With farm profits floundering and COVID-19 concerns putting further stress on farm operation budgets, many farmers are more hesitant than ever to deploy new technologies for the next few growing seasons.
“The farm economy is under a tremendous amount of pressure,” said Dan Cosgrove, CEO of Growers Edge, an ag fintech startup. “You have low commodity prices, tariffs, and global trade disputes – all of which have had a tendency to push prices, corn and soybean in particular, down further and further. These macroeconomic economic cycles will eventually turn around, but it doesn’t look like it’s going to turn around tomorrow.”
To help combat financial stress, many farmers have cut down on input costs, but according to Cosgrove, that strategy has the potential to lead them into a downward cycle.
“They may be spending a little less on inputs, but because of that they may be getting a little bit lower yields on the backside, which leaves them with less to spend the following year,” he said.
Be it to improve outputs or to reduce waste, Cosgrove believes farmers need new technological advances in the field so they can do more with less.
Of course, farmers are looking to cut costs during these difficult times, not add further expenses. With this in mind, Growers Edge has set out to develop a product that actively incentivizes farmers to embrace new technologies, all while minimizing the financial risk of adopting these technologies within their operations.
“What we’ve hoped to design is a product that creates an incentive for growers to spend a little more, knowing the products themselves are guaranteed to perform,” Cosgrove said. “By having a warranty on the products we sell, we’re able to help the farmer manage that risk a little better, so that’s the model we’re pursing.”
Growers Edge works with their core customer, ag retail, to develop a series of steps or a “prescription” that growers can follow: buying specific seed, following certain agronomic recommendations, etc. By following these steps, Growers Edges offers a warranty behind their product’s performance.
“If our product falls below a specific yield level, we’ll send the grower money back,” Cosgrove said. “We hope this allows farmers to try products that they may not be quite sure about, but since there’s a warranty involved, they’ll be able to try it out with little to no risk.”
There are a lot of companies and scientists out there working to solve problems in agriculture, and Growers Edge is doing their part to help farmers incorporate these products within their operations.
“There are new technologies brought to bear all the time that are solving problems within the ag industry,” he said. “Most of these companies have a lot of good data to show that’s the case, but some don’t, so it’s important that warranties are in place.”
According to Cosgrove, the biggest challenge in this current farm economy is that companies have to prove to the farmer that their product works, otherwise, nobody’s buying. Farmers can’t be expected to shell out hard-earned dollars to “test” something out without a guarantee that it’s going to work for them and make their operation more profitable.
“A lot of times, especially when economies are tight, farmers aren’t going to take your word for it,” he said. “On one hand, if it works, farmers have shown an incredible ability to ramp up and adopt new technologies. However, it’s incumbent on those bringing those technologies to the marketplace, whether it’s seed, chemistries or new digital precision ag tools, to demonstrate real value to the grower.
“I’ve heard a lot of farmers say, ‘I’m going to go broke on all these 3-5 bushels per acre I’m going to save on these new technologies,’ and that’s true,” Cosgrove continued. “A lot of companies are not very good at showing real value to the farmer, so we hope we’re able to elevate that conversation so that they can start to see real value. If not, they can still try the product because they’re backed by a warranty that puts them in in no worse position.”
On June 4, Growers Edge and Arva Intelligence announced a partnership to help farmers become more efficient and profitable by delivering data-backed solutions that remove the financial risk of deploying new technologies. The two companies will jointly create a proprietary ag input warranty program for growers in the Arva network.
“We’re excited to work with Growers Edge to match financial risk products with our predictive analytics in seed selection and fertility recommendations by environment. The goal of our partnership is to remove some of the financial risks that keep growers from adopting new technologies and new crop inputs,” said Jay McEntire, CEO of Arva Intelligence.
The partnership will get started with pilots at five farms across the U.S., as well as the Arva Research Farm. Growers Edge and Arva will use the resulting data to create a product warranty for select crop inputs and new ag technologies.