Every season, farms have to fork out serious cash for huge stacks of inputs, whether that’s feedstuffs, fertilizers, or pesticides. Anywhere in the world, the traditional way to get hold these is via locally-connected networks of retailers who work closely with farmers year by year, building up close personal relationships.
The drawback to this friendly-sounding scenario, of course, is that farmers can never truly know if their trust is being routinely abused. The signature operating style of these middlemen retailers is rarely transparent or efficient with pricing — and this problematic style is not restricted to emerging markets like India. In a developed country like Germany, even in 2020, getting a quote or reliable delivery from rival retailers is far from straightforward or quick; so the risk is that under any analogue relationships-based system, farmers need to give up their search and get buying while having to cross their fingers that they are not getting fleeced and that there isn’t a better bargain out there — or come to that, a better product.
“Everything is analogue. Nothing is digital,” cautions Jonathan Bernwieser, a business IT specialist who grew up on a farm in Bavaria, Germany. “My dad would have really big difficulties optimising his procurement, and many farmers like him in Germany still do. Depending on who you’re asking, you can still have price differences of up to 50%!”
That enduring pain point prompted Bernweiser to found Agrando, a digital agribusiness marketplace designed to give farmers more honest and transparent access to the products they need, linking them with retailers and manufacturers. His business model differs from many agribusiness marketplaces deployed in the US that aim to cut out the middlemen, namely those agricultural retailers, by instead working with all existing vendors in the supply chain with the aim of digitizing their work and making the supply chain more efficient.
A seed round “in the millions”
The model clearly resonates with a few investment firms; AFN can reveal that Agrando has in fact closed a seed round “in the millions” led by the June Fund, a European tech VC. The round was joined by the London family office JLR Star and agtech-focused investor Baltic Venture, along with other business angels.
“We look for founders that bring fundamental change to the industries they are addressing,” said Florian Schindler, a co-founder of the June Fund. “The huge business of European agri-trade certainly is ripe for such changes. By enabling all players involved in agri-trade, we have the strong conviction that Agrando is in a unique position to address this exciting market. We are very impressed by Jonathan’s industry expertise as well as vision and are excited to support the Agrando team in making this a reality.“
Bernweiser founded the company in 2017 as a digital trading platform for agricultural inputs, but it has since broadened its focus beyond this core infrastructure, he told AFN during a recent phone interview. The platform already encompasses, he claimed, Germany’s “largest dealer network” and the country’s “largest digital product search engine for agricultural resources.” He added that the company is in the process of becoming “Germany’s largest online network for farmers.”
‘Every farmer is a CEO’
A quick look through the Agrando site shows how farmers can use the platform, independent of time and location, to request products from individual or multiple dealers, compare offers and centrally document orders. The purchase process takes place in the classic way (Bernwieser even mentioned the platform being compatible with faxes, still in use on some German farms.) In addition, the platform supports a farmer’s operational planning; it checks through their operational key figures for optimization potential and figures out ways to best aggregate the order volume — a similar set of algorithms that might book you the cheapest set of flights online. The design process, said Bernwieser, is about not patronising farmers with solutions they do not need, but looking at farmers as concerned about boosting their bottom line in a tight margins business. “What I’m telling my team is that we all need to stop thinking of farmers as private people,” said Bernwieser. “Every farmer is a CEO.”
For incumbents in the retail and manufacturing space, Bernweiser wants to be an ally rather than someone aiming to cut them out.
“One of the big challenges is logistics,” he said, describing how he overcame an initial temptation to start doing the buying and selling himself — an approach taken by the German startup Ag.supply, among others. “You’re dealing with very large volumes. The margins in this business are very small, so location really makes a large advantage. I would not know how to do that without having to get hold of a lot of distribution centers.” FarmLead over in Canada has opted for a similar strategy in grain trading, preferring not to take on the risk of owning the grain before selling it on.
Instead, Bernwieser added, “I’d rather focus partnering up with retailers with the existing processes they have, and finding a way to make that more efficient.” Conversely, he said, he did not believe these retailers would ever be able to replicate his platform. “You can only build a platform if you’re unbiased,” he said, suggesting any retailer would be incentivized to promote their own products over their competitors’. “A platform is never going to be their core business,” said Bernwieser, suggesting it would be better to “adjust their logistical systems to his,” which “gives them access to new farmers.”
Observers of Latin American agritech will find this approach particularly familiar, especially anyone who has read my colleague Louisa Burwood Taylor’s recent report on Argentina’s Agrofy Series B funding — at the time, the largest fundraising effort for a Latin American agtech startup on record. Like Agrando, Agrofy is an online agribusiness marketplace matching buyers and sellers of a wide range of agricultural products ranging from machinery and crop inputs to farmland and financial services, often maintaining existing retail relationships. The company has already expressed plans to enter the European market.
Other offerings treading tangential agribusiness pathways might make a pivot in a similar direction. In France, for example, there’s Agriconomie, which works with incumbents to offer an agribusiness marketplace for farmers and their suppliers with advanced logistics capabilities and a streamlined value chain that removes some of the mark-up for growers. In the US, you’ll see a similar offering from Farmers Business Network, a farm data startup that has pivoted to selling inputs to farmers with uniform, transparent pricing. From San Francisco, you’ll find the likes of HarvestPort, which did a pivot of its own from machinery lending to inputs sales last year, and similar companies like AgVend. China has its own agribusiness marketplace in Maihuolang, which turned heads with a massive $150 million Series A round in 2017. Even in the tiny but tech-savvy Baltic nation of Estonia, there’s a comparable marketplace offering in the form of e-agronom.
But Bernwieser sees hope in the form of competition, and said he had already been in touch with a few of these fledgling rivals to scope out grounds for collaboration.
Any follow up thoughts on digitising food supply chains? Drop us a note at email@example.com