You have a book to sell, and a book you’d like to buy. What do you do? Chances are, hop online.
In Brennan Turner’s eyes, trading grain is no different. For those unfamiliar with the grain-trade world, it’s a multi-billion dollar industry that does business the old-fashioned-way: with sellers, buyers, and brokers. Turner wants to change that.
“Why can’t we bring all the buyers and sellers in the system where they can meet each other?” asked Brennan Turner, Founder of FarmLead. “Sorta like how Uber matches up drivers and those who needs rides, we help grain buyers meet farmers and vice versa.”
In October 2012, Turner founded FarmLead, an online and mobile platform for both buyers and sellers to directly trade their grain. The idea is to make grain deals more efficiently traded at better costs, while cutting out the middlemen.
Charging a connection fee per deal on both the buyer and seller sides, Turner says that the site’s prices of doing business are well within reason for industry traders. For smaller deals, Turner charges $1 per metric tonne. With an annual connection fee of $450, users may make unlimited deals for the year. For those without the yearly subscription, the connection fee is $1 per MT, to a grain or seed-specific cap. (Wheat connections, for example, cap at $75.) Turner says the site’s average connection cost to a user is about $75.
We are democratizing access to venture capital. Learn how you can invest with us.
“At the end of the day, there’s a massive opportunity cost for finding other deals,” Turner says. “The energy and time [to look] all over…. We provide that connection service that is so hard to find.”
Though based in Western Canada, and sourcing many deals from the region, Turner is now targeting growers in the Midwest to start using the platform. Traditional brokerage services make about 0.5-1 percent of grain trades, and that’s exactly the margin that Turner is looking to bite into.
Since launching, FarmLead has registered over 1,200 grain sellers, and 275 buyers. That’s over 10.8 million acres of possible production being sold, according to Turner.
“These buyers and sellers include farms, marketing consultants, and brokers, even,” Turner says. “It’s a significant leg up. They have a lot of deals they need to move, and we have a niche spot in the market.”
While he’s excited about the future, Turner says it hasn’t been just green grasses since launching. “Agricultural people are fairly skeptical,” Turner says. “And rightfully so. It’s not a cheap business or industry really. Guys are selling their farms for millions of dollars. It’s not a small business anymore.”
But the skepticism isn’t stopping him. Turner says he’s placed several security blocks to make sure the service is up to his standards. “How do we know they’re selling the quality of grain that they say they are?” Turner asks. “If they don’t meet our requirements, they don’t use our system. Plain and simple.” These standard requirements are determined by the inspection service, SGS, who recently partnered with FarmLead.
Turner also has built in financial protections for the seller. Farmlead does credit checks on every registered buyer every quarter through Dun & Bradstreet, and Turner says he has partnered with credit insurers to provide an accounts receivable insurance option to sellers to make sure they get paid no mater what.”
And to make things easier, Turner isn’t stopping at providing a trading platform. He’s also developing tools to help his customers determine the transportation costs of the deals they’re negotiating. He’s calling this service the FarmLead Freight, and says it will be ready this fall.
“We’re a different way of doing business,” Turner says. “You think of shopping online; we’re taking that business model and applying it. It’s maximum satisfaction for least amount of effort.”
Turner says his final goal is to take the business internationally. “We believe there’s significant international trade benefit. We can facilitate these international deals,” he says. “Because we’re tech-based, we don’t have a ball and chain.”
If you have any news, insights to share, would like to pitch guest posts, commentaries or white papers, drop us a line at [email protected].
FEATURED PHOTO: Lnk.Si/Flickr