Jacob Bunge reported recently at The Wall Street Journal Online that, “Inside a packed arena last December, 2,700 farmers sipped coffee from paper cups and listened to remarks on the Midwestern economy: incomes down, costs up and bankruptcies rising.
“The speaker wasn’t a politician or an academic. He was Charles Baron, co-founder of Farmers Business Network, or FBN, a Silicon Valley startup that is trying to build an Amazon-like online marketplace for agricultural supplies.
“Mr. Baron, pacing the stage in a black-and-green flannel shirt, warned the audience that big companies often sell seeds and herbicide sprays at inflated prices, protecting their profits. FBN, he said, allows users to compare prices across products and suppliers, helping farmers negotiate.”
The Journal article noted that, “Six-year-old FBN is among the best-funded farming startups. It has raised about $571 million, including $250 million this month, from investors such as heavyweight venture-capital firms Kleiner Perkins and Alphabet Inc.’s GV, as well as money-management giants T. Rowe Price Group Inc. and BlackRock Inc.”
Mr. Bunge explained that, “The close-knit agricultural supply industry remains heavily centered on rural stores and grain elevators. Sacks of seed and truckloads of fertilizer still get sold across the hood of pickup trucks, between farmers and salesmen who may know one another from church or coaching Little League Baseball. A handful of multibillion-dollar corporations handle the bulk of U.S. seed, pesticide and fertilizer sales.”
The article pointed out that, “FBN ran into bigger roadblocks with seed and pesticide makers, who largely refused to directly supply the platform and allow it to sell Farm Belt staple products like Syngenta’s Force insecticide, or Corteva’s Pioneer corn seed.
“FBN executives said in some cases they are able to procure name-brand farm products from brokers or wholesalers, but at higher prices than traditional retailers. They said the startup has otherwise been shut out by manufacturers intent on protecting the existing network of farm retailers, and its established profit margins.”
The Journal article added that, “Despite the industry opposition, [Amol Deshpande, FBN’s chief executive and co-founder] and Mr. Baron believe they can grow FBN.
“The company started its own line of seeds and purchased a Canadian chemical business to produce FBN’s own weed and bug sprays. But those efforts are proving costly, and last year FBN laid off some staff as it restructured its sales division. Mr. Baron said the company is adding more employees, including its own crop advisers. The company hasn’t yet turned a profit.
“Over time, as FBN signs up more farmers, its executives believe more seed and chemical companies will be willing to work with the company.”
