Yagro, launched earlier this year, is a digital business-to-business platform that seeks to link farm suppliers and their customers together in a way that removes cost and inefficiency from the distribution function, primarily through better information sharing.
The company has three co-founder directors. Gareth Davies spent his early career at Syngenta’s headquarters in Basle, working on innovation and ways for the business to harness digital platforms and technology to interact with and understand its customers better, while removing cost and inefficiency from the supply chain through better information exchange.
While much of this work was international, rather than UK-based, Mr Davies saw the potential for a digital agri-supply platform in the domestic market. He joined with Daniel Jolly, from a Norfolk family farming background but who had spent the last decade in the fresh produce industry, and Richard Sears, who has worked in digital technology to progress the project.
The partners are working from incubator offices in Cambridge, with close access to a number of high-tech start-ups allowing some cross-fertilisation in a fast moving technology environment. The company employs four software engineers. Initially self-funded, the business now has finance in place from a number of private investors, some of which are agribusiness-based.
“Talking to farmers, we saw the potential for better information sharing to reduce their administrative burden,” says Mr Davies. “Many farmers are relatively isolated from their main suppliers, both geographically and digitally. While there are digital packages to help bring them together, the majority are still using manual paper-based office systems, and obtaining quotes by fax and phone.”
At the same time, the proliferation of digital consumer platforms - such as Amazon - over the last decade mean that many farm managers are well versed in using such technology at home, opening the way for a greater uptake in their business life. “Procurement is not the most exciting part of managing a farm business,” notes Mr Davies. “Advanced digital technology can offer a more streamlined, efficient and faster way of procuring essential farm supplies with less hassle for the busy farm manager.” At the same time, the platform is cloud-based, secure and protects the confidentiality of both vendor and purchaser.
Yagro had a low profile launch in March 2016. The first season was spent refining and perfecting the system and ensuring the model is flexible enough to work at all levels of the supply trade from small merchants to the multinationals; and on the customer side from the family farm to large estates and contracting operations. It has concentrated on the fuel and agrochemical sectors initially, and is now exploring fertilisers and seed as newer capabilities.
Expansion into the animal feed and health products sectors is also on the horizon, but the company is wary of expanding too quickly – while it believes the platform is infinitely scalable, it wants to remain in control of what it does. Similarly with post-farm gate business – while some customers are keen to see a digital platform to facilitate the sale of farm outputs, Mr Davies wants to prioritise the inputs side first without spreading resources too thinly. But there is already overseas interest – Mr Davies has just returned from exploratory discussions with potential investors in Australia.
Despite little marketing activity and no publicity, Mr Davies says the farmer user base has grown through word of mouth recommendation, and the business is now generating revenues.
How does it work? Mr Jolly illustrates the system with reference to a farmer seeking 10,000 litres of red diesel. Rather than ringing round a number of suppliers, he can use the Yagro online portal to specify the amount required, the delivery site and preferred date. This is seen by suppliers on the system who can make a quick decision based on that information and make a quotation. He would expect a range of offers within 15 minutes – these can be made out of the office over mobile devices.
“Speaking to suppliers, we know that most price their fuel over a 24 hour window for most farm accounts – effectively the supplier takes a risk on that position, depending on when the customer picks up the phone to ask for a quote.
“But, if the supplier knows the volume, destination and the delivery date, a more precise offer for that volume, based on available logistics and other business commitments, can be made – the supplier can price on a narrower window of time. Or he could offer to deliver on a different date at a better rate, as this might fit in better with the firm’s existing orders and vehicle movements. Therefore, sharing the information potentially saves a considerable amount of time, benefiting both supplier and customer,” explains Mr Jolly.
The process is not an auction, stresses Mr Davies – it is a platform enabling the farmer to compare prices and timings before placing an order, using information sharing to secure the best deal possible in his particular circumstances.
The model is free to use for the farmer customer – Yagro makes its revenues through charging the supplier a levy on the business transacted. Suppliers are invoiced monthly in arrears. But the farmer pays the supplier for the actual product on the vendor’s terms and conditions – Mr Davies emphasises that Yagro is not a principal for the goods or involved in the actual transaction – its role is as information provider and in putting the two parties together. But he is confident that both purchaser and supplier will be better off, even after the Yagro margin.
“We have seen millions of pounds spent through the system so far this year, so the model is validated,” he says. “But we are open to hearing thoughts and receiving input from the supply base – the more we hear the more we can tailor the platform to the industry’s need. It is all about information in designing the Yagro product as well as the way it works.”
While the initial impetus has been to build a core digital infrastructure that links farmers and their suppliers, developing technologies offer considerable add-on potential for the future. “We are aware of smart stuff in the Artificial Intelligence field – this could be a very powerful tool for harnessing intelligent data. Other industries have shown the more information you have, the more you can improve the cost base. Automation becomes a possibility – the system knows what product is needed when, and so can order it. You could even imagine predictive technologies to prepare for more irregular events such as pest and disease pressure.”
Some suppliers are cautious, concedes Mr Davies, but this is less a disruptive technology than a streamlining of the existing way of doing things, he says. Yagro isn’t attempting to impose the platform on the industry – rather it is taking care to consult, explain and listen to ideas for improving the platform.
Nor does he envisage the platform replacing the distribution function. “The distributors’ core competence is sourcing product from the manufacturer, perhaps providing an advisory service and arranging the delivery logistics. Our core competence is as a technology provider - helping those distributors to reach the farmer customer and perhaps broaden the access.”
The Yagro partners are aware that some purchasing groups have already invested in IT infrastructures to make farmer buying easier and reduce the back office functions across a range of farm and more general business inputs and services. Yagro is building a dialogue with large and small purchasing groups which share the same objective to take cost out of farm supply and drive efficiencies. “Certainly we can do both with our ready-made platform to replace time consuming and expensive admin, but at the end of the day the system must work on the human scale. It is people who make the purchasing decisions, and often they require advice and help as an added value service.
Perhaps the Yagro platform could be used behind existing purchasing brands in the market place – combining the human, trusted face of the brand and the Yagro technology.
So far, farm suppliers have become involved as the farm customer base has grown, but the business is now ready to work with more supply businesses. It is starting to raise its profile through the trade press and industry events and will be working social media and marketing channels.
“We have huge levels of interest on the farm and supply trade sides, in terms of what it brings to both,” concludes Mr Jolly. “It is fundamental for us to understand the supplier’s needs too – all businesses are different in structure, so it is a complex challenge to build theseoperating models and behaviours into a simple system for the customer to use. But our model starts with the farmer in proving a simple to use but powerful platform to give him choice and value when sourcing inputs, while saving time over getting quotes and handling paperwork.”