Embracing Tech for Farmers – Farmigo
Currently, there are several startups in Europe who want to bring the farmers market online in form of subscription model: HelloFresh, Bonativo, Gousto and Farmdrop (just to name a few). Each of those startups build on the underlying concept of locally grown mostly organic food for urban customers. Most new ventures follow a home delivery approach, however differ in customer’s choice of individual items and automated baskets based on recommended recipes.
These new business models integrate cases of disintermediation and reintermediation simultaneously. Disintermediation occurs in form of taking out wholesalers and supermarkets to reach customers and reintermediation remains in form of the newly created startups. A critical question some customers may ask themselves is whether the farmers benefit from such business models in comparison to traditional wholesaling? And whether more advanced tech could assist farmers to forecast better?
This is where Farmigo comes into play. The 2009 founded company took a more holistic and dedicated approach to eliminate supermarkets (Kowitt, 2014) and increase benefits for farmers and customers at the same time. Currently Farmigo operates on the West and East coast of the U.S. focusing on urban areas, which have access to farms within a 100 mile (160km) radius (Adams, 2015). The food startup established a community-based business model, where it connects local farmers directly to consumers through “food communities”. Each community within a specified geographic area can access several farms through the dedicated Farmigo site and subscribe on a weekly or semi-weekly basis. Once ordered the food is delivered from the farms to community drop-off stations such as offices, schools or community centres within 48 hours of harvest (Ha, 2014). As customers pass certain pick-up stations, which can be specified beforehand, they can collect their fresh orders.
Both Farmigo founders have a career background in software engineering. One of them was previously vice president at SAP working on supply chains and logistics (Adams, 2015) who wanted to embrace his supply chain expertise to offer farmers new ways to connect to customers. To increase stability of demand forecasts and estimate corresponding harvesting supply, Farmigo has developed a cloud-based software system for farms to manage their Community Supported Agriculture (CSA) subscriptions. This system incorporates inventory management, business analytics, payment management, logistics as well as forecasting agricultural and livestock yields.
The ultimate benefit for farmers is a higher margin on the transaction made. According to the founder of Farmigo, on average farmers get 30% of the sale when dealing with wholesalers. Farmigo turn this around and entitle farmers up to 60% of the transaction. The community organizer gets 10% and Farmigo the last 30% (Kowitt, 2014). Another benefit for farmers is that they get paid immediately rather than the standard retail conditions of 30-60 days.
As Farmigo is building an alternative food system based on technology and a community approach it will challenge other farmer online delivery services and could be implemented in Europe where there is a high demand for local organic food in highly populated areas.
Check out Farmigo: http://www.farmigo.com/
Adams. (2015). Retrieved October 11, 2015, from http://www.forbes.com/sites/forbestreptalks/2015/05/11/this-entrepreneur-thinks-his-startup-farmigo-will-kill-off-supermarkets/
Chang. (2012). Farmigo Brings Community-Based Farmers’ Markets Online. Retrieved October 11, 2015, from http://www.wired.com/2012/12/farmigo-local-food-communities/
Ha. (2014). Built In Brooklyn: Farmigo Brings Local Produce To Schools, Offices, And Homes. Retrieved October 11, 2015, from http://techcrunch.com/2014/12/22/built-in-brooklyn-farmigo/
Kowitt. (2014). Can this startup kill off the supermarket? Retrieved October 11, 2015, from http://fortune.com/2014/08/04/can-this-startup-kill-off-the-supermarket/