Our two customer groups - Consumers and Farmers. by

Our two customer groups - Consumers and Farmers. / Published December 20, 2015 by Brennan Costello

Brennan Costello

Our two customer groups - Consumers and Farmers.

We are building an online marketplace for agricultural production contracts to address two main customer problems: excessive income volatility for small farmers, and obstacles preventing individuals outside agriculture from ownership of crops and livestock in small increments.

Volatility in agriculture is inherently higher than volatility in other industries for several reasons (natural shocks, long production times, low elasticity, etc.), and small farmers (producers) lack access and training required to use some of the risk management tools employed by larger producers, which leads to a concentration of risk and excessive income volatility for them. This problem is especially acute for farmers in developing countries who lack even basic risk management tools.
It is also difficult for outside individuals to directly participate in agriculture. Transactions between unfamiliar parties require complicated legal contracts that are unfeasible for small transactions. Large transaction sizes preclude many individuals from participation, and the lack of a transparent marketplace precludes those without a pre-existing relationship with an agricultural producer.

We plan to address the aforementioned problems by providing an online marketplace where the transparent exchange of small production contracts can occur in a safe and efficient manner. This platform will incorporate visualization of the users’ agricultural holdings and analysis tools to provide recommendations for their virtualized farm. The software will combine a game-like interface with functional farm management software to improve the users’ experience and lower barriers to entry for new users. User histories and reputations will be important to build trust and stored value in the network.

A production contract is an agreement between a producer, who is paid to grow a crop or raise livestock, and a contractor, who owns the agricultural product. Essentially, the producer is paid for providing services to the contractor, namely labor, management, expertise, etc. Production contracts can effectively spread a producer’s risk among a wider group of individuals, which can stabilize the producer’s income (risk reduction) while enabling outside individuals to own crops and livestock without needing to relocate or make large investments to achieve economies of scale (improved accessibility).