Fresh

Smallholder farmers are crucial to local food security, but have limited market access, margins, and access to innovations. Those who started working with sustainable agricultural practices have an additional challenge: access to market for sustainable products. Moreover, in a long food supply chain food loss and the use of single use plastic packaging are highly present.

Fresh shortens the value chain by connecting smallholder farmers through its platform, offering them market access (also organic products) at fair prices, and based on data provides them with information to improve their sales and sustainable production. People get access to local, healthy products, and at the same time food loss and use of plastic packaging are being reduced. Demand for local and organic products through ecommerce opens new markets and collaboration can strengthen the position of farmers.

Scaling Fresh worldwide will enable smallholder farmers and provide a local, fair, and sustainable food economy.

Over 220,000 farms in Chile are small-sized, and data from IICA says that 16 million small farmers have a lower productivity with COVID, which technology like Fresh could solve. 

In Chile and worldwide, smallholder farmers are crucial for local food security but also face several issues:

• Limited access to commercial channels, dependency on intermediaries and low margins. Also limited commercial skills and knowledge that enable them to optimize yield and sales.

• Increasing climate challenges (drought, water scarcity, desertification), which is a larger issue for smallholder farmers that have very limited access to innovations and technology. 

• Access to the organic market is an additional challenge, as certification is expensive and selling products at added value is hard.

• The long value chain with many intermediaries causes food loss (~40% is lost in the value chain), use of single-use plastics (up to 80% use plastic packaging), and CO2 emissions due to transport and packaging.

• Logistics to connect smallholder farmers with consumers sustainably is a big issue. People in cities are used to the immediate availability of products at low prices, whilst sourcing smallholder farmers in the fields work with seasonality. Combining these two and scaling requires technology.

With Fresh, we shorten the value chain between farmers, and consumers and businesses (restaurants) through our impact-driven e-commerce. It is a digital platform connecting small and medium-sized farmers with end consumers in cities, selling their products through the www.freshapp.cl platform. With Fresh we do the marketing (mainly digital through social networks @freshapp.cl) and logistics. Only products that have been sold are harvested. We inform farmers about the sales, they harvest, and we collect the products in their fields the next day. Then we take the products to our logistics center and there we put the orders for the customers, to finally make the last mile delivery.

Fresh provides smallholder farmers with market access and fair treatment, eliminates food loss and plastic waste, and provides customers with fresh, local and organic produce.

The next step is to expand our platform and include back-end processes that optimize logistics and processes with the farmers, through an app that enables them to onboard and upload products/prices themselves and communicate with us. Furthermore, we aim to develop algorithms that use supply and demand data to optimize farmers’ sales and yield, by providing them with reports of future consumption/market price estimates.

The focus is on small and medium-sized farmers in Chile. We built a relationship with multiple important stakeholders. As of the start we are working closely together with the INDAP PRODESAL (Instituto de Desarrollo Agropecuario - Programa de Desarrollo Local) as their goal is to support smallholder farmers. Now we're working closely with ten farmers in Santiago. They are very important for us, as we are developing our solution together with them. They tell us about their challenges and needs. Based on that we offer them a solution: access to the market, channel diversification, disconnect from traditional channels like supermarkets (often with strict rules and low margins), produce more sustainably, partner with other farmers, and improve their agriculture and commercial position with data.

In our next step, expanding our platform, we will collaborate closely as well with the farmers to make sure the platform adds value and is designed with UX for them.

Our ambition is to expand to other countries in the region. In Latin America and the Caribbean, there are many smallholder farmers, more than 16 million, that take up 80 - 90% of the total agricultural companies (Sotomayor and Namdar-Irani, 2016).

Long value chains are extremely inefficient and smallholder farmers are crucial for local food security. Fresh creates a short, local supply chain by directly connecting smallholder farmers to customers within 100km distance. Farmers harvest products that have been sold, and Fresh delivers in maximum 12 hours after harvest. This way Fresh limits 1) food loss, 2) CO2 emissions through limited transport, packaging and storage, 3) need for packaging. Fresh provides people with healthy products and farmers with fair trade. Moreover, the data generated is used to provide smallholder farmers with advice to improve their commercialization and sustainable production.

Chile has many digital platforms that offer fruit and vegetable delivery, but before Fresh none doing logistics from farm to fork in a scalable way. Other delivery services are tapping into the existing supply chain rather than shortening it. Some of these online deliveries are Vasma, La Frutología, La Feria Delivery, Gazpacho, and Verdulivery. Another type of competitors are traditional supermarkets that offer delivery like: Jumbo, Lider (Walmart Chile), and Cornershop. Using technology to facilitate local farm to fork initiatives is a very strong trend in the US and Europe, but has not yet taken hold in Chile even though it is key to ensuring our food security. Fresh is also developing a scalable model to grow the number of farmers and customers, so that the impact on both sides grows rapidly, and therefore create more income for farmers as well as more jobs in the food and beverage industry. Our platform and our logistics process are key in this. That is why we will further develop our own back end to maintain coordination and communication with farmers, and optimise the process from planting the crops to logistics between farmers and customers. This system will be designed with and for farmers, in a way that farmer onboarding and management is scalable using a common tool for them, smartphones. Finally we are implementing a logistics system that optimizes first mile logistics from farmers, also respecting the cold chain and sanitization prior to dispatches, so that we ensure healthy and sanitized food.

The customer facing e-commerce that is an integral part of Fresh is currently up and running and has already expanded the market for smallholder farmers around Santiago. This e-commerce will be complemented with a platform that farmers can use to better align their production with the market, thereby avoiding food loss and generating more revenue. The platform consists of a database accompanied by easy to use methods for entering and accessing data in the forms of mobile and web apps. At the moment, the technology that Fresh already uses is Wordpress and WooCommerce for its e-commerce, and Whatsapp for its interaction with farmers. These choices were made because the ubiquity of WhatsApp allows for a low barrier to entry, while the open-source nature and availability of APIs of WooCommerce will allow for easy integration with our database. The final integration of our systems will allow farmers to manage their stock, prices, invoices, pictures, and general communication with Fresh´s platform. Big data and machine learning algorithms will be used to make optimal use of the information generated by the farmers and consumers, so that farmers can receive recommendations and reports on what to plant and when, therefore improving their position and optimizing food loss in the system. All of this being done from a smartphone, which in Chile is very common everywhere, also among farmers.

The use of an app for farmers to interact with Fresh is a very simple technology that is used by many platforms (e.g. Airbnb for properties, Amazon for products, etc.). The combination with whatsapp is making the technology even more accessible in a country where this app is ubiquitous. These user friendly technologies are crucial in order to create an easy to use platform for farmers, who in general are not very tech oriented, specifically in Chile. And although younger generations of farmers are, we are developing an easy to use interface that can be controlled by anyone from a smartphone, which is very common in Chile and Worldwide. Chile is leading smartphone use in Latin America, in 2019 there were more mobile phones (20 million approximately) than the country population (18 million approximately).

The innovative part of our proposition is the linkage of these simple interfaces for interaction with an extensive data analysis framework that will serve crucial information to help them optimise their farming methods and sales to the farmers. This combination of easily accessible interfaces with big data and machine learning algorithms for supply and demand forecasts is being used widely by many startups and established companies worldwide.

Our main activities are to directly connect smallholder farmers and customers through our e-commerce. Fresh executes local supply chains in a fair and sustainable way. This also includes marketing and communication about the advantages of a local food economy, fair trade, sustainability and eating healthy. At the same time Fresh will gather commercial data and best practices for sustainable agriculture.

As output smallholder farmers have direct access to a new market, and companies (like restaurants) and consumers access to local, fresh, organic produce at their house. Farmers will also have access to data and advice.

As an outcome immediately a local supply chain has been established in Region Metropolitana in Chile, which is fairer and more sustainable as well: less food loss, less packaging is needed to conserve products, CO2 emissions are lower due to less transport, packaging and storage, farmers receive a better price and can sell a higher volume. Smallholder farmers have been enabled to play a direct role in the food economy. Moreover, the farmers and consumers that use Fresh or follow Fresh’ channels become more aware: of the existence of each other, availability of local, healthy products, where products come from, etcetera.

On the long-term local food economies are the new normal in Latin America. People and farmers feel connected.  People are aware that farmers have grown their food, which products are in season and where their farmers live. They love to eat healthy food from their farmers. Vegetables and fruits are not packaged anymore and food loss is reduced to <5%. Smallholder farmers are proudly providing food security and receive a fair income. This income, in combination with the data and advice that they receive, enables them to make their processes and production more sustainable and commercially viable.

Currently we actively collaborate with 10 smallholder farmers close to the city of Santiago, who now have direct access to the market, receive a fair price for their products and are able to sell their organic produce as such (which has been an issue before). Through our e-commerce we provide over 100 families in Santiago access to healthy, local produce in 6 municipalities. Fortunately people's interest in local, fair, and organic produce is growing. Our groups of consumers include families, conscious consumers, and a growing group of people who like the convenience of ordering online. We also serve 3 business customers, like restaurants and a foundation which provides meals to people in need. This segment could be a lot bigger as we validated growing interest in local, organic, high quality produce, but due to COVID-19 this segment is currently reduced. 

Within a year we will provide a commercial channel to over 100 smallholder farmers in the surroundings of Santiago, and selling to over 1.000 families and 10 business customers in the whole city of Santiago. In 5 years, we will be serving over 10.000 smallholder farmers, and selling to over 1.000.000 people and 500 business customers around Chile including Viña, Concepción and Antofagasta.

After scaling in and around Santiago, our next step is to expand to other cities of Chile, and then the rest of the region (Peru, Colombia, Brasil, and Mexico). Our focus is on large cities in Latin America, surrounded by agricultural areas.

Fresh aims to create a new normal: local food economies in which everyone gets a fair share, which is environmentally friendly with sustainable agricultural practices, less food waste, packaging and transport, and provides people with healthy food.

Firstly, this will impact the lives of farmers. Over 10.000 farmers in 5 years:

1) have direct access to the (organic) market, diversification of their channels, and fair conditions, 2) have an increase of income of 20% because of higher prices for their products and reduced food loss, 3) get paid within a week instead of 30-60 days, 4) receive valuable data-based information to optimize their commercialization and sustainable production.

We reach this impact through our current e-commerce solution, and by developing the platform to provide farmers with valuable information and advice based on data and best practices. We start in Santiago but aim to expand within Chile and other countries in the region (Latin America and Caribbean) as well by replicating our solution. To facilitate this, we are building our model in a scalable way.

Secondly, by drastically shortening the chain and creating transparency in the value chain, the environment is being impacted positively through decreased food loss from 40% to 0-5%, more than 5 tons less food packaging per year, and 70% less CO2 due to less transport, storage and packaging. 

Thirdly, through our e-commerce, over 1 million people will have access to healthy products in 5 years, as Fresh produce from farmers are made available at a fair price.

1.Market barrier: Due to COVID-19 e-commerce has been growing rapidly. On the one hand this is an opportunity and on the other hand it has rapidly increased competition. Companies, such as neighborhood grocery stores, which before did not offer online purchases and delivery services, now do. Although there is a very large market in Chile and worldwide in the B2C and B2B fruit and vegetable deliveries, it has become more challenging to differentiate. The proposition we offer is different from the local competitors, as we work with local farmers, provide fair trade and offer organic produce, but for consumers all options are overwhelming. We expect e-commerce to remain a bigger segment and as such this barrier will remain in the coming years.

2.Financial barrier: In this complicated time, it has been difficult to find funding. We have managed to grow in a very lean start-up way, due to which we have been able to validate our model and have started impacting farmers, the environment and consumers. However, to grow and scale our operations a bigger investment is needed. We expect this barrier to remain in the coming 5 years, when we want to replicate to other cities and countries.

3.Technical barrier: The lack of technological skills that farmers have, and that could make it harder to implement our back-end development with farmers.

4.Legal barrier: It is difficult for smallholder farmers to receive certificates for their produce, like organic certification, as these processes are expensive and complicated.

1.Our proposition has certain elements that distinct us from competition. We offer local products, fair trade, and high quality and organic produce, and a growing interest for these products will make our proposition superior to our competitors. In our communication and marketing, we inform clients about our farmers, the way they produce and their advantages. We also focus on offering prime customer service, high quality products and a convenient solution. Financial resources could provide the opportunity to spread our message faster.

2.We applied for multiple subsidies and funds, and are in touch with impact investors. Their feedback also helps to become investment ready. However, a grant or subsidy would fit better with our current needs. In that sense the funding MIT could give us would solve that issue.

3. Technology in farming is growing with new generations. To make sure our solution will be used, we are developing the solution together with and for our farmers. In that way we can make choices that fit their needs. For instance, Whatsapp is a channel that works very well for them, and all have smartphones. Also being able to sell through Fresh creates a big incentive to learn and make use of our technology. Having our international expansion in mind, it would be interesting to share experiences with the Solve community.

4. Sebastian Morales, who is part of our team has experience in organic certification, as he is part of a Chilean cooperative of smallholder farmers that autocertificate their organic produce.

Our team core team consists of 2 full time members: Nils Lindeen leading Fresh, and Luuk Gremmen leading operations and platform development. Also we have 2 part time members: Dieuwertje Nelissen developing the business model and partnerships, and Sebastián Morales supporting farmers growth. Furthermore, transport between farm and city is done by a contractor, and the operational part of Fresh has two workers (Daniel Castillo and Diego Arias) for order building and last mile delivery. Extra hands are sought based on the amount of orders. Lastly we have two interns: Valentina Sepúlveda and Tomás Prieto, supporting customer service and marketing.

1.Our impact-driven team has extensive expertise in setting up (impact) businesses. For instance, Nils set up his own NGO and healthy food restaurant, Dieuwertje scaled a marketplace for solar energy, Luuk is experienced in building platforms and started his own healthy food company, and Sebastian is an expert in working with smallholder farmers and certification for organic production. The team is complementary and has a perfect mix of expertise for our business, including marketing, working with smallholder farmers, food business, logistics, IT/APP and scaling platform-based businesses.

2. Within Chile and Latin America, we have solid networks that will allow us to find the right partners. In Chile we are for instance closely working with INDAP, the organization of the Ministry of Agriculture that supports small farmers. Also have great networks in the local impact investment community.

3.Chile and Latin America are going through complex social issues. Solutions that improve equality are therefore very welcome. With our team we understand the local situation and provide a suitable solution with Fresh.

4.Fresh is founded by Enviu venture builders. We use the proven methodology of Enviu, used to already build  over 20 companies, with a success factor of more than 80%. We use Lean Start-Up: quickly testing and pivoting to grow a solution that fits market demand. Moreover, we have experience in scaling businesses: replicating what can be used directly, whilst adjusting the precise solution to the local context.

Fresh is currently working with three groups of partners:

1. Governmental partners such as INDAP, the organization of the Ministry of Agriculture that supports small farmers.

2. Non Governmental partners such as OPOC, a collective of organically certified farmers in and around Curacaví.

3. International partners based on our involvement in the Enviu Venture Building Studio, which gives us access to advisors from diverse backgrounds and experience worldwide. 

With the local partners (INDAP and OPOC) our current work mainly boils down to growing our network of producers and defining the best ways in which to partner with individual farmers. We do not have a formal agreement signed with them, but collaborate informally considering it is a win-win relationship, as we solve problems they seek to solve as organizations. In the future we are looking to expand these partnerships and leverage their experience and our data, and access to the market to improve the production, and therefore income of the farmers.

The international partners meet once a month to exchange experiences and share know-how on how to implement new ideas.

The business model is based on customer purchases, connecting with small farmers so they can sell directly to customers through the freshapp.cl platform. Fresh provides the opportunity to brand products: it informs about the farmer and the characteristics of the products, such as organic. The farmers determine their prices, over which Fresh has a 40-50% margin approximately  to cover the operational, marketing and logistics costs offered. Fresh is transparent about this fee to farmers, and as the value chain is shortened and many intermediaries are eliminated, the margin "freed" is enough for profitability, while offering fair prices and payments, for both farmers and customers. 

Fresh is able to deliver more value to consumers without being more expensive than the competition. We are not the cheapest in the market, but all products are cheaper or comparable to our direct competition, including other fruit and vegetable delivery services, supermarkets, and greengrocers. For high-quality, organic products we are cheap, this business model also provides an opportunity to support farmers in other ways. Overall we provide healthy, sustainable and fresh produce for clients at accessible prices, through a user friendly platform and prime customer service.

Fresh delivers with a focus on consumers, starting in Santiago, and aiming to serve more than 1.000 homes in a year. We also have restaurants and companies as clients, and although COVID-19 impacts that group, we still have restaurants as clients and these will grow again when the situation improves. Other potential clients are schools and universities.

There are two barriers in which we believe MIT Solve could provide a solution. One is fundraising, as a lack of funds is our main barrier for scaling our solution and our impact. Secondly, one of the big challenges is that smallholder farmers have a relatively low adoption rate for using digital solutions. We solve this in Chile to develop together with our farmers. However, having our international ambition in mind, it would be very interesting to learn from experiences all over Latin America. Apart from the barriers, we are interested in learning more about best practices for sustainable agriculture and the use of big data for optimizing agriculture and believe that the expertise of the Solve community is very valid to optimize our business model, especially for international expansion.

Solution technology support will be useful to further develop a back end platform that fits with farmers needs and also generates a proper input for our e-commerce. Also funding is crucial for our next steps of growth and scalability, as we have managed up until now with no major investments, and are needing to improve our infrastructure (physical and technological) to attain our next objectives. Finally marketing, media and exposure are crucial to continue our client and sales growth in the B2C and B2B markets of the food business, so that our platform reaches more people in Chile and Latin America.

It would be very interesting to exchange experiences with partners in the Solve community who are also working with farmers and the use of big data and technology to improve agricultural practices, or even partners that have developed similar solutions for other industries that could be adapted to ours. We already have a platform but are also planning to expand it and include more features for the farmers. We are also open for joint ventures with parties that already developed solutions for this, and sharing learnings from experiences we have gathered in the agricultural business in Chile.

For the moment Fresh is not using AI, but our next back end development is intended to be an app where farmers can interact independently with our platform, uploading products, prices, production plans, planting surfaces, among other technical data on their production. Also the complete logistical farm to table tracing of products would require the use of AI to optimize transport. 

All this combined with the information we are gathering from clients that buy in our e-commerce, will allow us to cross supply and demand information in the fruit and vegetable industry. Which is also supported by big data algorithms and AI in the processing of the data generated,  and will allow us to optimize farmer decisions on what and when to produce, harvest and sell, improving their economical situation, food security and reducing food waste in the system. Also this would be supported by a user friendly platform for farmers, that can be accessed from a regular smartphone, and therefore allowing us to elaborate estimations and reports for them.

The AI Humanity Prize would allow us to further invest in the platform development, farmer training and IoT hardware investments for farmers and transportation vehicles.