In Cota, Colombia, a smallholder farmer named Nestor loads a truck with crates of fresh potatoes and plantains. The produce is bound for Corabastos, one of Bogota’s busiest central markets.
As the crates rattle their way from the farm to the city, a slew of middlemen take custody of the goods. A truck driver passes them off to a regional supplier; a warehouse worker sets them alongside other goods bound for Bogota; a new driver steps in to ferry them further down the highway—each will take a cut of the profits from Nestor’s crop.
To accommodate all these intermediaries, the price of Nestor’s plantains will be marked up nearly 45 percent by the time they reach the market. That’s bad news for both end consumers and Nestor, whose narrow profit margins are further squeezed.
Meanwhile, in Barrio Bosa—a low income neighborhood on the edge of Bogota—a small mom-and-pop shop owner named Marlene wakes up at 3 a.m. to travel across the city to Corabastos. She’s made the trek nearly every day for the last 10 years.
Though Marlene spends nearly 20 percent of her weekly income on transportation to and from Corabastos, she has 200 or so regular customers who depend on the produce from her shop. Marlene lacks the financial capital to buy fruits or vegetables in bulk—besides, too much would go to waste. Instead, she’s forced to pay a premium on smaller quantities.
Faced with these financial challenges, Marlene isn’t taking any risks with her business—she purchases only as much produce as she thinks she can sell in a day. Unfortunately, this means higher prices and limited availability of fresh fruits and vegetables for the residents of Barrio Bosa.
Marlene’s financial concerns are shared by over 340,000 small shop owners across Colombia. Serving as the final link in the chain between farms and low-income neighborhoods in the city, these family owned shops sell nearly 70 percent of the food in the region.
When inefficient value chains and inflated costs challenge shop owners’ ability to stock fresh produce, the nutrition of millions of people is put in jeopardy.
This is where Agruppa comes in.
Co-founded by Carolina Medina and Verena Liedgens in 2015, Agruppa is a social startup connecting smallholder farmers with urban neighborhood shops to bring fresh, healthy, and affordable produce to low income communities.
To maximize its impact, Agruppa works directly with shop owners, the gatekeepers of nutrition in their communities.
Shop owners can use mobile phones to place produce orders in an instant. While Agruppa’s mobile platform calculates costs, processes orders, and ultimately delivers fresh produce right to shop owners’ doors, the owners themselves save hundreds of hours of costly travel into Bogota’s central markets.
Agruppa currently delivers fresh produce to over 260 shops in some of Bogota’s most marginalized neighborhoods. With most shops catering to around 50 households—about 200 individuals—Agruppa is providing well over 30,000 people with high quality, low cost fruits and vegetables.
But Agruppa aims to do much more than just benefit end-consumers, says cofounder Carolina Medina, who developed the model for Agruppa with fellow students at the London School of Economics. “With Agruppa, all the actors along the chain can improve their current situation.”
Small business owners like Marlene save time and money on produce and transportation. By aggregating the demand of multiple shops in a given neighborhood, Agruppa can provide vendors with fresher produce at cheaper prices.
“[Shop owners] can save roughly six minimum monthly wages per year,” Medina says. “Considering 89 percent of our shops are the sole income providers for their households, and 40 percent live below the national poverty line, this can be game changing for them.”
Next, by pairing with Agruppa, smallholder farmers like Nestor gain access to a huge city market and improve their cash flow by selling directly to vendors.
While most Colombian farmers struggle to find consistent buyers and often wait as long as 90 days to collect payments on their produce, Agruppa’s partner farmers gain steady customers, are paid better prices and receive payments immediately upon sale.
Even drivers benefit from collaborating with Agruppa. The startup currently employs 21 transportation contractors whose daily deliveries and consistent rates garner them well above market wages.
At the core of Agruppa’s high-impact approach is a commitment to its local partners.
“(Agruppa goes) beyond mere commercial exchange with the farmers that supply us,” says Medina. “(We work) to actually understand their dreams and needs so that (we) can add value and really build a relationship upon trust. We believe this relationship will ensure their sustainability as farmers, while also making Agruppa less prone to market fluctuations.”
Though Agruppa remains focused on its small-scale operations in Bogota, the startup’s commitment to building sustainable relationships provides a solid foundation for maximizing its impact on a larger scale.
In March, Agruppa entered a partnership with the Mercy Corps Social Venture Fund, an investment group providing early-stage financing and support for social enterprises in the developing world.
The fund lead the Seed Round with an investment of $150,000. Yunus Social Business also participated in the round, closing in late-May.
“(The Social Venture Fund’s) seed stage capital and support is a critical missing piece to get enterprises with high potential for impact off the ground,” says Tim Rann, senior advisor at the social venture fund.
Beyond receiving critical financial support, Agruppa will also benefit from access to Mercy Corps Colombia’s expertise in agricultural development and extensive portfolio of regional programs and contacts.
Bolstered by fresh investment, Agruppa is gearing up to expand its network of local partnerships to 850 shops by the end 2017, and to thousands of smallholder farms by 2021.
Within the next year, Agruppa aims to source nearly 1,000 tons of smallholder farm-fresh produce per month—a major step towards fostering economic empowerment and food security in the region.