Tarfin: Buy now, pay at harvest

Founded in 2017, Tarfin is an agriculture fintech start-up based in Istanbul that has developed a mobile application to address the financial challenges farmers face. “It’s an innovative business model for the Turkish market, providing farmers with farm inputs and instant working capital financing,” says Mehmet Memecan, CEO.

Mehmet worked in the fertilizer business for several years before returning to Turkey. “When I came back, I saw how small-scale farmers faced difficulties in accessing financing to buy things like fertilizer or seeds. They don’t have cash until after harvest... Banks ask for collateral and the process of getting a loan is quite cumbersome. To make ends meet they resort to buying with vendor financing terms and the cost is high.” This is where Tarfin comes in. “We are a tech-based agricultural distributor,” explains Mehmet. “We sell the farm inputs farmers need with extended payment terms.” The Tarfin app helps farmers find the closest partner stores that offer the necessary inputs (e.g. fertilizer, seeds etc.), compare prices and instantly apply for financing. Then they can head to the store, sign a promissory note and walk away with the products.

“We built the underlying risk scoring models on advanced machine learning algorithms with four years of internal repayment performance data. In our scoring models, we utilize both conventional data as well as proprietary alternative data about the farmer and the transaction. We use our (over 300) retailer network across the country and our mobile app to help farmers conveniently access farm inputs with extended payment terms. No collateral, instant approval. And we’re about 8% cheaper than next door. Those savings can go to the farmer’s kids’ education, support overall household spending” Mehmet says.

Working with 15,000 farmers across Turkey, Tarfin has so far completed over 26,000 transactions. It boasts less than 2% default rates and is looking to expand to Eastern Europe in 2021. “Our solution is workable in other markets where there is fragmented agriculture and technology allows us to get to small ticket sizes that a bank wouldn’t bother looking at.”  In 2018, Tarfin received an equity investment from Collective Spark, which helped the company grow. “We went from a small team of 4 to around 30 people. It helped build the tech infrastructure we have today and strengthened our balance sheet to make us also more attractive to banks and other creditors,” Mehmet explains.

Company: Tarfin (Istanbul, Turkey)

Type of business: agriculture, ICT

Financial intermediary: Collective Spark

EIF financing: Turkish Growth and Innovation Fund (TGIF)

For further information about EIF intermediaries in Turkey, please refer to:
http://www.eif.org/what_we_do/where/tr