Bushel’s new payments network is a major step towards digitizing US agriculture

In a major step on the road to digitizing the ag supply chain, grain trading platform Bushel has launched a new software platform that facilitates digital payments between farmers and agribusiness partners.

Payments in US agriculture are what Bushel CEO Jake Joraanstad calls “the last frontier for digitizing the industry,” with roughly 90% of them still done with paper checks. North Dakota-based Bushel hopes to digitize the process of moving money in the ag sector, fostering a faster, more reliable payment system.

How it works:

Bushel’s new product is “one offering that has three different functions and audiences,” Joraanstad tells AFN.

• Bushel Payments facilitates the movement of money between farmers and agribusiness partners within the Bushel platform. For example, it’s how money travels from a facility purchasing grain to the farmer, or how a grower might pay for fertilizer. 
• The Bushel Wallet digital wallet is “where the farmer manages their connections to multiple bank accounts and sees their total balance,” says Joraanstad. Bushel says this is the first digital wallet ever created specifically for farmers and for the scale of agribusiness. Farmers can link up to six US bank accounts and instantaneously send or request payments within the Wallet network at any time. 
• Bushel Wallet Link is an API that allows any third-party agribusiness players to embed Bushel Payments into their own digital properties in order to move payments back and forth.
• All three tools mean farmers can receive payments in their accounts directly, rather than wait for checks to arrive in the mail.
• Bushel says the onboarding process to register and create a Bushel Wallet account takes less than three minutes.

Why it matters:

To illustrate how farmers and agribusiness partners stand to benefit from digitized payments, Joraanstad lays out some numbers and scenarios around the current payment systems, 90% of which he says are done via paper checks and invoices in the US:

• On average, a check sits for seven to 14 days before a farmer deposits it. “It’s not as if they didn’t want to deposit it. But there are a lot of things that [get] in the way,” he says, such as a farmer needing to drive an hour or more to reach the nearest bank.
• On the flip side, a farmer may pay an invoice late because it gets lost somewhere “on the desk” or they don’t realize they owe a payment.
• The problem gets bigger when the amounts of money owed get larger, which is currently happening because of the skyrocketing costs of fertilizer and other inputs.
• Grain, too, has gone up. Joraanstad says the cost of corn in 2017, when Bushel started, was around $3 per bushel; today it is $7. “A lot of times [the farmer has] bills to pay and loans to pay off and insurance rates are increasing. So that extra two days to two weeks doesn’t help anybody really.”
• According to Shane Thomas, author of the Upstream Ag Insights newsletter, Bushel payments pushes the company into new territory from a total addressable market point of view as it gives it a much greater ability to launch new products and services on top of its existing infrastructure. Thomas wrote in this week’s newsletter: “There have been questions about whether any agtech company can truly be a publicly-traded success. In the case of Bushel, there is a lot to be done on their end to gain even more meaningful scale and I suspect mature the unit economics of their core business, but it gives them a foundation to become a successful, stand-alone public entity delivering value to many nodes across the value chain, from upstream all the way downstream.”

The bigger picture:

Joraanstad notes that part of the reason the current payments landscape for US farmers is so inefficient is that the country’s banking system is fairly old and therefore has a lot of legacy systems still in place. 

“Banking systems in other countries developed later in the technology curve,” he says, citing many countries in Africa as well as Australia as examples. “The idea of a same-day payment doesn’t exist in the [US] banking world today; it’s one day or more. In Australia, it’s 15 seconds.”

“At least 90%, maybe 99% of payments to farmers in Australia are electronic. So we’ve got a long ways to go here in the US and that’s the problem we’re trying to solve next for Bushel payments,” he adds.

Digital payments could also address ongoing labor shortages in agriculture. “If we’re able to reduce the need for three people to pay farmers down to one, and it’s electronic, there are [fewer] logistical things to follow around like canceling or reissuing checks. That’s a big improvement.”

What’s next:

It’s early days still for Bushel’s new payments platform, and Joraanstad says the first few pilots are in motion:

• Consolidated Grain and Barge Co. (CGB) is piloting Bushel Wallet Link to embed the payments feature into its user interface.
• Ag Valley Cooperative, based in Nebraska, will pilot Bushel Payments for its growers. Farmers will be able to access Payments through Ag Valley’s app powered by Bushel.
• Joraanstad says the company is actively seeking more companies to join the payments network and will announce additional partners in the next half of 2022.

“Bushel has over 200 customers that could be using this tool and 60,000 farms. Our hope is that by the end of the year, you’ll see a significant amount of farmers who have now electronically-enabled payments in agriculture. I think going into next year we will easily have the largest payment network in agriculture.”