How does the business make money?

“We make money majorly through transaction fees on the commodity exchange and markup cost cut on the off-takers. We are currently charging 5 percent for every commodity transacted. Also, we are charging a 10 percent mark-up on the off-takers,” Ms Adeti notes.

“We leverage on digital marketing to get details of people interested in buying maize in bulk. We also talk to institutions that constantly need cereals in bulk, for instance, secondary schools, government institutions, maize millers…”

When they conducted a business survey, the entrepreneurs say they realised that storage was one of the most pressing challenges among farmers.

“During our prospecting we established that the disincentive for storage due to constraints on borrowing capital and lack of standard warehouses contribute to a circuitous flow of farm produce out of surplus areas during harvest periods, only to move back in once deficits set in,” she says.

“More generally, the disincentives for farmers and traders to store produce tends to depress prices right after harvest - and because relatively little is stored through the season - less is available for consumption later in the season, which raises prices more during these periods. In order to drive down the price of food to rural and urban consumers, we established Radava.”

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They began with Sh1 million initial capital that they received from the Jasiri Talent Investor, “to validate their idea, develop their MVP (minimum viable product plan), formulate a go-to-market strategy and start their business”.

“Our primary partners are the WRSC and the National Cereals and Produce Board (NCPB). Notably, in 2019, the government enacted the Warehouse Receipt System Act to promote structured commodity trading. The Act forms the basis of our company,” Ms Adeti adds.

Their mobile application and platform that will allow farmers to seamlessly connect to markets is under development and is set to be out by end of next month.

“Basically, the platform will enable farmers to contact us to organise logistics of getting their produce to the storage facilities. We also have a section where ‘ordinary’ people interested in agriculture can invest through buying and selling agricultural produce just like Forex,” the techpreneur says.

“In other words, they can gain returns from agriculture without going through the process of planting, weeding, harvesting, logistics, finding markets etc. Also, we will have a feature that enables people to buy the warehouse receipt under their name which they can later trade or redeem for their stored produce at any of the warehouses in the country. This is very interesting.”

To use the services, it is not a must for one to have a smartphone but one can access the services by contacting them by visiting their office, messaging or calling them.

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“But we are leveraging on technology to make the process easy and fast,” she says.

“We are also working on a bulk SMS system which we use to send updates on price changes to farmers. The SMS can be accessed with an ordinary ‘Kabambe’ phone,” Ms Adeti adds.

Their physical office is located at Pinetree Plaza, Kaburu Drive, Ngong Road.

She advises people to conduct market research first, before embarking on a business journey, to understand the problems and opportunities in this industry.

“Also consider collaborating with people essential to your business. Most importantly, you must have a passion for agriculture that will enable you to keep moving forward,” advises Ms Adeti, who loves travelling and exploring new places.

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