TonnUp offers new digital channel in commodities market

8th April 2021 By: Creamer Media Reporter

South African agri-tech startup TonnUp has launched an online trading platform that aims to shake up the local commodities market by helping farmers market and sell their agricultural products within a structured and transparent environment. 

The platform aims to empower South African farmers to take control of the pricing, marketing and distribution of their own products at a fraction of the cost of existing mechanisms available to them. It will bring together buyers and sellers in a way that allows farmers to get maximum value for their products, buyers to make more informed buying decisions, and the market to be more transparent and efficient, said TonnUp director Stephen Krüger, who is a maize producer based in Viljoenskroon.

“TonnUp is the result of a fundamental need for farmers to extract a fair price for their inputs and risk. Our farmers are the starting point of the food value chain, but have the least ability to create a fair price for their product. They take all the risk and create the real value. We think there’s a real opportunity to lift the veil on the commodities market and help the farmers get the best prices for their products,” said Krüger.

Using TonnUp, farmers will consult with their brokers or silo owners to offer their commodities on the platform at their desired price point. Buyers – like millers and processors - will be able to bid on these consignments, whether there is already stock on offer or not, at all registered delivery points. A further plus for the buyer is that they can also bid for a preferred delivery location from where they can receive their product, if their bid is successful.

“South Africa’s current grain market is between 14-16 million tons, and less than 25% of that is traded in a formal market. This means that potentially, 75% of the grain crop is available to be traded on a formal platform, with full pricing and location transparency. Our value proposition is to bring together buyers and sellers, and to create a spot market where everybody gets a fair deal,” said Krüger.

One of the major bugbears of cash markets is delayed payments. TonnUp aims to remove this through a ‘trade plus 2’ (T+2) working day settlement cycle. While silo owners will continue to guarantee the quality and quantity of the physical stock on the storage certificates, TonnUp facilitates the cash-flow process so that sellers receive their payments and buyers receive their stock quickly and efficiently.

While TonnUp’s initial focus will be grain, it plans to expand rapidly into other commodities, including soya, sorghum, oil cake and even fertiliser. While similar platforms have performed well in select overseas markets, the TonnUp platform is a first for South Africa’s agricultural industry. 

“Ultimately, we’re using agri-tech to empower farmers to manage their own products at a fraction of the current cost, and from anywhere at any time,” said Krüger.