The local agri-tech startup Nile took its first steps a few years ago to disrupt the agricultural value chain by launching an e-commerce platform that connects fresh produce farmers directly with commercial buyers. The platform streamlines produce sales, supply procurement and even applications for financing. Nile recently secured nearly R200 million in funding to expand its operations across Southern Africa. We asked co-founder Louis de Kock a few questions.
By Lucille Botha
What opportunities does this capital injection unlock?
About 21 months ago, we launched a new digital marketplace for production inputs where farmers can buy fertiliser, chemicals and packaging material, among other things. We launched it as an MVP (minimum viable product) to test the concept and simply adapted the existing Nile software for it. We’re getting very good feedback and learning a lot. That’s why, with the new funding, we’re going to build software designed specifically for production inputs and invest across the entire value chain.
We also want to broaden our reach when it comes to selling fresh produce. We want to access the lower-LSM groups – the more informal market. That’s why we’re establishing more secondary hubs, particularly in rural areas. This gives farmers an opportunity to market their lower-grade produce.
We’re also busy expanding our export platform. We already facilitate export transactions with 50 countries, and we want to grow that further, with a strong focus on Southeast Asia. India is important to us, and we already have strong partners on other digital platforms who buy fresh produce through our platform and distribute it there.
Our final goal involves data. We process an enormous number of transactions on the platform – both on the input side and the sales side. We can use this data very effectively in two ways. The first is financing. We want to start providing more farmers with financing, especially short-term financing. Bridging finance, especially where a farmer already has potatoes in the ground but gets stuck because he still needs to harvest, pack and send them to market, is something we’ll be focusing on. This financing is based on specific data we have about the farmer, the value chain, market prices, and so on. We’re building strong capabilities to use this data to determine a farmer’s risk and to offer financing that traditional banks aren’t willing to provide or aren’t willing to provide quickly enough.
The second use of data is the ability to predict price movements and give farmers better insight into margins, based on a large dataset we collect across the sector.
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The production-input platform sounds exciting. Is it like a Takealot for farmers?
Our aim is to deliver 100% of our products to a farmer within 24 hours. It’s complicated, though, because unlike Takealot, which can courier a small parcel, these are often large implements or fertiliser. The principles are similar – you log in, choose what you want, add it to your basket and pay.
A big part of digitalisation is making sure it fits the processes of the people we want to serve. Most farmers, for example, ask for a quotation before they buy anything. So we need to build the system in a way that doesn’t differ too much from their normal business practices. It helps that I grew up in the agricultural environment and get the occasional tip from my father! But many of our farmers are real leaders who believe in our vision and go out of their way to help us test new ideas and bring them on board. It’s genuinely wonderful to co-create something with farmers that is relevant to them.
We carry no inventory, but when a farmer orders through us, the supplier is notified to deliver it to our main hub in Gauteng by that evening.
Because farmers deliver fresh produce there every evening, it’s easy for them to load the product they ordered and take it back to the farm. For a farmer in Vryburg, for example, it means a truck arrives at 02:00 to deliver produce and then loads the product, so by morning it is on the farm. If the farmer had to send a bakkie into town to fetch it, he would probably only get it around lunchtime.
In areas where many farmers work with Nile, especially in the north, we use collection points where farmers who deliver to Gauteng and head back with an empty truck can take back a batch of products for farmers in that region on a set day, where it can then be collected or distributed.
We want to give farmers the widest possible variety so they’re not limited to whatever the local co-op has in stock that day. We also operate with very low margins because we want to save farmers money. Margins differ for each category: On fertiliser the saving may be a few percentage points, but on packaging material it can be 20–30%. Considering most farms operate on single-digit profitability – somewhere between 5% and 10% – it makes a big difference if you save 10% on inputs and earn 5% to 10% more on the sales side. Because our cost base and model differ fundamentally from traditional businesses, we can do this sustainably in the long term.
Also read: Harnessing technology for smarter farming
What makes Nile so attractive to investors?
Development banks typically look at whether something is a good investment and whether it has a positive impact on society. We make a difference for the farmers who work through us because they earn more money and gain access to more transparent channels, and food waste is greatly reduced when products are marketed through a direct channel.
Yes, they see hundreds of similar businesses around the world, but I think they’re surprised at the extent to which farmers use our platform – and the different functions it offers. It’s unique globally that farmers actually use the technology and market a large part of their harvest through Nile. For most farmers we work with, we’re their biggest or second-biggest marketing channel. It’s also important for investors to be involved in a sector that is progressing and developing quickly, such as South Africa’s huge agricultural industry, and in businesses that are improving it further and creating opportunities.
What are the main barriers to adopting platforms like yours? Trust? Connectivity? Digital literacy?
Yes, trust is a major factor. We’re blessed that people speak well of our platform and recommend us to others. Most users heard about Nile from a neighbour or someone in their area. The new generation of farmers may be less loyal and more transactional than their predecessors, but they still like to support their usual channels and the same people. So it takes a bit longer when you introduce a new concept and brand like Nile, but if it works well, you get organic growth because they tell others about it.
Connectivity is still a challenge. We cannot wait for Starlink to come to South Africa! Many areas still have poor signal, but there are solutions for low-data environments. WhatsApp integration, for example, is very relevant for us, and we now rarely build software without thinking about how WhatsApp will integrate with it.
Is there a difference in technology-adoption rates between new farmers and older generations? Or between provinces or farm sizes?
On the sales side, where we sell fresh produce, farmers adopt the technology more readily than buyers do, even though farmers have more functions to perform on the system – checking availability, uploading prices, managing logistics and shipping. Naturally, younger people are more likely to use the platform, but people across the entire age spectrum use it. It seems to me that older people are now more comfortable using their phones.
Adoption among larger farmers is almost 100% because they typically have someone in the office who handles marketing functions. We want to see how we can encourage medium-sized and smaller farmers to adopt the technology by creating a simpler interface that requires fewer inputs, and by integrating WhatsApp and existing channels.
All new functions we build on the platform are based on farmer feedback. We are, for example, building free software to help farmers digitalise their packhouses. A medium-sized farmer who needs to pack potatoes in a fairly simple packhouse might need software with minimal functionality, such as tracking packhouse stock and pack-out percentages. Hopefully he will then market part of that product via our platform. Over time, smaller farmers adopt more technology because we build functionality that aligns specifically with their needs.
What excites you about the future of agricultural technology in South Africa? Is there anything that concerns you?
I’m incredibly excited about agricultural technology. It has been around for a long time, but usage has increased exponentially in recent years, whether for cutting costs, improving control, handling procurement functions, ensuring certainty or reducing theft. It feels to me that the farmers who are moving ahead are typically those who are embracing digitalisation. The benefits are tangible on the farms we visit.
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