U.S. startup disrupts Canada’s farm sector
Digital platform to buy inputs, sell production
Last month, Alberta farmer Nolan Robertson used an online retailer to purchase 8,000 litres of herbicide at $3.75 per litre — a steal compared with the $5.80 he might have paid through a traditional supplier.
“It was a huge cost savings for us,” said Robertson, who grows wheat, oats, field peas and other crops on his 7,500-acre farm near Fairview, north of Grande Prairie.
He purchased the genericbrand herbicide through Farmers Business Network (FBN), a California-based company that aims to disrupt the long-established conventions of commerce in Canada’s farming industry. For years, farmers have depended on a shrinking number of established retailers to secure products such as seeds and fertilizers, often haggling over prices in face-to-face meetings with dealers.
“It cuts out the whole retail middleman,” Robertson said. “It’s almost like Amazon for farm products.”
Charles Baron, the CEO and co-founder of FBN, says the platform comes amid narrowing margins for farmers who, he said, have paid higher input prices in recent years despite weaker commodity prices. The U.S. Department of Agriculture predicts that net incomes among American farmers will slump 6.7 per cent in 2018, falling to the lowest level since 2006.
“Farmers have been struggling” in the U.S., Baron said.
FBN aims to “democratize” the agriculture industry by providing a digital platform on which farmers can buy and sell products, compare prices among other subscribers and even analyze seed and agronomic data. Baron said there could be as much as a 50-per-cent difference between what farmers pay for chemicals, seeds and other products, a result of their weak bargaining position. “Everything is done in a black box — ‘Come in and talk to the dealer and we’ll work out a price,’” Baron said.
FBN was launched in the U.S. four years ago, and established its first Canadian headquarters in High River, Alta., in April.
The company has raised US$193 million in seed capital, initially from GV, the venture capital arm of Alphabet Inc. It later secured funding from Acre Venture Partners, the investment arm of Campbell Soup Co., Temasek Holdings Private Ltd., a state-owned holding company based in Singapore, and others.
Baron said he’s felt pushback from some of the industry’s established suppliers and farm co-operatives, which are being increasingly consolidated.
“It’s an old boys club and they don’t like new people coming in,” Baron said.
Other companies have tried to build similar digital networks. One is the Farmers of North America, a group that similarly aims to open the procurement of farm products through a centralized portal.
Mainstream corporations have also launched their own competing platforms. The retail arm of Saskatoonbased Nutrien Ltd. unveiled a new digital platform in April that it expects to launch next month.