“In an ideal world…” We’ve all heard it, and probably said it too. “In an ideal world, corn prices would be $5 a bushel or better,” or “In an ideal world, a one-pass glyphosate application would be all that’s needed.”
Obviously, this isn’t an ideal world, particularly in agriculture, where market realities challenge farmers on a daily basis. Yet if a company called FarmLead continues with its development, farmers will be one step ahead in self-marketing their own commodities.
In 2013, FarmLead was first conceived as a means of helping farmers sell their crops for more money.
The design is a simple open forum that brings buyer and seller together.
For the seller, there’s the opportunity to post volumes of grains and oilseeds online to a potentially unlimited number of buyers. For the buyer, there’s a direct line to those growers who can provide exactly what they’re looking for, meeting whatever specs they seek.
For both parties, too, there’s a back-and-forth negotiation process with the goal of arriving at an agreed value.
To date, more than 80 million bushels of grains and oilseeds have been negotiated through FarmLead’s portal, with more than 5,700 users and more than 100 crop categories to choose from. The site has also expanded from its origins in Canada to the U.S., with farmers using the site in more than 40 states. The website’s success is based on two primary considerations: one, that growers are increasingly interested in doing their own marketing, and two, that there are more farmers who have invested in on-farm storage and can take advantage of this online marketplace.
Scott Mowbray is one farmer who’s been using FarmLead for roughly two-and-a-half years to sell grain off his Cartwright, Man. farm. Mowbray’s operation is considered small for Western Canada — about 2,000 acres — his crop production centres around canola, spring wheat and soybeans, and at times has included specialty crops like winter wheat, flax, peas and barley, all of which are marketed on FarmLead. His location just 16 kilometres from the U.S. border actually puts him in good stead using this marketing system. He can market his barley or yellow peas at home in Canada, or he can sell to a buyer in North Dakota or Minnesota.
For Mowbray, using FarmLead provides value in terms of better prices and time savings. Again, owing to his location — within a 90-minute drive of two large-scale canola crush facilities — he finds marketing smaller grains and oilseeds a benefit.
“Price-wise is one of the benefits that we’ve seen, and much more with smaller commodities — ones that don’t trade as fluidly as canola or wheat,” Mowbray says. “I can’t phone my local elevator and get a price for a high volume of barley every day of the week. It allows us to access some of those markets that don’t trade fluidly in the local area. And because of that, you have multiple buyers that are all interested.”
As for the time savings, Mowbray says that he no longer has to spend a day or two playing phone tag with a handful of potential buyers. Now he can post his volumes online and has access to dozens of potential customers. He can also use FarmLead to sell old and new crop production.
If — or when — FarmLead attracts some of the larger players in grain marketing — Richardson or Viterra in the West, Bunge or Casco in the East — farmers would be able to market virtually anything online, adds Mowbray.
Broadens the market
That’s the purpose and the goal, according to Alain Goubau, one of FarmLead’s founders. Growing up in Eastern Ontario where he continues to farm, Goubau, along with co-founder Brennan Turner, wanted to help farmers engage in their own grain marketing and do it with more confidence.
“It helps — particularly producers — to really maximize the number of buyers they can deal with at any given moment, for any broad-acre crop that they may be producing,” says Goubau. “We go with the classic corn, soybeans and wheat, but also all of the specialties: edible beans, pulses, specialty oilseeds. And for the buyers, it helps them more efficiently access the grain that they’re potentially in a position to buy in a particular region or area or at a particular time of year when they’re looking to buy a certain type of grain.”
Participants create accounts and set up listings of grains that are to be bought or sold. Negotiations are conducted free of charge, and FarmLead makes money only after the sale is made, once buyer and seller agree on the transaction. It’s at that point that FarmLead takes a commission, depending on the volume of grain being sold or purchased, and in broad terms, it’s a fraction of what a broker would charge.
“We charge the buyer and seller equally, because we don’t really work for one side,” says Goubau. “What we’ll charge is a dollar per tonne for the first 80 tonnes, and 25 cents per tonne above that.”
On a per bushel basis, it works out to a little more than a cent per bushel for the first 2,000 to 3,000 bushels, depending on the crop, and less than half a cent per bushel beyond that. There’s no distinction between a more mainstream crop and one that’s a specialty, adds Goubau. In fact, quantity doesn’t matter: the platform puts everyone on a level playing field, and the marketplace is making a grain deal based on numbers: price, specific volume, location, distances, freight and quality. It’s a simple formula that’s designed to give more exposure to buyers and sellers.
The only caveat is that all buyers participating in FarmLead undergo a credit check, and the portal constantly monitors the credit quality and performance and behaviour on the site. And every farmer who’s used this platform has been paid.
Adds to on-farm diversity
The exposure to sellers is the biggest plus as far as Mowbray is concerned, and it has helped him diversify his crop rotation. He has considered marketing his canola using FarmLead but concedes that the two crush plants nearby provide him with good returns already. It’s actually with his niche crops that he’s seen the most benefit.
“I’ve learned that there’s a potential for growing these niche crops,” he says, referring to yellow peas and barley (the fababean potential hasn’t matured sufficiently for Mowbray). “I wouldn’t have wanted to touch some of these crops five years ago because that would be my biggest concern. There might be a couple of buyers in Manitoba, but can I sell it when they want to buy it? Now I have access to all of these buyers at the same time, and I feel much more comfortable knowing some of these crops.”
It’s not that he wants to expand the acreage on his specialty crops; as long as he’s just down the road from the crush plants, Mowbray reasons the need to move canola via FarmLead just isn’t there. But the self-marketing option for posting his grain to an internet-wide network of potential buyers is similar to transforming conventional shopping to an online model like Amazon. He’s dealing in a much larger world now.
“We’re not a big farm, so we have to be a little more nimble than others and be able to take advantage of things like FarmLead to be able to make up for the fact that we don’t have the same economies of scale that others do.”
The next step for FarmLead
Last October, executives with FarmLead launched another valuable online tool, GrainTests.com, which provides buyers and sellers of grains and oilseeds with a listing of third-party laboratories from across North America. The launch adds a level of traceability to the demand for quality parameters in the volumes under negotiation.
It helps ensure farmers are offering specific traits and characteristics for potential buyers. For buyers, it’s an opportunity to ask about fusarium or vomitoxin levels in a crop. Or if they’re looking at high-quality milling wheat, they might want to know about falling numbers.
It’s not a reinvention of the wheel in grain-testing services; FarmLead has simply made it easier for the producers to access those laboratories. Preparing and ordering grain samples can be done online, whether it’s for multiple tests for a commodity, multiple samples or multiple commodities.
“Then what we do is give you a very clear recap, for each of your samples — this is what you write on it, this is who you’re sending it to — and then we have a good turnaround with the third-party labs,” says Alain Goubau, co-founder of FarmLead. “The lab sends the results back to the producer and if they need to refer to them later, we also make sure that we keep a copy for them.”
Farmers are urged to get their samples tested — it just makes it that much easier in the negotiation process. He adds that it’s the opportunity for growers to have their own view of they’re offering, without relying on some other service provider who might be involved in the process of buying a grower’s grain.
“We like to say paying $25 or $50 to test $30,000 or $50,000 worth of grain is a very smart investment in that grain,” says Goubau, who also farms in Eastern Ontario. “It’s about driving the habit of self-marketing a crop. I know that if I’m selling wheat, it’s probably good to get the basic grading done and a couple of the key factors, either the protein level indicators, moisture indicators and the toxin indicators, because those will be the very first questions the buyers will ask when they’re looking at the grain.”
For more information go to: