Lagos-based Releaf is aspiring to make it easier for FMCG manufacturers in Africa to access high quality ingredients for their factories and has just raised $3.3 million in an oversubscribed Pre-Series A funding round.
Releaf develops technology to enable decentralized purchasing and processing of raw crops to improve profitability and prevent post-harvest loss for the palm oil plant native to West Africa.
The new funding will support the launch of two new technologies. The first is a portable version of its award-winning palm nut de-sheller called (Kraken II). Second is a geospatial mapping application called SITE. This identifies the most optimal positioning of supply chain infrastructure for consumer goods manufacturers, creating an effective link with Africa’s decentralized farming system.
CTO and co-founder of Releaf Uzoma Ayogu said the technologies are the next steps in the company’s plan to fundamentally transform the efficiency of agricultural supply chains in Africa. “To make food supply chains profitable, we must maximize extraction yields with leading processing technology and minimize logistics costs by bringing processing capacity closer to farmers,” he said. Before Releaf, he explained, stakeholders had to choose between one or the other - large factories had great technology but were far away, leaving most farmers with rudimentary technology to process their crops. “We’re now able to maximize both,” he declared.
The SITE technology used cutting-edge geospatial mapping tools to determine how much oil palm is planted in an area and their annual yields. Alongside Releaf’s proprietary data on soil type, rainfall, farmer productivity and 3rd-party data from organizations like the International Institute of Tropical Agriculture (IITA), Foundation for Partnership Initiatives in the Niger Delta (PIND) and Rocky Mountain Institute (RMI), the company said it can deliver a dynamic view of farming activity.
Kraken II is a portable, lower-cost version of Releaf’s Kraken which the company claims is West Africa’s most advanced palm nut de-sheller. It is just as efficient as its static predecessor, it claimed, costs half as much and can attain 3x profitability because it can be transported to high density farming areas, eliminating more than 80 percent of margin-eroding logistics costs.
According to company, the combination of Kraken II’s portability and SITE’s placement and route planning capabilities enables Releaf to target the best opportunities across Nigeria’s oil palm belt rather than being limited to sourcing crops within 100 kilometres of a fixed processing site like existing food processors.
Africa will represent 40% of the human population by the end of the 21st century and the fast-moving consumer goods market will emerge as its first globally relevant industrial sector. Releaf’s technology is therefore designed to accelerate this industrialization while ensuring inclusive success for the planet, farmers, food factories, and consumers in one of the greatest economic opportunities globally.
'Our food supply chains are currently not set up to maximise the potential of our food system'
Since launching in 2021, Releaf said it has used its supply chain technology to process more than 10 million kilograms of palm nuts and grown its monthly revenue 7X year on year.
“We want to replicate this success across Nigeria and the rest of Africa, and these new technologies are the next steps in our plan to fundamentally transform the efficiency of agricultural supply chains in Africa,” said Uzoma Bailey Ayogu.
The company has also secured more than $100 million in supply contracts from leading consumer goods manufacturers, including Presco, PZ Cussons. Releaf’s valuation has tripled since its seed round a year ago.
Oil Palm is an ubiquitous product that can be found in 50% of consumer goods in Nigeria, from cosmetics to food products, driving a $5 billion market. It is the world’s most efficient oil seed and is widely used as a vegetable oil source. But West Africa’s food supply chains are currently not set up to maximise the potential of our food system, complained Ayogu. Releaf’s mission therefore is to drive the future of food processing and bring it closer to farmers, he told FoodNavigator.
“Africa’s food system is largely decentralized, with smallholder farmers responsible for up to 70% of the production,” he explained. “You will typically find farmers with smaller plot sizes in multiple locations and a lot of multi cropping to maximize the land they have access to.” Meanwhile, factories are often situated in large cities where they have access to skilled talent and consumer demand. As a result, smallholders often work in concert with traders to transport their commodities to these factories, but their income is reduced by the cost of logistics (up to 50% of the value of the commodity), post-harvest losses (about 15% of income lost), and trader margins. “Farmers make very little income and are unable to reinvest profits into better productivity, leading to stagnant growth, low-incomes, and little resilience against disruptions in the value chain such as global warming, COVID-19 and failed crops.”
Poor positioning by African food factories affects them, too, we were told. For example, 90% of factories in Nigeria are running at below 50% of their installed capacity due to scarcity of quality raw materials and the capital to purchase them. With low capacity utilization, factories are unable to pass cost-savings to consumers. In Nigeria what's more, consumers spend around 60% of their income on food (contrasted with 10% for US consumers). “With the lionshare of their income allocated to basic, and often inadequate, nutrition, there isn’t much money left to invest in other aspects of their lives,” Ayogu told us.
“The absence of efficient and affordable technology and tools means our food systems are not working as well as they can and farmers are spending most of their time doing backbreaking work for little return. Our mission at Releaf is to bring processing capacity closer to farmers in a way that aligns with our traditionally decentralized farming model.”
'It is necessary that we explore sustainable and environmentally-friendly ways to cultivate oil palm
The latest funding round was led by Samurai Incubate Africa, Samurai Incubate Africa is a venture capital firm based in Tokyo, Japan, investing in start-ups in Africa. High profile US venture capitalists Stephen Pagliuca (Chairman of Bain Capital) and Jeff Ubben (Board member at World Wildlife Fund and Founder of Inclusive Capital Partners) also invested.
Crutially, Releaf was able to win over investors with a promise its model can ensure sustainable oil palm in Nigeria and a more climate-resilient future. “It is important to note that the oil palm tree itself is not the driver of deforestation and other harmful practices that are inflicted on the environment,” explainmed Ayogu. “Instead, it is the practices adopted by certain players that focus on completely taking over existing rainforests and land cultivated by smallholders that are problematic.
"Palm oil is an incredibly efficient crop that produces up to 10x more oil per hectare than other vegetable oil crops. Globally, oil palm supplies 40 percent of the world’s vegetable oil demand on just under 6 percent of the land used to produce all vegetable oil. With this level of efficiency, it is necessary that we explore sustainable and environmentally-friendly ways to cultivate oil palm, especially in the West African climate that it is native to. This is why our model focuses on dealing with naturally occurring Wild Palm that already co-exists with the natural biome.”
SITE, meanwhile, was developed in collaboration with Stanford University’s sustainability export Professor David Lobell, who said: “I enjoyed working with Releaf and using our tree height algorithm to establish the correlation between oil palm age and height to help farmers to get a better understanding of their future yields and make better data-driven decisions on sustainable replanting. There is a great opportunity to unlock Africa’s unique agricultural potential by leveraging remote sensing solutions, and I believe this partnership will be a catalyst.”