Online commodity trading platform gives farmers more control

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TonnUp Director Stephen Krüger and COO Brett Riley.

TonnUp, an online commodities trading platform, arose out of the need to address some of the frustrations and challenges that farmers face in the agricultural commodities market.

So said Stephen Krüger, corn grower and director of TonnUp, speaking at the official launch of what he described as the “first electronic platform for farmers that takes into account the whole value chain “.

On Wednesday, Krüger and his team, which includes COO Brett Riley, unveiled the online commodity trading platform for farmers at a virtual press conference.

Krüger explained that the launch was the culmination of a long process that began in 2015. “[We realised] there was a good time and a good opportunity for another commodities market to establish itself in the South African context, since until yesterday we were only dependent on JSE Safex in this regard.

Safex, or South African Futures Exchange, is the futures exchange subsidiary of the Johannesburg Stock Exchange (JSE). It is made up of two divisions: a financial markets division for trading in equity derivatives and an agricultural markets division for trading in agricultural derivatives.

According to a company description, TonnUp aims to disrupt the local commodity market by helping farmers market and sell their agricultural products in a structured and transparent environment.

In addition, it will bring together buyers and sellers in a way that enables farmers to obtain maximum value for their products, buyers to make more informed purchasing decisions, and the market to be more transparent and efficient.

Krüger said: “He [TonnUp] brings farmers to an electronic platform where they can submit their products, where they can better manage prices and sales in the future. It gives them a lot more control, and with it, it gives them marketing opportunities at a fraction of the cost of the market.

He noted that the costs of marketing a ton of wheat, corn, land or any other agricultural product have become very expensive, making them unaffordable for farmers.

“We looked at the cost structure, what it costs a farmer to market a ton of his product. The economy is not just for farmers… doing business on TonnUp should be affordable not only for producers but also for millers, processors and buyers, and ultimately the end user of our products.

Riley added, “TonnUp is the result of listening to an uncomfortable market for a long time. There is a large value chain in the agricultural sector and very often the producer pulls the stick around and is not as valued as we think they should be.

“After listening to a lot of angst and discomfort in the market, we believe there is an opportunity to offer a formal platform where a producer can bring their product to market, or where a buyer can post a market notification. for what they are looking for.

“We are a platform for engaging market participants; we are not here to face institutions like the JSE. The JSE offers a very different product offering and a different contractual basis.

“We are not here to conquer their market, whatever it is; on the contrary, we believe that a robust spot or spot market actually supports the futures market and vice versa. “

Using TonnUp, farmers will consult with their brokers or elevator owners to offer their products on the platform at the desired price. Buyers – such as millers and processors – will be able to bid on these shipments, whether there is already stock on sale or not, at all registered delivery points. They can also bid for a preferred delivery location from where they can receive their product, if their bid is successful.

Krüger explained: “The current grain market in South Africa is between 14 million and 16 million tonnes, and less than 25% of it is traded in a formal market. This means that potentially 75% of the grain harvest is available to be marketed on a formal platform, with full price and location transparency. Our value proposition is to bring buyers and sellers together, and create a spot market where everyone gets a fair deal. “

According to TonnUp, it aims to eliminate payment delays observed on the spot markets, thanks to a “trade plus 2” (T + 2) business day settlement cycle.

While elevator owners will continue to guarantee the quality and quantity of physical inventory on certificates of storage, TonnUp facilitates the treasury process so that sellers receive their payments and buyers receive their inventory quickly and efficiently.

While TonnUp’s initial focus will be grains, it plans to expand rapidly into other commodities including soybeans, sorghum, meal and fertilizers.

“Ultimately, we use agritech to enable farmers to manage their own products at a fraction of the current cost, and from anywhere and anytime,” Krüger concluded.


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