Pakistan’s Agri-Tech startup Tazah has announced that it has raised $ 2 million in seed funding to rebuild an inefficient agricultural supply chain that drives up fruit and vegetable prices and leads to waste from harvesting.
Tazah is an agricultural technology marketplace that directly connects farmers with fruit and vegetable retailers across the region.
Globalfounders Capital spearheaded the funding round with Zayn Capital. Other investors include Ratio Ventures, Walled City Co., i2i Ventures, Suya Ventures, Globivest, Afropreneur Syndicate, +92 Ventures, Sunu Capital, Musha Investments and others.
The funding round was overwhelmed, according to the company, with local business groups such as Meezan Foods and famous angels including executives from Careem, Swvl and others taking part.
In an agricultural supply chain that is largely unrelated to the agricultural retail chain, farmers sell fresh produce, such as fruits and vegetables, from farms to intermediaries who then sell them to wholesalers. Individual retailers buy from wholesalers at a premium price due to the extra charges of agents, brokers and wholesalers who works in between.
Retailers then sell it to end consumers and determine their profit margins based on where they sell.
The agricultural supply chain in Pakistan works inefficiently, favoring only the middle men. The farmer produces basic vegetables and sells them at a very low price to the brokers, while the purchase price of the final consumer in main cities increases by several factors. For example, a farmer sells vegetables to intermediary agents. These agents or middlemen sells it to customers for \8-10 times more.
The massive increase in prices from farms to retailers is explained by the fact that a number of operators have cut margins at all stages of the sale of these products. There are many processing and logistics points for perishable goods.
Processing and delivery is done through inefficient and outdated infrastructure, which increases costs and further drives up prices. It also creates post-harvest waste and degrades the quality of perishable food.
Brokers and wholesalers are winners because they can take advantage of the farmers’ benefits and generate higher profits. Farmers lose this profit because they rely on predatory sharks to fund their working capital needs.
On the other hand, the retailer must collect fruits and vegetables from wholesalers early in the day at constantly changing prices. Product quality is also not top notch due to shortcomings in the supply chain.
The end user naturally suffers from very low prices for basic vegetables and fruits at the start of the supply chain. Also in terms of quality, the retailer and buyer end up paying a hard price for a product that has lost its quality by the time it reaches these stakeholders.
Tazah, a B2B marketplace, seeks to address these challenges by directly connecting farmers with fruit and vegetable retailers and eliminating traditional middlemen and wholesalers. In contrast, retailers can buy better prices from farmers.
Tazah also has a separate warehousing and delivery service that can deliver goods directly to retailers instead of leaving and buying early in the day, and the quality of the product is better as well.