National Post (National Edition)
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 a price of $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 generic-brand 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 faceto-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 “democra- tize” 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., the producer and distributor of fertilizers and seeds formed through the Us$36-billion mega merger of Agrium Inc. and Potash Corp. of Saskatchewan Inc., unveiled a new digital platform in April that it expects to launch next month.
The company said it will offer services where farmers can pay bills, analyze agronomic data and interact with agronomists to seek advice for their operations. It also plans to eventually roll out e-commerce capabilities. Nutrien says the company’s digital platform will be more dependable than its competitors by leveraging its expansive distribution network across North America.
“You’ve got to have the distribution,” said Richard Downey, a spokesperson for the company. “When farmers need the product they need a lot of it in a very short period of time.”
He pushed back against the notion that farmers were paying too-high prices due to an opaque procurement system. “I think farmers are very knowledgeable about their inputs and the products that are out there,” he said.
FBN remains a long way from overturning agriculture’s existing commerce structure. The network has just 300 subscribers in Canada, though it boasts well over 6,000 members in the U.S.
But the company sees plenty of room to grow as farmers hunt for the lowest available input costs. Robertson, for his part, says the market has already begun to shift due to the introduction of new sales platforms. “I’m starting to see more competitive pricing at retailers because of this,” he said.
IT’S ALMOST LIKE AMAZON FOR FARM PRODUCTS.