When it comes to buying and selling grain, South Africa is fortunate to have a First World trading system in the SA Futures Exchange (Safex), which provides a platform for the transparent discovery of price and price risk management.
First published in the Daily Maverick 168 weekly newspaper.
As with all stock exchanges, it cannot cover all agricultural products and does not take into account price differences, because prices are standardized on one zone – Randfontein – and applied at all levels.
This means that farmers offering different prices in different areas are not visible on the Safex system.
Safex also trades only South Africa’s main commodities, such as wheat, corn, sunflower seeds and soybeans, leaving sellers of smaller commodities out in the cold.
Now Skudu, an agro-tech company based in Paarl, has stepped in and launched Skudu Match, a free farming app that directly connects farmers and buyers of agricultural products.
âSouth Africa produces over 18 million metric tonnes of grain per year. The grain sales chain can be costly for both farmers and buyers – between 0.15% and 15%, âsays Skudu CEO Cobus van der Merwe.
These costs, he adds, can be attributed to unnecessarily long buying and selling chains or expensive procurement structures. Skudu Match will reduce these costs.
Van der Merwe was a grain trader before entering the agro-technological sector.
âWe have identified the problem that farmers are not in contact with all potential buyers interested in their production when they want to sell.
âFor buyers, it is difficult to find farmers who are ready to sell when they want to buy. “
Skudu Match solves this problem in four steps. âIt’s kind of like a dating app,â he says.
How it works:
Get “on the outside” and look for a match in the market;
Compare character traits;
Chat online and trade the five Ps (product, position and availability period, price, payment terms) and both Qs (quality and quantity) in the Skudu trading room; and
Go on your “first date”. In terms of Skudu Match, that means you are introduced to your counterparty and sign the agreement.
The system, says Van der Merwe, is designed to accommodate any product, of any quantity. It will start with cereals and will include bales of alfalfa and hay as well as straw. Vegetables and fruit will come soon after, but in this area, notes Van der Merwe, there are other competitors.
âOur intention is not to compete with Safex or to duplicate parts of the system that work effectively,â he says.
“We want to provide the ability to price products in other parts of the country where there is little price discovery and low liquidity.”
The app is free, but Van der Merwe hopes to generate leads from his clients for other pillars of the business. These include Skudu Market, which is for bulk farm inputs (a huge virtual warehouse from which farmers can source bulk inputs) and Exact, through which farmers can receive directions on fertilizer from a sample of soil or leaves, generated by the company’s agronomic algorithm. This guideline is crop, stadium and zone specific.
The algorithm performs over 780 billion calculations in less than a second. It can be used to plan fertilizer purchases or to discuss problems with a local agronomist.
The agricultural sector is one of the few growth sectors in South Africa. There are 30,000 farmers in the country but new entrants are emerging and, with them, younger and more technological ones.savvy farmers.
âFor a long time that wasn’t the case – 10 years ago you were doing business over a cup of coffee in the farmer’s kitchen. Now it’s different, âsays Van der Merwe. DM168
This story first appeared in our weekly Daily Maverick 168 newspaper which is available for free to Smart Pick n Pay shoppers at these Pick n Pay stores.