BEFORE fresh fruits and vegetables can find their way to our plate, they would have travelled and passed up to seven middlemen from the farms. This sad reality prompted financial technology (fintech) start-up Agrabah Ventures Inc. to develop online platforms that can solve these market access woes.
“Farmers and fisherfolk are among the poorest sectors but they are the ones growing our food. We choose to support them through technology to make the value chain more efficient, to have a stable market channel and access to finance,” said Agrabah co-founder and CEO Joselito Ocol Jr., whose involvement in his father’s seafood trading business made him realize the agriculture value chain and the pain points of those in the sector.
In 2020, Agrabah was chosen as part of the “Fintech for Impact” initiative of global financial institution ING Bank, N.V. and the United Nations Children’s Fund (Unicef). ING and Unicef extended equity-free investments, along with technical and business mentorship for one year, to five early-stage, open-source fintech start-ups in the Philippines building solutions with the potential to offer financial security and opportunity to more people.
Named after the Arabian desert kingdom where the fictional character Aladdin lives, Agrabah aims to help producers steadily earn fair profit by connecting them to large scale buyers, as well as providing microfinance opportunities. The team has been building trading, logistics, and finance platforms that farmers and fisherfolk can use with ease. Agrabah Wharf, for example, allows them to supply directly to institutional buyers or large-scale businesses across the country to increase or stabilize their income.
Bicol served as Agrabah’s launchpad due to the region’s huge production of seaweed, which is one of its target commodities. More than 1,400 farmers and fisherfolk have been registered in its system and are issued an ID card with a QR code for use during crop delivery and across points of tracking.
For Ocol, the goal, however, is not to entirely remove the middleman from the equation, but “to provide a fair profit share to farmers and fishermen.” He said middlemen still play an important role in the agriculture value chain. “They provide logistics, financing, post-harvesting processing, and they take the risk of getting rejects from institutional consumers,” he said.
Tools and resources on its marketplace also empower producers for long-term solutions to existing value-chain problems. Farmers and fishermen should be responsible for aggregating the supply, doing the post-harvest processing, and the logistics, Ocol added.
Agrabah has also identified community leaders from among its platform users to support farmers without internet access.
Focused financing
AGRABAH recently launched a live pilot in a seaweed farming community in Camarines Sur where 37 suppliers of seaweeds applied for Agrabah Finance, its platform that matches farmers to loan providers. In the initial pilot, five of eight farmers were approved for a loan to be disbursed via digital means.
While loan approval and rejection remain at the discretion of the financial institution and the platform simply facilitates the application, Agrabah has developed and refined a risk-rating system that suits farmers. This system is based on the detailed crop availability and delivery data gathered by the platform, factoring in a verified income stream dataset.
“These data represent their income on selling their produce — something that cannot be captured by financial institutions since most farmer transactions are not being taxed or entail the filing of income tax return. This vital information proves they have the capacity to pay,” Ocol said.
In addition to receiving the ING-Unicef investment and mentorship, the start-up also won the PhilDev and Cebuana Lhuiller Foundation Financial Literacy Innovation Challenge. It used the prize money to conduct 10 financial literacy boot camps for 250 farmers and fisherfolk in Caramoan, Camarines Sur.
Hope for farmers
AGRABAH seeks to increase its user base by deploying its app in other communities, including seaweed farmers in Tinambac in Camarines Sur, Tabaco in Albay, Sorsogon, Camarines Norte, and in the Visayas region. It also plans to incorporate other commodities such as cutflower, cacao, and seafood.
With the support from ING and Unicef, Agrabah and its partners have built an integrated platform, shifting to automation and building key open-source tools. This will enable Agrabah to grow its reach in rural communities and take on additional clients to buy from the communities — ultimately, multiplying its impact.