The Poultry Exchange, a chicken meat marketplace, has closed a seed round of funding. The Dallas-based business raised the funding from angel investors including the former CEO of a leading US poultry company, according to CEO Janette Barnard. A family office also invested.
Barnard founded The Poultry Exchange after realizing the inefficiencies that exist in the spot market for chicken, which accounts for between 10% and 30% of the $60 billion chicken meat industry.
The spot market is where suppliers sell the extra chicken they produce that’s not been purchased through the typical forward sales contracts they arrange with the big food companies.
There are several reasons why a supplier might end up with more supply than predicted, such as the birds come into the processing plant weighing more than expected. Because the poultry industry is so integrated, the live birds go the processing plant whether they’ve been pre-sold or not, according to Barnard.
A plant will sell at least 10% of its supply in the spot market, she added.
“It then falls on the sales person to find a home for that product and quickly, because chicken is obviously perishable,” she says. “If they don’t sell it within a given period after processing, it will then move into the freezer, which adds costs and a logistics burden, but also reduces its value. It’s in the best interest of the supplier to sell it fresh.”
The current process involves the sales managers first calling up existing customers, then less frequent customers, then its trader network, and so on, to see if they want the extra supply. This takes up a lot of their time and often results in selling the stock later in the day at lower prices. “So it’s an operational issue and a financial issue,” says Barnard.
It can be equally time-consuming and inefficient on the flipside for the buyers, she added.
The Poultry Exchange aims to make it easier for buyers and suppliers to connect in what can be an opaque market regarding who will sell to who and who will reveal how much extra supply they have.
It works in three ways: a supplier can list its product and receive bids from buyers; it can reach out directly to certain buyers; and buyers can post what they want and get responses from suppliers.
There is an element of the platform needing some behaviors in the industry to change, an industry that’s successfully operated one way for a long time, Barnard admits. But after she graduated from business school having worked at Cargill previously, she reached out to poultry businesses, and this was a problem that came up multiple times as something they’d like solving, she said.
Down the line, she would like to bring the model to other meat markets too.
The beta version of the platform launched in June with six plants; there are now 20 plants enrolled and around 45 buyers of varying sizes.
The Poultry Exchange charges a size-based monthly subscription and transaction fee to suppliers and buyers pay a nominal subscription on a per user basis. This nominal fee was to ensure buyers have some skin in the game to encourage activity, said Barnard.
This funding round will mainly go towards marketing the platform and enrolling more participants on it. The round gives the company about six to 12 months of runway.
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