🍕 This'll Get Food Prices to Drop...
Hi there,
We’ve partnered with Ollie and to celebrate, we’re giving you the chance to claim unlimited mental health credits for your team. Yes, you read that right: every single person who clicks on this link right here and signs up, gets unlimited mental health credits for their entire company. You’re welcome!
In this Open Letter:
- What’s eating the margins: Tech to lower food costs.
- Recession woes, expensive braais & 3D-printed housing.
- Silver linings: Inside SA’s mental health crisis.
- New podcasts: How would you build it?
TRENDING NOW
Tech, Potatoes & Lucrative Margins
A win-win for SA food prices?
Last week we dropped a short on the rise of food prices. Potato prices have been more volatile than Bitcoin in a bull run, seeing a staggering rise of 40%+ in one year. And whilst these prices go up, they seldom go down at the same rate. This isn’t sustainable…
The Travelling Vegetable
2400km. That’s the estimated distance a food item travels from farm to plate in the USA, so it should be a few hundred to a thousand km in SA. And considering that many of these food items need a cold chain, the cost to get them to you is staggering.
In fact, in 2020, the competition commission determined that the average retail price for milk is 3.5 times the production cost. Meaning that of the price you pay, only ±28% ends up paying for the production of the milk.
But transport isn’t the only cost, diesel to keep generators going will amount to R1b for Shoprite in the year to come. This is not to mention the capital outlay to install and the operational expense to keep these generators going. It’s all adding to the cost of food for the man on the street.
The Make-Up of Food Prices
If production cost is 30% of the cost, then what constitutes the other 70%? It differs per food item and where in SA you live but generally, the basket that gets the food to your table is made up of production, transport, retailer operations and a whole host of brokers and agents that facilitate these interactions.
Is 70% of the price up for grabs?
If one were to cut some of the middlemen, shorten the supply chain and even go direct to consumers, there are some lucrative margins to be made. And it’s busy happening.
The fishing industry in South Africa provides income for some 27k people in SA, and an estimated 75% of these are informal fishermen. Traditionally these fishermen would supply into a supply chain that is constantly squeezing their margins and enriching others along the way.
But Abalobi has been changing the game for them since 2017. What started out as a small social enterprise to capture fish data evolved into a full-blown sea-to-table solution for small-scale fishermen. Whilst at sea, fishermen can log their catches which then get listed on a marketplace that chefs, restaurants and even the public can access. Enabling the cook to buy directly from the producer.
The impact? Over 250 000 kg of fish sold and more than R16m paid out to fishermen. What’s more, the data that is generated is crucial to the preservation of marine life around the world.
But What About the Price of Potatoes?
- 10 months ago, Nile announced a $5.1m round of funding to further their mission of connecting producers and entities that sell to the public. The solution is in essence a B2B marketplace that helps retailers with price discovery, quality verification, payments and traceability. Streamlining the supply chain and ultimately reducing costs.
- The estimated 2 million small-scale farmers in South Africa mostly suffer from low yields and a lack of financing. Both issues can be addressed through training and providing finance and market opportunity. This is what Agrikool is working on, aggregating produce from smaller farmers and then linking them with market opportunities such as Shoprite and Boxer. All of this contributes to more supply which will have a positive impact on prices for retailers.
Whilst the short-term impact of supply chain costs and loadshedding is for the consumer to bear, the food industry is set for a shakeup in the medium term. We are watching this space…
IN SHORT
Change of heart: RIP the metaverse.
Where are all the iPhones at? This neighbourhood has the highest concentration of iPhones in SA.
It's all pointing to a recession, GDP contracted 1.3% last quarter.
“No Time to Braai,” the new Bond film about skyrocketing Shisa Nyama prices is… depressing.
Are 3D-printed houses the solution to SA’s low-cost housing crisis?
Now you can swear on YouTube again.
Balanced view: What if AI is just the next bubble?
Price wars: Twitter owes Amazon $70m, so Amazon stopped paying its Twitter ads bill.
WATCH THIS SPACE
Inside SA’s Mental Health Crisis
Key innovations, needs & opportunities in Tech
You don’t need to look very far for proof of the “global mental health crisis” UN Secretary-General Antonio Guterres highlighted at the launch of last year’s World Mental health Report.
The WHO concurs, and explains why:
- Depression is a leading cause of disability worldwide,
- Suicide is the 4th leading cause of death in people between the ages of 15 and 29
- People with mental health issues often die up to 2 years prematurely from perfectly preventable physical conditions.
You get the picture.
But what is the situation locally in SA?
Mental (Un)Health SA
According to the SA Depression and Anxiety Group (SADAG), as many as 1 in 6 South Africans suffer from anxiety, depression or substance-use problems. (That’s around 16 million people, confirmed by a more recent Wits study that says only a quarter of these South Africans are getting adequate treatment.)
And SADAG should know, they handle around 2’200 suicide-related calls per day.
And it’s costing our economy about R200bn per year in absenteeism and “presenteeism” alone. That’s about half of what the country spends on healthcare for an entire year [circa R462bn] and probably quite close to 5% of GDP.
So an entrepreneur looking to build a happy, healthy, thriving team is facing some unique challenges.
SA’s “special case” challenges
South Africa has over 10’000 psychologists, so why don’t employees and families just get treatment?
3 possible reasons:
- Logistics: How accessible is treatment really if you need to make an appointment for some time in the future, take off work and then trek across town to their offices? It ends up costing patients far more in time and travel than just the session alone.
- Costs: At an average of R1000 per session, and most therapists will advise multiple, weekly sessions (so about R4000pm), is it even affordable? Now one can assume that a large portion of those fees goes towards the therapist’s office space, administration and staff.
- Stigma: As wonderful as SA’s mix of cultures are, they are nearly all patriarchal and the stigma and discrimination against people with mental illness are both well documented, and still alive and kicking to this day.
4 Ways Tech can help us Rise to the Challenge
Affordable accessibility is something Tech by nature does very well, but solid tech solutions could also help break the stigma too. Just imagine:
- Connecting an employee discreetly with a professional via their device reduces the cost for everyone, and they can do it virtually anywhere (in a breakaway room or during lunch), and the best part is no one needs to know about it (stigma nullified).
- You can even facilitate highly specialised services by connecting people with professionals virtually anywhere in the world. Simultaneously helping spread the load among psychologists in various locations.
- And it doesn’t need to be a major monthly cost-to-company per individual, either. Take Ollie for example; they let companies purchase credits for psychological help and share them among staff – those who need it can use it.
- This type of tech solution opens the door to other related services that help you boost productivity and build a culture – it’s easy to facilitate extras like coaching sessions, group classes and short courses on managing stress etc. via a savvy tech provider.
Speaking of, we’ve launched a new partnership with Ollie Health. And to celebrate, we’re giving away free mental health credits – sign your team up for Ollie and you’ll get 1 month’s unlimited free credits.
SOMETHING NEW
Introducing “How would you build it?”
Ever had a startup idea and no idea how to get it going? We all have. And that’s the problem that Bobby Sequira and Renier Kriel are trying to solve on their latest podcast series called “How would you build it?”
They take trends, some of which are covered in this newsletter, and break them open to help aspiring founders and builders find ways to get going. Like this.
How would you build it releases a new episode every Friday, subscribe here and never miss an episode!
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