With food costs skyrocketing due to the war in Ukraine, interest rate hikes, fuel hikes and changing weather patterns, KwaZulu-Natal-based start-up AgriKool is focusing on reducing the cost of food by cutting out middlemen and reducing transport costs while increasing profits for farmers.
Zamokuhle Thwala, CEO and co-founder of AgriKool
As an e-commerce platform, AgriKool collects data and insights that are used to inform farmers about market trends, especially pricing. A grower simply lists the products they have available for sale. Buyers engage the grower and agree on the price. AgriKool ensures timely payment and facilitates the transport of the products to the buyer.
Transport and logistics account for significant costs in the agricultural supply chain – as much as 35% of the total operating costs for farmers, says Zamokuhle Thwala, CEO and co-founder of AgriKool. To reduce these costs, AgriKool partnered with a fleet of trucks that carefully map routes to ensure goods are transported on every leg of a truck’s journey, increasing the utilization of vehicles and drivers. This method reduces fuel consumption, lowering transport to just 20% of operating costs, adds Thwala.
The industry is ripe for overhaul, says Thwala, as farmers take a lot of risk in the agricultural value chain, without being able to predict whether they will make a profit or a loss. Typically, farmers take their produce to municipal markets in warehouses where farmers and agents (buyers who sell to retailers at a profit margin) gather.
Here, agents offer to buy fresh produce. Farmers cannot predict how much they will earn because agents determine the final price of goods. The warehouse takes 5% commission on the value of goods sold, while the agent takes 7.5% commission – whether the farmer makes a profit or a loss. AgriKool cuts costs for both the agent and the municipal market.
We chat with Thwala to find out more.
Briefly tell us about AgriKool
AgriKool is a business-to-business e-marketplace that connects producers and buyers. The agritech startup coordinates the transport of goods and verifies quality.
How and why did you get started?
I experienced a lack of market access when I was a small producer and decided to solve this problem by connecting new producers with buyers of fresh produce. The aim is to help small producers take part in the main economy and also improve household income.
Tell us about your e-platform
AgriKool is an e-commerce platform that connects agricultural producers and buyers to facilitate the sale of products between retail buyers and farmers. The agritech start-up provides all aspects of agricultural trading from purchase agreements to delivery of goods.
Can you share some of the key challenges you’ve faced in setting up your business?
As a first-time entrepreneur, I’ve made tons of mistakes. I had very limited experience in how to build and run a startup. I have done everything out of naivety. I struggled to get financing.
How would you like to see AgriKool grow or develop over the coming years?
AgriKool plans to double the introduction of producers and scalers to other provinces. We have engaged several large commercial buyers and suppliers including Freshmark (Shoprite’s fresh produce arm) and have been promoted to a senior supplier with Boxer.
We have also brought in 21 large commercial and 100 small growers, replacing the Durban Fresh Produce Market as an intermediary between these large growers and retailers. Our revenue has increased by over 400% a month this year.
As an entrepreneur, what would you like to see changed in the South African startup landscape?
I would like to see an inclusive and more collaborative landscape. Black entrepreneurs and women-led startups shouldn’t find it as difficult to raise funding. I would like to see more startups that have corporate partnerships.
What trends do you predict for the industry?
Retail is becoming increasingly inclusive and consumers are well informed about who they are buying from (buy locally). I believe this will accelerate the transformation and create an inclusive society. We will see more small producers taking part in the mainstream economy.
What advice do you have for aspiring entrepreneurs?
The best time to invest in entrepreneurship is now. Think about your idea and how to make it happen – ideas are worthless unless they are executed.
Where do you want to see AgriKool in the next five years?
I see AgriKool as Africa’s food and agricultural procurement hub connecting agricultural producers and buyers across the continent. We will help reduce the cost of food in Africa by making trade easier, optimizing logistics and eliminating friction in the trade of agricultural products.
AgriKool is based in Pietermaritzburg with plans to expand to other provinces in the coming year.