Investing in the Future of Food: Agricycle’s novel supply chain model lifts up impoverish farmers, reduces food waste & steadily supports CPG brands

03-Feb-2021 - Last updated on 28-Sep-2021 at 14:24 GMT

A new business model developed by Milwaukee-based startup Agricycle that combines a vertically-integrated supply chain with a portfolio of upcycled brands is proving that with a little imagination and basic resources small growers can have an outsized impact on their local economy, the environment and global supply chain security.

Agricycle’s network of more than 35,000 farmers around the world is made primarily of small growers with as few as five fruit trees who typically would be dismissed by other ingredient suppliers for logistical reasons or unfounded quality control concerns. Without a route to market or method of preservation, many of these farmers live in extreme poverty while much of their fruit is wasted.

But with a little ingenuity, Agricycle found a way to transform this waste into opportunity and create livelihoods for those who otherwise wouldn’t have them. As explained in this episode of FoodNavigator-USA’s Investing in the Future of Food, the company offers farmers low-barrier technology – such as solar-powered dehydrators – to upcycle would-be wasted fruit into food-grade ingredients that it helps them bring to market through branded products sold to consumers and ingredients sold to bakeries and CPG manufacturers.

“At our core, what we’re doing, we’re working with the most remote, rural small holder farms” that because of their size and limited access produce half of the world’s food loss, which has a negative impact on climate change, company co-founder and CEO Josh Shefner told FoodNavigator-USA. “These farmers have access to raw material that simply needs value addition, and some sort of conversion into different products that could then create income for them.”

Agricycle “is pulling those two things together – building a supply chain that reaches the smallest farmers and then helping them convert what they already have into products that can be sold.”

Among the products farmers are able to make with Agricycle’s help include a line of dried fruit sold under Agricycle’s Jali Fruit Co. brand, a better-for-everyone charcoal made from by-products marketed as Tropical Ignition and an innovative line of organic flour made from fruit and as well as other ingredients sold B2B.

A stable supply chain primed to support scaling brands

While Agricycle currently is balancing its role as a branded manufacturer and ingredient supplier, the long-term goal is to concentrate on the ingredient side of the business, which is better suited to leverage the company’s unique supply chain model.

“Our core competency really is that we built a supply chain. We built this network of farmers. We’ve trained them. We have the technology so we can put as much ingredients or product as we can through the system,” Shefner said.

He explained that the company’s two brands prove that it can provide sufficient supply and meet regulatory and safety standards. He also noted the company’s recent victory as a winner of the FoodBytes! platform’s 2020 pitch competition is a much-needed vote of confidence by a trusted industry leader.

Even with a strong proof of concept, breaking into the ingredient supplier industry with an unfamiliar business model was challenging for Agricycle at first in part because it had to overcome preconceptions about small growers’ capabilities.

“There’s a lot of hesitation at first because it’s a system that they’re not used to. This is not a couple of plantations that have whole warehouses built on the premise. These are networks of farmers where, for use to pull cascara coffee fruit flour, we might be pulling from 3,000 different farmers from across two countries,” Shefner acknowledged.

But he said the model works thanks to his team, including Patrick Nderitu, co-founder and director of East Africa at Agricycle, who has a team of nearly 25 field officers and food safety managers as well as a network of nonprofits that train farmers to provide consistent, high-quality supply.

“We knew we would need to do more to prove ourselves, especially because the small holder farmer who is applying to the global market” is going up against large brokers and big farms that have “claimed that small holder farmers have no capacity to understand or maintain food safety concepts. We have proven them wrong,” Nderitu said.

He noted that the Food and Agriculture Organization of the United Nations even works with Agricycle to distribute its technology and training as way to empower farmers – a partnership that he says breaks a glass ceiling.

Increased supply chain security

By cultivating a broad network of growers, Agricycle also can offer a degree of supplychain security in the face of natural disasters that competitors with more concentrated farms and plantations cannot.

For example, Shefner explained, last year a swarm of locust three times the size of New York City decimated many fruit farms in East Africa, but because Agricycle’s network is spread broadly many of its growers were unaffected and could provide pineapples when other larger farms could not.

Collective bargaining power further uplifts growers

Agricycle also is leveraging the collective buying power of its network of farmers to negotiate better prices for services and inputs that will ensure their ongoing production and improve the quality of their products and livelihoods.

In addition, it is committed to paying its growers seven times the average wage in East Africa so that they can improve their lives and stimulate their local economies and broader networks.

“Right now we have 40,000 farmers, and we plan to by the end of 2021 have a hundred thousand farmers in our network. And among those, we’ve crated 7,000 livelihoods to date,” which means consistent incomes that are propped up by Agricycle, Shefner said. “We want to see that 7,000 hit 20,00 by the end of 2021.”