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South Africa-based agritech startup TonnUp has launched an online trading platform that assists farmers in marketing and selling their agricultural produce in a structured and transparent environment.
TonnUp has launched a new platform that aims to disrupt the local commodities market
Stephen Krüger, the director of TonnUp and a maize producer based in Viljoenskroon, explains that the platform has been geared toward supporting local farmers and buyers.
“TonnUp is the result of a fundamental need for farmers to extract a fair price for their inputs and risk. Our farmers are the starting point of the food value chain but have the least ability to create a fair price for their product. They take all the risks and create the real value. We think there’s a real opportunity to lift the veil on the commodities market and help the farmers get the best prices for their products,” said Krüger.
Established in the last Quarter of 2020, the newly launched and innovative platform aims to empower farmers to dictate the pricing, marketing, and distribution of their products.
“South Africa’s current grain market is between 14-16 million tons, and less than 25% of that is traded in a formal market. This means that potentially, 75% of the grain crop is available to be traded on a formal platform, with full pricing and location transparency. Our value proposition is to bring together buyers and sellers, and to create a spot market where everybody gets a fair deal,” adds Krüger.
TonnUp claims that its one-stop platform is cost-effective when compared to other existing mechanisms available to local farmers.
The benefits of the platform include the following;
- Listed farmers get the maximum value output for their products
- Buyers are able to make more informed purchasing decisions
- Fosters a transparent and efficient market.
How does it work
Farmers are able to list their commodities on the platform at their preferred price after consulting with their brokers or silo owners.
Buyers such as millers and processors are able to bid on these listed commodities, regardless if there is currently stock or not available at all registered delivery points. The platform has essentially reduced the admin and paperwork involved from process of the producer to consumer.
In addition, the trading platform enables buyers to bid for a preferred delivery location.
“Ultimately, we’re using agri-tech to empower farmers to manage their own products at a fraction of the current cost, and from anywhere at any time,” comments Krüger.
Addressing delayed payments, a problem faced in the traditional trading commodity market, TonnUp has implemented a ‘trade plus 2’ (T+2) working day settlement cycle.
TonnUp provides insight into this process.
“While silo owners will continue to guarantee the quality and quantity of the physical stock on the storage certificates, TonnUp facilitates the cash-flow process so that sellers receive their payments and buyers receive their stock quickly and efficiently.”
To ensure financial security for all parties involved in the transaction, the platform only enables customers to trade from pre-funded accounts. Customer’s funds are held in segregated accounts which are distinct from operational accounts.
The initial focus of the platform will be on grain but the agritech plans to expand into a range of other commodities such as oil cake, fertiliser, soya, and sorghum.
Featured image: Tim Mossholder via Unsplash