Soil Builders, saving harvests with small holders farmers and connecting local farms to city folk in the UK

In this episode we hear from Wolfgang Mittmann, founder and CEO of Saving Grains how they are helping smallholder farmers save their harvests, fulfil their potential, and make sure that no good food goes to waste. Also Pete Russell shares more about his company,  Ooooby, a social enterprise that connects local farmers to city folk through an organic fruit and veg box subscription service.
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In the Soil Builders series we welcome back previous friends of the podcast to understand their progress and we discover new companies, startups, farmers, investors engaged in building soil all over the world.

More about this episode and the Soil Builders series on https://investinginregenerativeagriculture.com/soil-builders-7/
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Transcript

SPEAKER_00: 0:01

Welcome to Soil Builders, a series where we follow who is building soils at scale. This is an experiment, so please share any feedback. Why this show, Soil Builders? I believe that most change in regenerative agriculture and food will come from and is coming from entrepreneurs building ways to regenerate soil at scale. I call these Soil Builders. Soil Builders are entrepreneurial farmers, ag tech companies, investment funds, food startups, new seed cooperatives, teams within food companies, robot startups, investment vehicles, etc., etc., etc., This series allows the community of the podcast, which is you, full of funders, investors and fellow soil builders to follow their progress, their challenges and their breakthroughs. I hope you enjoy it and please reach out with any comments, feedback and ideas. Today we have Pete of Ubi, working hard to make local and organic food easy and fair in the UK. And Wolfgang of Saving Grains, turning post-harvest losses into profits for smallholder farmers. But first over to Pete. Pete, could you briefly introduce yourself and what brought you to Found Ubi?

SPEAKER_01: 1:07

Hi Koen, I'm Pete Russell and I founded Ubi over a decade ago because I recognised that our centralised global food systems were causing more damage than good. That was the industry I was in And I had a firsthand experience of that. And it's not by design, but by consequence of economic incentives. In the pursuit of greater and greater economies of scale, food corporations have been forever consolidating and centralizing. Food production methods have been optimizing for maximum yield at minimal cost. And the food itself is optimized for the demands of long convoluted supply chains and for merchandising rather than for nourishment. So Ubi was founded as a solution as a short, fast, and simple sales and distribution model, which is designed to bring economies of small scale, if you will, which can actually compete with mainstream food at the retail end of the market, whilst ensuring that all the actors within the supply chain in particular the food growers are receiving the right proportion of the retail pound.

SPEAKER_00: 2:28

And what is the biggest difference for farmers working with you compared to working by themselves or working with others?

SPEAKER_01: 2:34

I'd say the biggest difference for farmers working with Ubi compared to working by themselves or with others is that they have a comprehensive system with Ubi wrapped with full support so that they can easily manage a direct sales model to households and business in their local region. This means that farmers can often double or even triple their margins without needing to become experts in sales and

SPEAKER_00: 3:01

distribution. And what makes Ubi so unique in the direct-to-consumer marketplaces, which is slowly getting more crowded?

SPEAKER_01: 3:10

What makes Ubi unique in the crowded space of direct-to-consumer marketplaces is that it's primarily designed around the logistics coordinating and streamlining the delivery process from gate to plate. Collating, you know, an ever-changing range of perishable goods from small independent suppliers is a complex task. And platforms like Shopify or Etsy, they're great at the initial sales side, but they, like any of the logistical tools that are needed by food hubs to sort of manage a very complex supply chain operator in order to deliver on that sale. So the first sale to a customer is the easy sale. You're just selling an idea, really. But it's the second, third, and subsequent sales that make a food marketplace work. And that heavily depends on the entire customer experience working for the customer, including it arriving on time, in the right place, in full, and as fresh as expected every time. So that's our focus. acquiring customers. And so whilst people can easily buy one-off deliveries on Ubi, the system defaults to a subscription model and the customer dashboard encourages add-on purchases without disrupting the recurring sales pattern. So I think that's how we differ primarily. The customer experience on ubi um is that they know that they're shopping with a local independent farm and that's their primary experience they're shopping with someone in their region and you know with real provenance but they are also aware that they're doing this via the ubi platform so similar to etsy in that way you know you're buying from an independent vendor but you also know that you're doing it on the etsy platform so ubi is visible to the customer uh to the you know the household, but it stands behind the farmers and the food hubs. And the farmers are the champions that are put front and center.

SPEAKER_00: 5:31

And could you walk me through a use case? Let's say I'm a typical farmer and I'm reaching out to you. How does the process of joining and using Ubi look like?

SPEAKER_01: 5:40

The use case for farmers is evolving over time. At this stage, we're really focused on building out the logistics network. And so we're working with farms that also act as distribution hubs. These are the farms that may produce a portion of the products for sale to the customers, but they also buy in goods from other producers in order to provide a full range of staple items for the households. So in this case, the joining experience is a high-touch process where we work closely with the farm hubs to help them to set them up on the platform and to train them on how to run a full logistical operation in order to do home deliveries from their farm. In due course, we'll be enabling farmers that don't want to be hubs to simply create a supplier account where they can create a profile and upload their available produce and products to be purchased in bulk by the network of hubs on the platform. So customers will be able to buy from these suppliers via their local hubs, and these suppliers won't need to deal directly with the thousands of customers. They'll be able to sell in bulk. but they'll have a platform that presents them to the thousands of customers. And so for these farmers, it'll be a much simpler self-onboarding process in much the same way as a vendor would set themselves up on something like Etsy.

SPEAKER_00: 7:17

And now to Wolfgang of Saving Grains. Hi, Wolfgang. Welcome to the podcast. Could you briefly introduce yourself and what brings you to focus on grains in West Africa?

SPEAKER_02: 7:25

Thanks, Goan, for having me. It's a real pleasure. I'm Wolfgang. I worked for the World Food Programme for quite a while there. are focused on market-based interventions together with the accelerator. They have a great accelerator there. And so we try to address systemic market inefficiencies to help smallholder farmers escape poverty. So after a while, we focused on post-harvest losses. And basically, we've seen this huge opportunity to have a scalable business addressing these issues. And that's why we found Saving Grains. Now, the reason we went to West Africa to start with our platform was that we simply got some support from the Austrian Development Agency to get our model up and running. And could you share what Saving Grains is? Saving Grains is our social startup. We are building a digital platform to revamp the village crop trade in sub-Saharan Africa. And the problem we are addressing is that smallholders always sell during the harvest when prices are really low. Now prices go up within six months towards lean season. And in Ghana, it's a whopping 80% price increase on average. Now all of this money doesn't stay in the village. But smallholder sell to traders from outside the village, and the value chains outside the village benefit from this price increase. Now we are revamping that, but our starting point is not the farmer, but we enable local entrepreneurs to store hermetically. We provide them with hermetic storage technology, as well as a loan that we give them and an app. Now, this holistic package combined allows them to buy grain in their community from smallholders and then to store for a long time without any quality issues or any post-harvest losses. And subsequently sell and make on average 80% in profits. Now, they also have to invest some money, but due to the loan, it gets very profitable for them. Now, since all these transactions and all the money flows run out via our app, it's possible to automatically deduct the profit share and repay back to the smallholder farmer so that they benefit from that value creation. Yeah, this is, in a nutshell, our first product. And we think it's a very scalable product. Yeah, and at the moment, we're doing this in Ghana and testing our first market proof with 100 customers. But we have plans to prove that this model works for different crops, for maize, for beans, for groundnuts. And we also want to enter East Africa and Kenya and maybe to Nigeria to show that this is not like a local solution, but this is something where we hopefully can get better prices for millions of farmers.

SPEAKER_00: 10:32

And how does it make a

SPEAKER_02: 10:33

difference for the farmers involved? Now that one's really simple. Our farmers receive a profit share. So the customers buy from the smaller farmers. They make a big trading profit. And our app automatically takes a part of the profit and pays it back to the smallholder farmer. And what's really neat is that the profit share comes in the lean season. That's the time when everybody's broke, when farmers need to invest into their cultivation, but there's no money, the time when the family starts skipping meals. So it's money when it's most needed. Now, if you look at the numbers, our entrepreneurs make 80% in trading profits on average. So 10% of the trading profit we take out of this, and this goes to the smallholder farmer. Now, this doesn't seem very much, but if you look at the numbers and at the margins that smallholders make, they're fairly low. If you look at crop budgets, and I mean, there's variation depending on the type of grain and the type of cultivation and if you need external labor or not, but margins are typically between 5 and 20 to 25%. Now, if you give an extra 8% on top of this, it is significant. And the smallholder farmers we talk to, I mean, obviously they love that because there's no risk on their part, no behavior change required. So for them, it's a pure win. But there's also like a business reason behind this because we are a social business and we need to make money as well to be able to scale this rapidly. So we give a loan to our customers. And in Africa, as you well know, you have to make sure that you get the money back if you loan out money. Now, what is really interesting is that in this model, everybody wins in the village. So should there be a problem with the default, then we can communicate with the smallholder farmers and with the traders to find a solution. Because obviously if farmers expect a profit share, it's very uncomfortable for a situation for a crops trader not to pay that profit share. So it doesn't make sense for our customers to default on their loan policy and be unpopular in their village. So there's a big social element of this. There's also a social element that we completely underestimated that our customers love the social position. They love to be in the position to be the source of a profit share and extra money to farmers. So we're very happy about this social element and we find that it's very well intertwined, the social element and the business

SPEAKER_00: 13:28

element. And compared to other solutions. How is it fundamentally different?

SPEAKER_02: 13:33

Well, most sub-Saharan African markets are completely dominated by traditional crop trading, which means the trader comes in the village, buys grain, grain travels through aggregation centers and to population centers, and all these interseasonal price increases run up in later parts of the value chain outside of the village. Now, our solution, as described, is obviously very different and has many advantages. We formalize the crop trades to the traders. They get a loan. They get a financial history. They get transparency over their own trading activities. And there's profit shares to smallholders. So it's a big step to what's currently happening. Now there's other digital approaches, very interesting ones like Echo Center or Apex Nigeria. Safaricom is also working on solutions. But what distinguishes our solution from others is that we are a completely free platform. now other solutions are more captive so they use these crowd elements to basically aggregate themselves they sort of like use this more as an agent model but the crop is controlled by them whereas we are a free platform We really build on the entrepreneurial energy and activity of our customers, and they can buy grain and sell grain to anybody they like as long as it goes through our app. There's also an additional element to our business model where we also offer a connection to other markets, especially the urban markets and the big off-takers since we have higher quality grain. But this is not mandatory. We just offer our customers a price for their grain and they can accept or reject it depending on the other opportunities they have to trade. So we really build on this, being the tool for like hundreds and thousands of entrepreneurs to become small businesses or even bigger businesses and grow.

SPEAKER_00: 15:51

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