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Ag startup Farmer's Business Network was stymied selling others' seeds online, so it launched its ownqrcode

Aug. 16, 2018

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Aug. 16, 2018

Farmers Business Network cofounders Amol Deshpande and Charles BaronTIMOTHY ARCHIBALD FOR FORBES 

Amy Feldman, Forbes

Agricultural startup Farmer's Business Network tried to break into selling other companies’ seeds online and found itself stymied. So today (Aug 14) FBN launched its own seed brand, called F2F, which it will sell direct to farmers through its low-frills online store, where it already sells herbicides and fertilizers.

The new brand, which it is developing in concert with a number of independent and academic breeders, will launch nine new corn and soybean seeds to start. It will then use the data from the farmers in its network—data that underlays its entire business model—to develop new seeds that, it says, will serve farmers better. “A non-incumbent trying to start a new seed company is very, very unusual,” FBN cofounder Charles Baron told Forbes. “There are a myriad of reasons why this will be disruptive in pricing, distribution and transparency.”

The launch marks a major shift for the seed business, which is dominated by three large players—Corteva Agriscience (the agricultural division of DowDuPont), Monsanto (acquired by Bayer) and Syngenta (owned by ChemChina)—though it’s not yet clear whether it can break through. FBN said that it expects about 1,000 farmers to purchase seeds for the 2019 planting season, but it declined to disclose the volume of seeds it would produce this year or the revenue it might make from their sale.

“What we have done is put together a network of breeders who have fantastic genetics,” said Ron Wulfkuhle, a 30-year agriculture veteran and the former CEO of GreenLeaf Genetics who joined FBN this spring to head up the new seed division. “What we intend to do is to bring the farmer closer to the breeder.”

FBN, which is based south of the San Francisco airport and backed by nearly $200 million in venture capital—from the likes of T. Rowe Price, Temasek, Kleiner Perkins and GV (Google’s VC arm)—has set itself a mission to save America’s family farms. Baron, 34, and Amol Deshpande, 40, his cofounder and the company's brash CEO, want to shift leverage from the giant agricultural manufacturers to farmers who collectively produce nearly $200 billion worth of crops a year. By bringing these farmers together, FBN’s sprawling operation helps them get better prices on both the goods they buy and the crops they sell. It has yet to turn a profit, but it expects revenue of $200 million this year, up from $72 million in 2017. 

At the launch, FBN will offer five conventional, non-GMO corn seeds and four soybean varieties with a trait for glyphosate tolerance similar to Monsanto’s Roundup Ready 1, which is now off patent and can be sold in generic versions. Over time it intends to add additional seeds, both non-GMO ones and those with traits that have come off patent, in corn, soybeans and other crops. As with the herbicides, fertilizers and other products it offers online, FBN intends to offer low prices on its seeds that are the same for all customers, regardless of where their farms are located or how big they are.

The F2F seed program followed an earlier effort by FBN to test selling seeds from the industry’s largest independent seed company, Stine Seed, through its online store. While Baron was originally excited about the deal, the test earlier this year didn’t turn out to be a big win: Stine’s national pricing on FBN wasn’t much different from its local prices offline, and Harry Stine, its billionaire founder, questioned whether seeds may be too complex a product to be sold through a website.

The F2F seeds, in theory, will allow FBN to combine data and seeds into one business, letting FBN leverage the data to develop new seeds for farmers based on previous year’s results. Its focus on non-GMO seeds, which are less expensive and less profitable for the seed manufacturers, will allow it to focus on getting the genetics right for them to increase their yields. “Farmers have felt that the conventional seed always get short-thrifted and is not getting the top-tier genetics,” Baron said. “So the farmers’ data can become incredibly important in developing those genetics.”

The ultimate impact, Baron and Wulfkuhle believe, is that farmers may discover they can switch from genetically modified seeds to non-GMO ones without worrying about losing money. Typically, a bag of GMO corn seeds costs $270 and a premium branded seed might go for $400 or more, while conventional non-GMO seeds sell for closer to $170, Baron said. FBN’s seeds, by contrast, will go for just $99 per bag to start, though prices will rise as it gets closer to planting time. Since a bag of corn seeds covers 2.3 acres, that works out to $30 an acre savings over a traditional non-GMO corn seed, he said, or $150,000 for a 5,000-acre farm. Even bigger savings would come if the data shows that farmers could plant the non-GMO seed without losing too much in yield. “If all he needs is weed control, he may not need to use an herbicide-treated hybrid,” Wulfkuhle said. “He can now make that informed choice.”

Source: Forbes

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