Entrepreneurs seize opportunity in Egypt’s fruit and veg market
FreshSource Global, founded in 2018, is an Egyptian B2B agricultural supply chain platform that buys fresh produce directly from farmers and delivers it to businesses such as restaurants, retailers, hotels and food manufacturers. Clients place orders through an online platform. By controlling the entire supply chain, FreshSource can offer its clients better prices as well as ensure reliable supply.
The company provides a variety of perishable crops, with the top ones being citrus, followed by bananas, potatoes, onions and tomatoes. Crops are graded, with their destination determined by quality; the lowest grade goes to jam and juice manufacturers, while the highest grade is supplied to luxury hotel groups, for instance.
Last year, FreshSource raised an undisclosed seven-figure amount in its seed funding round, backed by 4DX Ventures and Wamda.
Origins of FreshSource
FreshSource was founded by siblings Farah and Omar Emara. Farah, CEO of the business, began her career at Endeavor, a non-profit supporting entrepreneurs, before working at Procter & Gamble in Egypt while pursuing a master’s degree at the London School of Economics. Her brother Omar, the company’s COO, worked at Goldman Sachs in London after completing his bachelors in computer science and business from the University of Bath.
In 2018, the pair came across a UN Food and Agriculture Organisation (FAO) study revealing that nearly 45% of Egypt’s food production was lost due to supply chain inefficiencies. With some knowledge of the industry from their family’s large agricultural cold chain logistics business, and their combined education and experience, they decided to establish a company to streamline the agricultural supply chain.
The co-founders began by researching and analysing similar business models and companies tackling the same problem in the Middle East, Africa and globally. They then reached out to the entrepreneurs behind these companies to learn more about their experiences. To comprehend their potential customers’ needs, the founders engaged with restaurants, hotels, and other stakeholders, working their way back through the supply chain to the farm level.
With a suitable initial business model for the Egyptian market in mind, Farah contacted an investor she had met during her time at Endeavor. “He gave us our first cheque,” she recalls, adding, “It was actually his first cheque ever given to a company that was pre-revenue, pre-name, pre-logo, pre-everything.”
Cutting out the middlemen
FreshSource purchases crops directly from farmers and transports them using refrigerated trucks to a warehouse for distribution to end clients. Initially, Farah says their pitch to farmers was that FreshSource would offer better prices for their produce, in contrast to the traditional model involving numerous middlemen between the farmer and the end consumer. Each player in this model adds their own margin, and each step of the supply chain involves food losses, resulting in a significant overall reduction in product. Traditionally, many of the crops were transported in unrefrigerated trucks and with poor packaging, further increasing waste. “This long and inefficient supply chain is what causes the high prices and high food losses,” Farah explains.
Apart from the fairer prices FreshSource offers to farmers, the company also provides them with support services through its network of agricultural experts. In addition, FreshSource has partnered with the Central Bank of Egypt to offer financing to farmers at low interest rates, as part of a government-led initiative.
Farah explains the company initially bought from small-scale farmers, but now focuses on medium-sized producers who cultivate approximately eight to 20 hectares. She notes that, due to logistics costs, the unit economics simply did not make sense when working with smaller farmers.
Challenging the status quo
Agriculture is a major industry in Egypt, contributing more than 15% to GDP. Historically, Egypt was known for its agricultural innovations. Its farming practices had a significant influence on other ancient civilisations. However, Farah says there has been little innovation in the farming sector in recent years. When she began their research in 2018, she was surprised to find that no company in Egypt was focused on streamlining the value chain. In contrast, smaller countries like Kenya and Uganda had several such solutions in place.
As a result, one of the main challenges FreshSource faced was convincing stakeholders, such as farmers and customers, to buy into their model and mission. Initially, Farah and her co-founder were often dismissed during meetings as “kids” who didn’t understand what they were doing.
A woman in a man’s industry
Farah personally also faced many hurdles as a female entrepreneur in a male-dominated industry. “I remember one guy told me, ‘Why are you wasting your time doing this? Why don’t you go do make-up or dresses?” Literally, word for word, that is what he told me.”
As CEO, Farah faced challenges from her own employees. She recalls an instance when she requested documents from a male employee. When the time came to hand over the documents, the individual blatantly ignored her and gave them directly to a male colleague, even though Farah was also present in the shared office. “He literally pretended that I wasn’t there and that I wasn’t the one who asked for the documents. I asked him, ‘Are these the papers I requested?’ But he didn’t even look me in the eye. Culturally, when a man and a woman are in the room, respect is given to the man and he is addressed, while the woman is often disregarded.”
Operating in a tough economy
Over the past year, Egypt’s economy has faced significant pressure, characterised by a plummeting Egyptian pound, shrinking foreign currency reserves, and surging inflation. One key factor in Egypt’s struggles is its heavy reliance on imported food instead of domestic agriculture to support its roughly 105 million people. The falling currency has led to a spike in import costs.
The Russian invasion of Ukraine last year further affected Egypt’s economy. As the world’s largest wheat importer, Egypt depended on both countries for supplies, and the conflict disrupted imports, resulting in soaring wheat and bread prices. Moreover, a decline in Russian and Ukrainian tourists, who were once a mainstay, negatively impacted Egypt’s tourism sector.
Although Farah acknowledges the tough economic situation, FreshSource hasn’t experienced a decline in demand. “People will continue to buy fruits and vegetables. As long as we remain competitive with our pricing, we will be good,” she says.
Farah notes that the business currently processes approximately 400 tonnes of produce monthly. With plans to expand from its single warehouse to an additional three locations across the country, the company aims to further penetrate the Egyptian market. As part of its growth strategy, FreshSource intends to acquire more customers, diversify its product offerings, and eventually expand into the broader Middle East and North Africa region.
FreshSource Global CEO Fatma Al Harbi’s contact information
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