In less developed countries, the mismatch between supply and demand is due to lack of infrastructure and knowledge to keep food fresh. Today, the issue now isn’t the lack of technology rather, the lack of access to this technology. SokoFresh - a company from impact venture builder Enviu - has developed a process and business model that gives smallholder farmers affordable access to cold storage and links them to better buyers.
How does it work?
Sokofresh manages off-grid, mobile cold storage units that are strategically placed at the farm-level to optimize aggregation from smallholders. Farmers, cooperatives and aggregators are linked to exporters, wholesalers and processors. The use of cold storage during aggregation has two effects: drastically reducing food loss during harvest and significantly reducing the transport costs from farm to off-taker. Through the margins gained in this process, SokoFresh can be paid on a per kg basis, and farmers can earn up to 50% more on their harvest, while buyers receive more and better quality produce.
Rabo Foundation was one of the the first partners to believe in this concept and invested in the SokoFresh pilot to increase the accessibility of cold storage. So far SokoFresh has placed three containers in Kenya, and will soon expand with six more.
Madelon Pfeiffer, impact investor at Rabo Foundation, and Paul van der Linden, venture builder at Enviu, share their vision on this value chain approach.
Madelon, why is the cooperation with SokoFresh so valuable for Rabo Foundation?
“We already know that in 2050 there won’t be enough food for all the world’s people, combined with our agricultural heritage, this issue stands out as one of our key focuses. When we first met SokoFresh, I was impressed by their entrepreneurial spirit and vision, and at the same time how the team is working towards solutions that are very practical. The fact that Sokofresh is looking at the whole value chain is very unique in the field, which gives them a strong position and chance for success. For us this is an opportunity to reach out concretely to smallholder farmers.”
“We need to drive out post-harvest losses and create a flourishing value chain for all”
Paul, you are a venture builder at Enviu, can you explain why you started SokoFresh?
“At Enviu we build impact ventures that drive systemic change. We believe that this is the only way we can solve the huge environmental and human issues we are facing today. Our FoodFlow program is creating a showcase value chain for French beans, mangos and avocados by developing the technology needed to drive out post-harvest losses and create a flourishing value chain for all. Our ambition is to build a value chain made up of sustainable, circular business models, achieving 0% post-harvest loss, increasing incomes and improving food security. The goal is to grow this showcase chain to other crops and regions throughout East Africa and beyond. The support of Rabo Foundation is essential in achieving our mission and bringing us a step closer to feeding the world's population in 2050.”
And why is cold storage the answer?
Because sourcing significant amounts of produce from smallholder farmers takes quite some time, farmers and off-takers have to constantly balance the high cost of transportation with the high losses caused by field heat and non-optimal storage conditions. With cold storage they are able to aggregate large volumes for 2-4 days without experiencing the food loss that occurs at outside temperatures. Trucks are then utilized at full capacity, reducing the cost of logistics. Reduced food loss and reduced logistics costs,make a very strong business case for cold storage. With this cold chain installed, the door to export markets is opened up, enabling a higher price point for the produce of our farmers.
Madelon, how do you choose your partners and what attracted you in SokoFresh?
“For Rabo Foundation we look at three factors when picking our investments. One is the economic impact that can be made, combined with intervention in the value chain, plus - of course - the resultant environmental impact. SokoFresh’s cold storage as a service model is so strong because it ensures that smallholder farmers can afford the storage and gain better pricing for their harvest. We are impressed by its unique combination with a market linkage solution. For Rabo Foundation it is the first time we are piloting this business model. We want to strengthen the smallholders position and pricing, SokoFresh is an example that we rarely see.“
What will be your next step in improving the value chain and how do you best partner up in that?
Paul: “Our ambition is to deploy 400 cold storages in the next 5 years, leading to an increased income for 35,000 farmers, 3000 new jobs in rural areas and 37.500 tCO2eq prevented annually. We are currently scaling up our cold storage capacity in Kenya. Furthermore we’ve started to develop a farmer-centric market linkage platform to provide smallholders with choice and support in who they sell to. From next year we’ll also start a pilot with farm-level value-adding processing by setting up a solar powered avocado oil production line. Our goal is to minimize losses and maximize the value of the harvest. If done right, the combination of cold storage, processing and market linkage will let us achieve our goal. By offering all this through a risk-free ‘as-a-service’ model, every smallholder will be able to afford it.”
Madelon: “We aim to inspire and facilitate farmer based organizations to create sustainable business. So that smallholder farmers can grow and reach their full potential. Addressing global challenges like climate change are needed to realize this. Therefore we need to team up. Like we did with SokoFresh and scale up initiatives like this.”