Twiga, a B2B e-commerce food distribution platform, has today announced the launch of its new subsidiary, Twiga Fresh, through which it will farm and distribute its own agricultural produce to traders.
Twiga said it has begun producing horticultural produce like onions, tomatoes and watermelons on its 650-hectare (1,606 acres) land, with an estimated output of 150,000 tons of fresh produce annually. Twiga has so far invested $10 million in the new venture, which will be backed by debt from development finance institutions.
Since launch, Twiga has used technology to link smallholder farmers with informal traders, giving the producers access to new markets and a large pool of clients, all while optimizing the food supply chain in its markets. However, along the way, Twiga says they have had to deal with traceability challenges, stock outs and price volatility -- which have made it hard for the company to deliver on its promise of affordability and food security. With Twiga Fresh, the latest addition to its private label business, they project a better control of production.
“The volumes for other fresh products were low because we made a decision not to scale fresh produce where we did not have traceability from a food safety standpoint,” Twiga CEO and co-founder Peter Njonjo told TechCrunch, adding that the new business will not affect so many farmers.
Twiga said it will, however, continue sourcing some produce like bananas -- where the value chains are more “established and efficient” -- from partner farmers, to serve the 45,000 traders it supplies every month.
The company says its farm is one of the largest commercial fresh produce establishments targeting the domestic market since most large-scale horticultural businesses in the East African country export their harvests.
“Most of the Africa-based investment in modern commercial farming has been made in the export-oriented industry over the years because of the low formality of the domestic food market. This has led to decreasing productivity of local farming, which has impacted both quality and pricing in the market,” said Njonjo who founded the company with ex-CEO Grant Brooke.
“The pricing today on basic fresh produce is one of the highest in history and we are also witnessing increasing importation of basic food items on account of this. Through building a B2B supply chain into informal retail, Twiga has been able to formalize the domestic food market using technology, putting the company in a unique situation to invest in backward integration and solve the problem of declining productivity and increasing cost of food,” he said.
Beyond Kenya, Twiga plans to start operations in Uganda and Tanzania soon, and is also exploring new markets in Central and West Africa.