Trade transparency for sustainable supply chains

TruTrade is a social enterprise that provides smallholder farmers with a reliable route to market and fair prices for their produce.

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I confirm that I am fully aware of the eligibility criteria, and based on its description, I am eligible to apply to the CSV Prize 2017.

  • Yes, I'm eligible

Preferred language

  • English

Organization name

TruTrade

Year founded

2012

Initiative stage

  • Established (the solution has passed the previous stages and demonstrated success)

Annual budget in 2017 (USD)

  • $100k - $250k

Number of beneficiaries impacted so far

  • 1,000 - 5,000

Organization type

  • Social enterprise

Secondary Focus Area

  • Nutrition

Headquarters location: Country

  • Kenya

Headquarters location: City

Nairobi

Location(s) of impact

Kenya: Busia, Siaya, Kisumu, Muranga, Embu, Tharaka Nithi, Kitui, Kilifi counties
Uganda: Gulu, Omoro, Pader, Lira, Abim Agago Moyo Yumbe districts

Website

www.trutrade.net

Facebook URL

https://www.facebook.com/trutradeafrica/

Twitter URL

https://twitter.com/trutradeafrica or @TruTradeAfrica

Problem: What problem is this initiative trying to address?

Smallholder farmers in Kenya and Uganda work in unorganized staple food markets, with no connection between producers and final buyers, limited transport and a lack of finance for aggregation. Farmers sell to middlemen at low prices, off-takers struggle to get a reliable supply of quality produce and there are few rural employment opportunities. Without visibility over trading transactions, smallholder farmers cannot be integrated into supply chains and there is limited potential for more inclusive agribusiness growth.

Solution Summary: What is the proposed solution? What do you see as its most promising aspects for creating shared value?

TruTrade's Trade Transparency Service (TTS) improves efficiency in rural agricultural markets:
• Farmers have a direct link to buyers and get better prices
• Buyers get a reliable source of produce that meets their demand for quality and volume
• Aggregators earn commission and can grow their business as a trusted service provider
We use our village agent networks, mobile-enabled ICT platform and digital payments to drive fair and open trading in local, regional and export markets. TruTrade agrees supply contracts based on commercial viability and potential for social impact. Farmers bring produce to a collection point, a village agent checks quality, weighs and then triggers a payment directly from TruTrade to the farmer’s mobile. TruTrade manages the aggregation from different agents, transaction logistics and delivery to the final buyer. We have a commission-based service charge linked to what farmers get paid and any profit is shared equally between farmers and TruTrade.

Impact: What is the impact of the work to date? Specify both the social and the environmental impact of your work

TruTrade increases smallholder farmer incomes and builds their confidence to invest in production; creates employment opportunities, in particular for youth as village agents; and enables off-takers to source sustainably.

In the first two years of operations (2015-16) TruTrade provided an offtake market for over 1,284MT of produce worth over $640,000, giving farmers an additional 20% income from their produce. Over 5,500 farmer transactions were made in 20+ agricultural commodities.

By 2020 TruTrade aims to provide a market linkage service to 30,000 farmers, for approximately 8,500MT of produce, worth over US$5million annually. This will result in more than US$3.5million income to farmers, with an anticipated US$850,000 of this additional to what they could have got through traditional market routes.

We use the power of the market to drive production of crops suited to the local environment and our traceability enables engagement in markets for organic produce.

Financial sustainability plan: How is this initiative financially supported? How will you ensure its financial sustainability long-term?

Currently TT receives investment from its main shareholder Self Help Africa to cover operating costs during business development. Grants have also been received for specific value chains or geographic areas.

TruTrade is a business that earns revenue from commissions (5% of farmer price) and has a 50% share in any profit from transactions. There is a service charge for trade finance to cover the associated costs. TruTrade is projected to break-even in 2020 when trading value reaches US $4 million.

In 2016 earned income was $19,500 (6%), grant income was $93,974 (27%) and other income (start-up investment from Self Help Africa) was $230,000 (67%).

In 2017 we are focused on network development & operational efficiency, significantly scaling up our reach, impact and revenue.

Unique value proposition: What makes your initiative innovative? How does your project differ from other organizations working in the same field?

TruTrade provides an alternative to the buy-low-sell-high trading practice common in agricultural value chains in Africa. Our model links commission earned by our network to the price farmers are paid for produce, providing an incentive to maximize farmer income. TruTrade's platform and operations position us at the forefront of digitizing informal agricultural value chains; addressing the critical “sale to settlement” gap in an innovative and scalable way.

Founding story: Share a story about the "Aha!" moment that sparked the beginning of this initiative.

“We can get support in production, but when it comes to marketing no-one is on our side”. This sentiment, expressed by smallholder farmers across rural Africa, led to the creation of TruTrade. We broker on behalf of smallholder farmers to get the best deal possible. In so doing we have found we can provide off-takers a unique commodity sourcing service, that enables them to build shared value in their own businesses.

We are constantly learning and adapting the business model to provide an efficient service, create social impact and become commercially viable. To make a significant difference to farmer price we have focused on value chains where a premium can be achieved for traceability.

We believe the future of smallholder farming depends on the creation of shared value within supply chains and that we have a valuable contribution to make in achieving this.

Where did you hear about the Nestlé Creating Shared Value Prize?

  • Upon recommendation from others

Program Design Clarity: We are hungry to know more about what exactly your model consists of. Succinctly list a) what main activities are you doing with your beneficiaries, b) where you carry out the activities? c) how often? d) for how many hours? e) who delivers the services? and f) any other brief details

TruTrade's service consists of three main elements: Platform, Network of Village Agents and Trade Finance. The online and mobile enabled trading and payment platform enables collaborative supply chain management: it allows for the capture of all costs, analysis of transaction viability and price setting; registration of farmers and triggering payments; and tracking of produce from collection to delivery. TruTrade provides trade finance so that farmers can be paid ‘Cash-on-the-Bag’ as they hand over produce at the collection point. Our trade finance covers transaction costs including packaging, handling, storage, transport, taxes and any value addition services up to delivery to final buyer. When the buyer pays TruTrade the fund is replenished. Our sourcing network uses the platform and finance to provide a marketing service to smallholder farmers in their area.
a) Farmers can see market prices displayed on boards at collection points. They bring produce and receive down-payment immediately on mobile money. At the end of the season farmer accountability meetings are held to feedback on trading performance and any profit generated is shared.
b) Currently TruTrade has networks in 8 Districts in Uganda and 5 Counties in Kenya, with 130 Agents trained to provide our service from their collection points.
c&d) Collection points are open whenever produce is available and there is an active deal.
e) TruTrade staff, Souricng Coordinators & Agents deliver the service.

Focus area

  • Rural Development

We are interested in learning more about your initiative's broad impact on sustainable development. Please reply ONLY to the question(s) related to your above focus area.

TruTrade is integrating smallholder farmers into sustainable supply chains. Our business is changing the way agricultural trading takes place, creating an impact on rural livelihoods and driving financial inclusion.
Access to markets: We provide a direct link to final buyers, so farmers have a reliable route to market and can get fair prices. We provide market information to inform production choices.
Economic development: Better farm-gate prices and confidence in the market drives a virtuous cycle as improved household economies enables investment in production. Business opportunities in aggregation are also driving wider community development as commission income is invested in local enterprises.
Gender equality: TruTrade is enabling more women to become village agents as using mobile money for paying farmers reduces the risks involved. Women farmers also appreciate the digital payments which enable them to have more control in managing finances and to feel more secure as they do not have cash hidden in the home after harvest.
Nutrition, health & wellness: There is a positive impact as better farming incomes means more money that can be spent on household needs. TruTrade is providing links to other digital financial service providers to improve access to credit and savings facilities.
Water management and Good Agricultural Practices: Basic information is shared through Village Agents to improve natural resource use and maximize farming incomes.

Creating shared value: How does your initiative create value for different stakeholders?

TruTrade is a social enterprise so creating shared value is at our core. We are building an 'ethical middleman' business, that serves farmers and buyers. Our service brings together the ‘supply power’ of thousands of smalholder farmers, to engage directly with volume buyers and benefit from economies of scale. This gives farmers a better deal on their agricultural produce.
TruTrade's approach to Creating Shared Value goes beyond our own business operations to being an enabler for agribusinesses and other buyers of agricultural produce to also Create Shared Value through their purchasing power. We provide all sourcing information to buyers and are engaging them to see how they can use our origination data to develop premium products and build more sustainable supply chains.

How is your initiative funded, now and over the next 5 years?

TruTrade is projected to break-even in 2020 based on facilitating trade in produce worth US$4 million. Currently (2017 figures), operational costs are covered by earned income (10%), grant finance (25%) and equity investment (65%). Business projections show increase in proportion of earned income, from growing trading volumes and new revenue streams, to 50% in 2018 and 85% in 2019, to full cost-recovery by 2020. Increases are from growing size of current revenue streams as well as developing new streams. Grant finance is available from a range of development partners who provide catalytic investment to support TruTrade to establish the service in a new area of in a particular value chain. Equity investment is provided by Self Help Africa.

How do you plan to influence your field of work if you are a winner of this edition of the CSV Prize?

Smallholder market access is a tricky 'nut to crack', but critical factors driven by growing mobile connectivity and technology are creating opportunities to formalize agricultural supply chains. TruTrade has learnt a lot in the last few years on how to unlock this opportunity and make our service work as a business. Winning this prize would provide a platform for sharing this experience and moving forward in developing complementarity between market agent networks and other agricultural and digital financial services. We will use the profile that would be gained to engage agribusinesses, to work with them to create shared value though enabling traceability and origination in both traditional commodity markets and high value crops.

How will you leverage an investment from Nestle to expand the impact of your work?

TruTrade is at a critical stage in the business growth. We have a proven business model and need to take this to scale. This investment would be used to:
1. Bring our service to new areas, reaching 10,000 more farmers in Uganda and Kenya
2. Further develop our technology platform, with greater directory and dashboard functionality to provide additional services to our clients and revenue streams for TruTrade.
3. Establish a Head of Business Development based in Nairobi to grow our market penetration, provide a pipeline of new buyer opportunities and develop alliances for greater impact.
This strategic investment will allow us to drive business growth and help us engage with more companies to provide sustainable sourcing solutions.

Spread Strategies: Moving forward, what are the main strategies for scaling impact? What’s the projected impact for the coming years? Are you planning to expand your programme into new locations? On what assumptions do you build your scale-up plans?

To scale impact we:
1. Identify value chains that have strategic potential, where the gross margins for small-scale production are positive, there is reliable and growing buyer demand, and transactions are commercially viable.
2. Grow our sourcing network. We establish a Sourcing Coordinator at District (Uganda) or Sub-county (Kenya) level. They recruit 5-10 Agents to start with, who each source from 30-50 farmers. The network grows to include more agents and reach more farmers each year. Our target by 2020 is to have 800 agents providing market to 30,000 farmers.
3. Expand our technology capacity. Our digital trading records open up significant new possibilities for farmer and business credentialing and to give global commodity buyers the ability to connect to their smallholder farmer suppliers. We need to realize this service offer and associated revenue streams.
We have secured access to trade finance to drive this growth.
We will then expand to new countries in the region.

Team: What is the current composition of your team (types of roles, number of full-time vs. part-time staff, board members, etc.)? How will this team evolve as your initiative grows?

TruTrade has an ambitious and experienced leadership team (CEO, Head of Operations, Head of Finance), bringing together expertise in supply chain management, finance and social business. We have a dynamic and growing staff covering Systems/IT support; Operations, Administration and Area Supervisors. We currently have 14 full-time staff, with plans to grow to 25 by 2020. We aim to recruit a Head of Business Development to complement our SMT.
TruTrade has an international Board currently comprised of 5 members, drawn from experienced business leaders, sector experts and investors.

Awards: What awards or honors has the initiative received?

We were recently recognized by MIT Solve Award as one of the winners in the ‘Women and Technology’ category.

Organizational leadership: How are you influencing your field of work in the present?

TruTrade is actively sharing our experience and exploring with others how we can maximize the development impact. We have shown it is possible to shift behavior from cash-based transactions to using mobile money and the finance we are pushing into these 'emerging ecosystems' is opening opportunities for other services. Our network of agents are also testing provision of bundled agricultural services to increase production.

We are contributing to global dialogue on this rapidly developing space. This has lead to our business model being featured in studies by CGAP on digitizing value chain finance for smallholders; IFC research on digital financial services and agriculture; and blogs e.g. for GSMA (representing global mobile operators).

Should you be successful, please confirm your availability to attend the Ashoka Impact Boot camp and Creating Shared Value Prize Live Pitch Event at the World Water Forum 13-16 March 2018

  • Yes, I am available to attend the events on 13-16 March 2018

Evaluation results

4 evaluations so far

1. Overall evaluation

5 - This idea rocked my world. It’s awesome! - 50%

4 - This idea seems really exciting. With a little more polishing, it’d be among my favorites. - 50%

3 - I think the idea is great, but it needs some work before it moves onto the next round. - 0%

2 - I liked it fine but preferred others. - 0%

1 - It didn’t make my heart beat faster. Needs significant revisions. - 0%

2. Innovation

5 - Absolutely, 100%! - 0%

4 - I feel really good about this - very promising - 50%

3 - This has some good elements and some areas for development - 50%

2 - This doesn’t inspire me so much - 0%

1 - This entry is weak here - 0%

3. Social and/or Environmental Impact

5 - Absolutely, 100%! - 25%

4 - I feel really good about this - very promising - 75%

3 - This has some good elements and some areas for development - 0%

2 - This doesn’t inspire me so much - 0%

1 - This entry is weak here - 0%

4. Financial sustainability

5 - Absolutely, 100%! - 50%

4 - I feel really good about this - very promising - 100%

3 - This has some good elements and some areas for development - 50%

2 - This doesn’t inspire me so much - 0%

1 - This entry is weak here - 0%

Nothing stands out! I thought it was great. - 0%

5. Potential to Scale / Replicability

5 - Absolutely, 100%! - 25%

4 - I feel really good about this - very promising - 50%

3 - This has some good elements and some areas for development - 25%

2 - This doesn’t inspire me so much - 0%

1 - This entry is weak here - 0%

6. Organizational Leadership

5 - Absolutely, 100%! - 0%

4 - I feel really good about this - very promising - 75%

3 - This has some good elements and some areas for development - 25%

2 - This doesn’t inspire me so much - 0%

1 - This entry is weak here - 0%

7. Potential for Creating Shared Value

5 - Absolutely, 100%! - 50%

4 - I feel really good about this - very promising - 50%

3 - This has some good elements and some areas for development - 0%

2 - This doesn’t inspire me so much - 0%

1 - This entry is weak here - 0%

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Attachments (2)

TruTrade Systems Map - Smallholder Market Access Nov 17.pdf

This systems map shows how we understand the context in which we work.

TruTrade Business Overview 2.0.pdf

Summary page from Business case which shows how TruTrade will grow from the baseline in 2017 over the next 3 years to end of 2020 based on our current operational model and plans. The Overview brings together the main drivers and provides a summary of key metrics. It presents, analysis of revenue and expenditure from the perspective of the trading figures and TruTrade's own financial position.

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Photo of Shazeeb

A great initiative to bring transparency in the unorganized market. I believe its successful implementation can ensure welfare of the small business holders. All the best!

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