SOCAP10: Kate Seely, FarmsReach


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  • Identifying local producers:
    Obvious first answer
    Popularity of farm-direct
    Industry desire for farm marketplace tools
    30-50 tools exist today
  • We were the first to launch a solid b-to-b platform built by rockstars from Silicon Valley.
    Unique business in having ag people + techie geeks.
    We launched a prototype in 2007 with 7 partners in the US and Canada, and launched publicly (in the US) 2009.

    Our first target was restaurants. Again intuitive response: they are creative, flexible, seasonal.
    We had a lot of momentum – have users in over 25 states….
    BUT – not a lot of transaction volume.

    Turns out they buy small volume and are inconsistent in what they want and how often.
    = Nightmare for farms actually. Admin/logistics burden for tiny orders. More pain than profit usually.
    = Nightmare for chefs as well trying to manage inventory of often ~50-100 fresh items across many farms. They want to do it, but in the end, distributors’ conventional food supply is just easier and cheaper.

  • There are limitations to farm-direct in general.
    For 1, it’s only 1% of food sales, so even if it quadruples, it’s still a tiny fraction of sales in the county and not a real game-changer.
    And 2, it’s hard, even for the most passionate pro-local buyer.
    See bullets on slide.

    So, farm-direct is great and romantic, but usually low volume overall – and a pain for both chef & farmer, even with an easy online marketplace.

  • So since our goal is to build tools to help farms sell more volumes to their region, we started researching more food hubs and aggregators across the country.
    That seemed like a promising strategy.
    We built some simple functionality since there are so many different models with different ops. Too early to definitively know which operation is the winner, so no point building tools for moving target.

    Got CDFA grant, have had opportunity to set up one up ourselves as part of SF Foodshed project with other orgs in the Bay Area. For that, we avoided the tiny restaurant issue by focusing on large buyers like hotels, caterers, and inst.
  • Ultimately, it’s too early for marketplaces.

    4 did rise to the top however:

    Convening went amazing. Successfully brought together whole vertical for 1st time, including competitors, who all shared the same mission for regional foods, and openly shared their own business struggles and successes for the greater good.
    See slide…
    DO NEED MARKETPLACE….just not yet
  • Controversy over role of aggregator. We know we need hubs, but:
    What’s role of distributor vs aggregator? Which parts of logistics sre appropriate to be done by whom?
    What size and types of farms should be served by aggregator? Makes sense to serve small farms who can’t get product to mainstream channels on their own, but what about medium farms that can and already do? In those cases, aggregator becomes an extra unnecessary middleman.
    How should aggregators operate to not be extraneous middleman?
    Jury is still out, but between you and us, we think they are models like Locavore Foods, Basis Foods, and Common Market from yesterday’s session which are less like nonprofits trying to do logistics, but rather logistics companies incorporating values and farm well-being into mission.
    So, aggregators are still evolving…. But the bigger aha was that there are more fundamental problems just helping farms PREPARE for market that trickle down and affect distributors and buyers down the supply chain…
  • Ultimately, it’s too early for marketplaces.

    Convening went amazing. Successfully brought together whole vertical for 1st time, including competitors, who all shared the same mission for regional foods, and openly shared their own business struggles and successes for the greater good.
    See slide…
    DO NEED MARKETPLACE….just not yet
  • So, what are we going to do?
    What’s the road ahead for FarmsReach and for tools?

    Good question 

    We know these 4 tools are needed and they’re pretty easy to build.

    Plan is to raise a small amount to just get these out and so we can get the ball rolling while the other big ? Marks are figured out
    Modular development
    Incremental testing & deployment
  • Release 4 basic tools
    Build on supply chain convening & collaborative community
    Facilitate info-sharing; minimizing duplication of effort
    See how hubs evolve…
  • SOCAP10: Kate Seely, FarmsReach

    1. 1. 1 S O C A P F O O D S Y S T E M S T R A C K , O C T O B E R 2 0 1 0 Regional Food Systems: B-to-B Software
    2. 2. Why Regional Foods?  Fresh & nutritious  Less pollution  Viable for producers; less middlemen  Economic vitality; keeps money circulating locally  Source-identification = food security & safety  People working on land = ecological health and aesthetic beauty
    3. 3. FarmsReach – first scalable solution
    4. 4. Limitations to b-to-b farm-direct  Less than 1% food sales  Passion only goes so far…  Difficult to source avg. 100+ fresh items across many farms, even with tools  Consistency: quality or volume  Price  Admin burden, even with tools  Logistics burden Producers ConsumersDistributors Retail & Food Service
    5. 5. What about aggregators aka food hubs? Producers Aggregator Consumers Distributors Food Service Retail  Small & med farms collaborate to serve larger buyers:  Inventory  Logistics  Marketing  Many models!  Industry support & momentum
    6. 6. FarmsReach Supply Chain Convening  August 2010 in San Francisco  Regional-food leaders across vertical from across US  7 farms, 7 top aggregators, 7 distributors, 4 buyers  SAP design methodology  Objectives:  How to help regional farms have visibility and access to new channels  How to help larger volume buyers access regional bounty Hoping to find: which aggregator models are best & what tools are needed…
    7. 7. First, the good news  Enlightening!  10 layers of complexities  Root problems  Openness & honesty  Inspiring!  Leadership Council  Cooperation & collaboration; community excitement  Desire for seamless solution across vertical
    8. 8. And then, the challenge: An ever-elusive Achilles Heel
    9. 9. Key Takeaways re: software needs  Bare-bones immediate need on the farm  Planning  Pricing  Pack  Compliance: food safety, insurance  It’s too early for marketplaces  Guaranteed piddly transaction volume  Custom software tools for specific types of aggregator models  “One size does not fit all”
    10. 10. FarmsReach Road Ahead
    11. 11. KATE SEELY MELANIE CHENG @farmsreach Thanks!