For Egypt, agriculture is one of its most critical sectors, accounting for more than 11% of its gross domestic product (GDP) and 28% of all jobs in the country. Yet despite its importance, the sector suffers from a long and complex supply chain that results in low food availability, high rates of food waste as well as inflated consumer prices.
A 2020 study published by the Egyptian Center for Economic Studies (ECES) showed that the final retail price of fresh produce sold to consumers is twice as high as the original price of produce initially sold to the farmer. This is mainly due to inefficient logistics, forcing retailers to raise prices to compensate for the money spent on transportation and inventory management processes.
The agricultural sector is one of the latest industries to integrate technology into its operations and has recently become the target of several tech startups looking to disrupt its largely traditional supply chain. FreshSource in Egypt, is a startup that seeks to solve the problem of food loss by enabling farmers to connect directly with businesses without the involvement of third parties or commercial intermediaries. The startup was co-founded by brother duo Farah Emara and Omar Emara in 2018 and has been operational since early 2019 and just raised a seven-figure seed round led by Wamda and 4DX.
“I think agritech in general continues to gain momentum around the world, and we have seen a lot of progress in the industry over the past few years. I think Egypt will continue to establish itself as the one of the world’s pioneers in agriculture. I believe the reason it has been overlooked is that it is an extremely difficult and complicated area. Working with perishable goods with dynamic prices makes it difficult to our cold chain expertise built on three decades of family business experience has given us a strong foothold in the industry and a strategic advantage,” says Omar Emara, co- founder of FreshSource.
According to the Food and Agriculture Organization of the United Nations (FAO), approximately 45% of agricultural production ends up in landfills due to poor management of cold chain infrastructure.
“It shocked us to know that nearly half of fresh produce hits the shelves. The consumer pays an incredibly high price to make up for this loss,” she says. “We started to research and found that it happens due to certain harvesting processes, storage and transportation methods as well as poor packaging. There are materials that are not really meant to be used.
To help solve the problem of food loss at its heart, the startup aims to meet the needs of farmers throughout the stages of agricultural production, having witnessed firsthand the challenges faced by farmers during and after the harvesting stages.
FreshSource offers medium to large scale farmers the opportunity to enter into contract farming, allowing them to have adequate access to finance as well as agricultural inputs. At harvest time, FreshSource purchases fresh produce directly from farmers and delivers it to businesses such as restaurants and hotels, as well as digital grocery ordering marketplaces. The startup also provides end-to-end last mile connectivity for further enhanced logistics and storage services.
By directly connecting farmers to vendors and businesses, the startup claims to help farmers reduce the rate of food loss by 20%. This is in addition to ensuring that farmers and businesses get the best deals and thus maximize their income.
Its latest round of funding will be used to expand its operations across Egypt and serve more farming communities.
“We plan to use the funds to expand our team and further invest in our technology. Additionally, we will cover all Egyptian governorates by the end of 2023. By 2024, we will start considering a plan to global expansion,” adds Farah.
For FreshSource, creating a product that can be scalable and easily accessible by farmers and businesses has been the biggest challenge. Farah explains that they have faced reluctance from its users who refuse to completely move away from pen and paper.
“At first, we only used WhatsApp and phones to interact with users. People would leave us a missed call, we could call them back so they didn’t have to pay anything. And then we started introducing different means of payment. methods for them to receive their salary and also other means for them to communicate with us. And this is how we will continue to deploy our technology, in progressive phases,” she says.
For Omar, being one of the first agtech startups to tackle food loss carries “a great responsibility to prove that the agriculture industry is ready to be disrupted. It has incredible potential as one of the biggest industries in Egypt and the region. We will continue to innovate and work for our mission.”