Sumá

More than 50% of the fruits and vegetables produced in Latam are wasted or lost along different stages of the supply chain. At the same time, we live in a world where 13% of the people are suffering hunger and 30% suffering malnutrition. In addition to, the prevalence of stunting globally fell from 29.5 percent to 22.9 percent between 2005 and 2016, although 155 million children under five years of age across the world still suffer from stunted growth (FAO, 2017), mainly concentrated in emerging markets and low-income areas. Thus, the current food value chain isn't delivering equity in accessibility and affordability to all the population.

Sumá is building a new food supply chain with small farmers and low-income consumers to reduce food deserts and malnutrition in the end beneficiary through a financially sustainable food access model based on a cost-effective F&V subscription focused on low-income consumers.

Behind the scenes, the fresh food chains are composed of activities that are necessary to bring farm products to end consumers (DHL, 2018; Gómez & Ricketts, 2013). Thus, the availability of fresh food for the end consumer in distressed areas is highly influenced by each one of the links in the food supply chain (FAO, 2013). At the other hand, many interventions to solve the “food desert” problem did not succeed to increase the purchase of healthy products, leading researchers to propose that affordability plays a key role in the decision of food purchases for low-income segments of the population (Wright et al., 2016). 

Within this context, we realized that linking the points in the value chain of local agriculture, making production more profitable, farmers would be encouraged to stay on their land and even expand production. Therefore, the main underlying hypothesis is that the current configuration of fresh chains that reach the bottom of the pyramid (BoP) in urban cities, particularly the most needed on in low-income areas, does not allow for availability and affordability, thus creating conditions that damage the early childhood development for children under the age of five and population’s well-being.

Our experience with small farmers shows that most of them don't know how to calculate their costs of production, even if they produce the best "tomato" of the season. Anderson, for example, is a 22 years old family farmer from a small city called Rio do Sul in south of Brazil. Anderson receive's BRL 0,32  per kilo or US$ 0.08 of cabbage sold. We, as consumers, paid BRL 5,00 per kilo or US$ 1.30 for the same cabbage in the supermarkets. This huge overprice is paid by consumers and doesn't go to the farmer. 

On the other side we found Ana, she is a 25-year-old single mother with three children who does temporary jobs to manage to support the house. Ana lives in a poorest community that does not have a regular business due to the low income of the consumers who live there.

We interview more than 500 small farmers and 300 low-income consumers to design a alternative fresh fruit and vegetables supply chain that connect them in their most crucials needs: struggling with food waste and poor nutrition, respectively. Tailoring the fresh food supply chain targeting malnutrition in low-income population directly from family farmers.

We identify small farmers in partnership with rural support institutions and teach them through face-to-face visits and text messages (SMS and WhatsApp) with a focus on how to calculate costs and sell products more fairly. At the same time, we defined low-income population areas based on City Council data. This evidence helping us develop a clear picture of which communities are nutritionally vulnerable regarding less fruit and vegetables offering such as: limited variety, limited accessibility, low availability and questionable quality. Next, together with the Center of Family Health Support (e.g. City Council Secretary) we identified the eating habits and consumer behaviour through a structured questionnaire in those pre-determined locations. Based on this consumer behaviour understanding we design a ideal fresh food basket per kilo  to offer in relation to production cost, farmers aptitude, product seasonality, consumer nutrition needs and delivery frequency for low-income families. Following we offer to the low-income customers, based on their attributes and willingness to adopt,  an alternative subscription fresh food supply chain model in pre-sold baskets providing accessibility, variety, freshness, availability, price, quality and order lead time. In addition to we invert the traditional push channel into a pull inventory supply chain, reducing all product loss. The operationalization and delivery process is carried out based on the existing routes already made by the government school feeding programme once its possible optimize fleet capacity and achieve energy savings regarding footprint. Thus, to reduce carbon emissions and operation costs, basket pickup points were settle at the schools themselves and either in nanostores that complement their product portfolio with the fruits and vegetables from the baskets. The nanostores play an important role in low-income communities as the only choice in offering product, being conveniently located near to residential areas. The payment of the baskets is done by cash at first, but prepaid credit technologies are being studied. The packaging of the baskets are returnable and delivered at the same pickup point in a provided standard plastic box. Small farmers receive fair prices for their products, low-income families have access to balanced, fresh fruits and vegetables, thus creating a new supply and consumption chain to the based of pyramid consumers.

The prototype consists of a more efficient process than the existing solutions and whose value is generated for an audience that previously had no access.

The traditional food supply chain prioritizes high inventory levels to meet the changing and uncertain demand of consumer markets with medium and high incomes. This complex structure with many losses do not consider the base of pyramid as a viable market. A new food distribution model that guarantees end-to-end stability with a spillover of impacts on the economic system, such as disease reduction due to healthy eating habits, allows innovation not only in the teaching of farmers for direct sale to these new markets, but also in last mile deliveries in low-income locations. 

We search for impact on the base of the pyramid market at the same time create new sources of supply fresh food, creating value by support local farms in order to connect them to alleviate poverty in the most needed communities where fruits and vegetable are hard to access. 

The current food supply chain is mostly inventory-pushed with significant price gaps between farmers and end consumers and generates a lot of food loss and food waste that could be used to feed a lot of people whether built a financially sustainable food new access model linked to low-income population in creating knowledge by education them (farmers and low-income families), engaging the communities to be part of the process and evolving partners (enterprises, institutions and governments) in a co-creation process.

In the first stage of the prototype we work with the teaching of commercial skills to farmers through widely distributed technologies such as SMS to locations with difficult access to the internet and WhatsApp for regions with available signal. The data collected are registered in a prototype platform through mobile access, developed by the project team. The study with the poorest communities was carried out with a structured questionnaire and with its approval the codification for the same platform is being studied to reduce the time analysis and the construction of the information matrix to deeper understand base of pyramid fresh food system and consumers behaviour. The design of the supply chain was based on alternative distribution channels defined to reduce food waste and food insecurity in low-income areas. On the consumer market side we used statistical methodology and analysis as following: descriptive analysis, factor analysis, clustering consumer profiles and structural equation model to design poverty-related consumer attributes. On the supply side, we used software to analyze supply chain scenarios, such as AnyLogic, and after deploying the first framework, these guidelines will also be combined in the same platform with a unique focus on supplying fresh fruits and vegetables. The roadmap for developing the features to the platform contains chatbots for onboarding information from the farmers and low-income families, allowing big data analysis from the base of the pyramid, besides blockchain for tracking the deliveries and the payments.

The solution is based in the premises that more than half of the fruits and vegetables produced in Latin America are wasted or lost along different stages of the supply chain and at the same time there is people suffering food insecurity and living in food deserts (FAO, 2011). Our prototype is simpler, cheaper than what already exists, and something capable of serving an audience that previously had no access to what it is propose. The results of the prototype implantation show that among families with a income lower than BRL 500.00 per month, less than US$ 130, there is a 97% predisposition to purchase a basket of fresh fruit and vegetables directly from small farmers. The same audience is able to pick up the baskets in the nanostores of their neighbourhoods. Furthermore, willingness to adopt is driven by affordable fruit and vegetables alternatives, convenient pickup locations and willingness to adapt family’s diet with nutritional food. Data from the field (interview passages in some low-income families) reinforce the market problem: “...I have less than US$5 this week to buy F&V, I won’t be able to get enough produce for my family.” .

This results shows that in short term we can provide access to health food to families with affordable prices, building a exclusive zero emissions supply chain for the base of the pyramide. In long term we expect to have ripple effects in reduce of diseases and in the pression on the public health care system.

Currently, the pilot model is selling 200 monthly baskets, with families having an average of 4 members, one being a child. So we're having a direct impact in 200 children. For fruits and vegetables production we are working with a group of 10 small farmers. The solution impacts directly about 840 people. 

In one year our goal is reach the 90 municipalities with the highest malnutrition levels in Brazil with 41.452 children under five years old with défict of height or weight per age. In five years we aim to achieve the next rate with more 500 municipalities and 102.947 children. 

Our goals are aligned with the Mapping of Food and Nutrition Insecurity with Focus on Malnutrition study prepared by the Brazilian Interministerial Chamber of Food Security and Nutrition (2017). 

Food insecurity has negative impacts on the academic performance of children and is associated with behavioral problems. For children, the lack of reliable access to food is more evident and can lead to anxiety, stress, depression, interpersonal tensions, and the alienation that comes with the social stigma. Next, a vicious cycle of food insecurity, wherein social isolation in the distressed urban areas with very limited access to healthy food can lead to depression and stress, as well as poor health and poor cognitive development, all impede people from reaching their full potential, with possible negative consequences for earning capacity and access to food.

Our primary goals for the next year is scale the solution for another localities. For this purpose we have a range of actions in several areas.

The first of them is technology. We validated with the small farmers that device they use in their routine are smartphones with low capacity, the ones that have access to the internet signal. Thus they prefer a responsive web page for that matter. The onboarding data from the small farmers can be done by SMS too, but we need to improve the automation of this processes with more advanced chatbots and AI. The traceability system of the routes and the deliveries are done through barcode a widespread technology, however we intent to implement blockchain for this process for the replication of the service. In regards the engage of the low income communities specially the families with children in early childhood, the main purpose is provide access to fresh and affordable fruits and vegetables aligned with their eating habits, local culture.  For expand our actions we need improve our local actions with a omnichannel platform that speaks with this audience including a scaleup solution for the payment method, prepaid card at first.

In five years our main goal is have a historical analysis of impact in improve nutrition in early childhood through a simple and smarter food supply chain based in small farmers and nanostores of low incomes communities. 

As a startup Sumá has a limited budget to carry out the development of new features. Thus we make cheap and quick tests of new approaches and evaluated the results achieved to verify the necessary investment and sustainability of the same. We are raising capital for the startup business model that is fairer trading channels for small farmers but there are a time gap between the entrance of the investment and the release of the solution in the market. Besides that we have some operational challenges like low or nonexistent internet signal in rural areas, high rates of robbery of delivery trucks in low income communities, lack of knowledge about handling fresh fruits and vegetables associated with unhealthy eating habits.

Financial challenge: the delivery of the baskets is made directly from the small farmers to the pickup points (schools and nano-stores) and the low income families pay directly to the nano-store owner or responsible at school. This operation is financially viable. Each basket cost about BRL 30,00 or US$ 7.00, 60% goes for the small farmers, 20% for the logistics, 5% for the schools or nanos-stores and 15% for Sumá. We designed a project with the City Councils for scaleup faster the solution in partner with the locals health centers. We already have 5 City Councils partnered for replication the solution.

Internet signal: If the area has internet signal we work mainly with WhatsApp and our web platform. If the area does not have internet signal we work with SMS and a wider in loco visits panorama.

Robbery in the delivery routes: several studies about last mile delivery in "favelas" shows that needs to be a clear communication between all the stakeholders of the community including those attached to illicit activities about the purpose of the solution. Define rotating pickup points and delivery routes are also a safe way.

Unhealthy eating habits: once we provide access to fresh and affordable fruits and vegetables we notice that many families does not know how to cook the items and this was promoting food waste. For that barrier we are working with nudge theory and behavioral science through trails of knowledge by SMS and WhatsApp messages. 

Full-time - 01 Agronomist, 01 Environmental Engineer, 01 Agricultural Technician

Part-time - 02 Business Administration

Contractor - 01 Supply Chain Expert

Volunteers - 03 Nutrionists, 01 Full Stack Developer, 01 UX Developer, 01 Fulfillment Expert.

The founders have a singular relationship with small farmers. Daiana, one of the founders is granddaughter of farmers in the south of Brazil. They had to leave their land due to the lack of fair opportunities for their products. Alexandre is Agronomist and always questioned the regular food system and the inexistent balance between waste and malnutrition. Developing channels for more fair trades to small farmers, Daiana e Alexandre gathered a team with similar purpose and enthusiastic research skills that start to pool together this great puzzle that is the food deserts and malnutrition in early childhood in Latin American. Our team has more than twenty years of experience with family farming in developing countries, mores than ten years in supply chain and in the last three years we're working on delivering our skills in the format of a solution to improve the health of low-income families, specially children under five.

Sumá currently has two groups of partners for the model piloting:

City Council of Rio Grande, State of Rio Grande do Sul, Brazil - is the first city that the pilot it is been implemented with volunteers of the Public Support Center for Family Health.

Food and Retail Operations Lab - MIT Center for Transportation and Logistics - the academic instance where all the data gathered in the pilot is analyse for improve public politics in Latin American regards food waste and malnutrition challenges.

We provide training in commercial skills and rural business for the small farmers and help them sell their products as baskets to low-income families that we engaged previously through visits and partnership with public health centers of the City Councils. Our revenue comes from a fee of 15% on the price of the farmers products. Sumá eliminates several middleman between the farmer and the communities, in the last months we achieved prices 7% cheapest for clients such as restaurants and the farmers earned 35% more compared if they sold their products for a middleman. The impact for the low-income families are higher because in general they didn't have access a those fresh products or if they did they couldn't buy because of the price. So we made a reverse engineering for defining the budget of the family for allowing to buy the basket. We've reached a biweekly basket in a unitary cost of BRL 30,00 or about US$ 7.00. 

Looking to be a impact enterprise we intend to following the three stages in our business model:

1.  Envision Stage: Co-create - access mutual value creation (craft solutions with base of pyramid and find the positive)

2. Pilot Stage: Innovate - ensure mutual value creation (orchestrate effective experiments and address market creation)

3 Expand Stage: Embed - enhance mutual value creation (generate integration-based competitive advantage and build social embeddedness)

We seek the path to financial sustainability through scaleup the solution in a Market Intermediary Model focusing on Low-Income Clients. The revenue is used to finance the business operating expenses and to cover program costs of rendering product development, marketing and credit services to the farmers. We envision the solution as exponential because from the moment that the alternative chain value is set we can automate routine activities and deliver other products or services that can enhance the impacts, like healthcare (diabetes tests).

Our dream is that rural families live in a dignified way and we believe that their crops can change lives. Low-income families may pay up to 30% more for products and services than middle income consumers due to a system that does not considers build a chain of value for this consumers. In each of the families of our prototype there is a child that needs health eating habits, fresh fruits and vegetables and most of all, get to know what are the products that the land naturally gives in our country e not in the factories. We believe that Solve can bring us bright e new ideas from mentors of all the world for our challenges to scaleup this solution. We believe that is necessary a radical shift in the food system and we need the help of all the Solvers that can contribute with time, thoughts, funds for a more transparent e fair food chain value.

FAO - Food and Agriculture Organization of the United Nations - We believe that our goals are very aligned with FAOs work in rethink food systems and value the small farmers. We seek to be part of FAO's network as one of the solutions that helps to achieve the Global Goals, specially #2 Zero Hunger.

Bill & Melinda Gates Foundation - Our work in Latam is related with the mission of the Foundation to ensure that all women and children have the nutrition they need to live healthy and productive lives. We think that the experience the Foundation has would be amazing for enhanced our combined solution.

For easily collect the data that brings together a new offer to low-income customers, based on their attributes and willingness to adopt,  such as an alternative subscription fresh food supply chain model in pre-sold baskets providing accessibility, variety, freshness, availability, price, quality and order lead time, we need to tailor made bots for this specific audience. In Africa there are many technologies advancing in this way, therefore in Latam we need to value our small farmers and focus on developing this technologies as well to form a database of pyramid producers and consumers.

Our solution is focused delivering fresh fruits and vegetables for low-income families. In Latam we have young women as family leaders and they are our first target to change the unhealthy eating habits that are inherent to food deserts localities. We believe strongly that the project can change in long terms epidemic situations like obesity and malnutrition diseases in early childhood.

For easily collect the data that brings together a new offer to low-income customers, based on their attributes and willingness to adopt,  such as an alternative subscription fresh food supply chain model in pre-sold baskets providing accessibility, variety, freshness, availability, price, quality and order lead time, we need to tailor made bots for this specific audience. In Africa there are many technologies advancing in this way, therefore in Latam we need to value our small farmers and focus on developing this technologies as well to form a database of pyramid producers and consumers.