Which is the best agriculture B2B marketplace
Platforms are changing the agricultural industry
This article first appeared in the DLG member newsletter on July 5, 2019
A platform is characterized by the fact that it pushes itself between existing business connections. Think Uber: you used to order a taxi and the driver drove you to your destination for a fee. With Uber, you call a car on your smartphone and the driver will take you to your desired location. You pay Uber. Uber pays the driver. Since Uber does not have any vehicles or employees, the platform has a low cost of capital.
In agriculture, a distinction is made between: a) Platforms where companies have a business relationship (industry / agricultural trade - farmer) and b) those where companies have a business relationship with end customers (farmer - consumer).
From the farmer's point of view, there are great opportunities. You can get more transparency and less effort too better prices shop. The start-up “Agrando” is an example of the purchasing of operating resources. In addition, the speed These processes become faster: It is conceivable that a supplier already has all machine data in stock and has already ordered spare parts, for example, because the algorithm was able to anticipate wear. At the same time, however, the farmer must Master of his data remain in order to avoid dependencies and the economic influence of suppliers.
Platform as a separate sales market
A great potential arises for farmers in platforms that enable him to use his Products to the end customer to discontinue. Under certain circumstances, the customer is even willing to pay a higher price if he can gain insight into the production processes via the platform. Particularly against the background of a free trade agreement with the Mercosur countries, it is becoming more and more important for farmers in Germany to set themselves apart through “tangible” quality. Platforms can help here. Not least as a communication tool with the customer.
Imagine a platform that pays a farmer to store CO2 in the soil.
Platforms can also pave the way for innovation by making technologies from other providers available to the farmer. Agricultural management platforms are good examples here if, in addition to automated documentation, they also offer innovative third-party applications.
But: every company is different
Last but not least, platforms could make the excessive bureaucracy with documentation obligations and other obstacles more bearable for our profession. Still, it is not that easy in agriculture. Farms and their managers are often extremely heterogeneous and have different needs and requirements. As a result, they usually do not really represent a single, large market. A platform provider must therefore think of Europe as a market at an early stage, not just Germany.
In addition, the rules and regulations (e.g. DVO) in Germany often differ from state to state. This increases the complexity of a single offer, as it is supposed to meet the needs of many.
Platforms as a threat to established companies
This harbors great dangers for traditional companies. Especially when there are inefficiencies. Start-ups are often able to identify this inefficiency and react flexibly to changing requirements. Why do traditional companies seem helpless to deal with this transformation, even as market leaders?
The answer is simple: these companies have a lot to lose. And nobody is celebrated for questioning their existing, supposedly successful business models. That means that disruptive developments almost never come from the companies themselves. One solution could be to invest in start-ups. Even if they pose a potential threat to traditional business. It is also possible to invest in venture capitalists specializing in agricultural technology or directly in AgTech start-ups as outsourced R&D expenses. The recently announced collaboration between BayWa AG, ATR Landhandel and Getreide AG with the start-up "unamera GmbH" is a positive example.
In an international comparison, we are still losing ground.
In an international comparison, most German agricultural companies have not seen possible developments. Or they saw it but did not want to react. In this respect, investments in AgTech start-ups are still too rare and risk capital is insufficiently available. It's good that more and more movement is slowly coming into this area. A similar inaction applies to the federal government, which has so far not really initiated investments in AgTech start-ups or changed regulations regarding venture investments or the development and licensing of innovative products. As a result, we are losing ground in an international comparison.
Efforts to invest state subsidies in individual platforms should be critically examined. Farmers would lose confidence. A state platform, financed by taxpayers' money, would put an end to competition in the private sector and put a strain on the agricultural innovation area in Germany. Instead, politicians should work together with the private sector in a constructive and goal-oriented manner. The federal government should concentrate on:
- Providing fast internet in rural areas,
- To improve and expand education & counseling, and above all
- Carry out quality management of digital products (especially with regard to data storage and the definition of standard interfaces and formats).
AgTech expert Borris Förster on innovations in agriculture and the reasons why there is still a lack of exchange between start-ups, companies and farmers.
Platforms will not stop at agriculture. One way to adapt to this could be to understand your own company as a kind of physical platform and give start-ups or science the opportunity to test innovative products and new approaches on a small scale in practice. In this way, start-ups could find out what the needs of the industry are and farmers have the chance to deal with new developments through contact and exchange without taking too great a risk.
With changes there are always opportunities: Imagine a platform that pays a farmer to build up humus or store CO2 in the soil. Not only the soil, the ecosystem, the habitat and the resilience of the farm will increase. Farmers would also be rewarded for what they have been doing successfully for centuries: ensuring the production of food and being the keepers of our land.
Platforms change entire branches of industry. But how?
- Market psychology: The aim is to attract and retain the largest possible number of interested parties with the largest possible range in a short time.
- Access: Platforms enable consumers / customers cheap and convenient access to the product / service.
- Market entry: The value of a platform is defined by the number of its customers. Whoever has customers has market access. And with it the bargaining power. Suppliers have to pay dearly for this market entry. In this respect, a large part of the margin is shifting from the supplier to the platform provider.
- Network effects: Because my friends or colleagues use certain platforms, I also use them.
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