Co-authored with Tony Holt.
By any standard, the agricultural industry is immense in both scale and complexity, responsible for feeding billions of people and employing roughly 40% of the world’s working population.
It has also been identified as the least digitised industry in the world — rife with inefficiencies and opportunity.
We’ve been watching the space with interest for the last few years, hopeful that we would meet an extraordinary founder with the tenacity and technology to revolutionise Ag as we know it.
Where does your avocado on toast come from?
Globally, the answer would probably be “Errr… I’m not sure”.
When a commodity such as wheat is grown by a farmer, it passes through an incredibly complex supply chain of buyers, financiers, storage, transportation and processing facilities before it gets to you.
In such a vast and important industry, it is astounding that underpinning multiple layers of transactions — both financial in the form of payment, and physical in the form of grain — are handshake agreements (often never documented), reams of paper contracts, handwritten receipts and hastily edited ownership documents.
In short, it’s a mess.
And the pain is felt across the agricultural supply chain:
farmers don’t get paid for what they deliver when they deliver
buyers and financiers can’t verify provenance of commodities (or where their commodities are)
consumers don’t know where their food comes from
When you factor in not-so-unusual occurrences such as multi-million-dollar insolvencies, food-safety scares and food fraud (which adds up to US$40B per year), there is a huge need for safe and secure commodity tracking for all participants in the agri-supply chain.
And from within the industry grew the solution.
The AgriDigital team share a clear vision for a platform that would enable:
users to buy and sell agricultural commodities with confidence
financiers to access live, accurate and verifiable information on asset location and valuation
buyers and consumers to verify the provenance of the commodity
In bullet-points, this reads very simply. Almost too simply.
In practice, AgriDigital’s platform enables a radical improvement in operational efficiency, which allows for:
same-day payment for farmers and buyers
flexible contracts with integrated communication — contracts are fast to create and stored in the cloud with parties notified in real-time at contract creation, amendment and completion
digitised deliveries with weighbridge and quality testing instrumentation integrations — delivery to payment occurs in seconds using IoT integrated facilities
paperless, automated invoices — manual invoicing can be completely removed
seamless payments on a same-day or agreed-term basis simplified reporting for all users and automated levy and end point royalty collection and remittance.
For growers, in particular, digitisation will help reduce the burden of risk they shoulder when they transfer ownership of grain without receiving payment. Providing the ability to track commodities from the field will open up financing for growers earlier in the supply chain.
It’s democratisation at work (and it’s working).
The team launched the platform in 2016, focusing on the Australian grains market. Since then, they’ve transacted over 1,500,000 tonnes and have over 1200 active users. Shortly to launch in North America, the team are also expanding the platform to include other bulk commodities.
Importantly, Emma and the AgriDigital team see the platform as a foundational piece of agriculture infrastructure, with the flexibility to use cutting-edge technology to increase transparency and efficiency.
The platform has been designed to evolve so that advances in other technology, such as IoT connected devices, are able to plug straight into the platform. Currently, AgriDigital is prototyping the use of IoT connected devices in grain silos and throughout the grain supply chain to improve the accuracy of supply-chain reporting and to ensure users have access to live data on their agricultural commodity assets.
The combination of IoT connected software and financial transactions means that the agricultural supply chain has clear blockchain applicability.
Which is where we found ourselves leaning in even further. Emma and the team are some of Australia’s leading experts in the application of blockchain technology. In fact, the team has already made global history. In 2016, they connected AgriDigital to a multi-node private Ethereum blockchain network and completed the first-ever live, in-market settlement of an agricultural commodity on a blockchain between a grower and buyer.
No wonder we’re excited.
When speaking to AgriDigital customers, we heard again and again that the ability to manage commodities efficiently and with high transparency is an absolute breakthrough for such a complex, manual and paper-dominated industry. The feedback was truly overwhelming: this platform solves a really painful problem.
Plus, with one platform able to solve issues up and down the supply chain, the network effects of AgriDigital are obvious. It’s an incredibly smart solution.
Which leads us nicely into the phenomenal AgriDigital team.
AgriDigital was founded in 2015 by Emma Weston, Bob McKay and Ben Reid. This is a team that deeply knows agriculture, with over 80 years experience between them. Emma is a blockchain expert, sits on the board of FinTech Australia, and has a crystal-clear vision for the business. She is exactly the founder that we love to partner with: deep technical knowledge, smart and ambitious, purpose-driven.
Emma’s co-founders have a wealth of complementary experience. Bob is a sixth-generation farmer and founder of Agfarm, a leading independent broker, and creator of the first online grain broking and clearing house, Clear Grain. Ben is a fifth-generation farmer and spent 15 years as a trader, broker and pool manager in agriculture.
If there was a team who can crack the commodity platform market, we’re convinced it’s this one.
The Agridigital team officially closed their A$5.5m Series A in December, with Square Peg Capital and one of Australia’s foremost family offices.
We are seriously excited to be on this journey with Emma and the team.
A note on supporting the industry.
Industry-leading startups such as AgriDigital are a testament to the development of the AgTech sector in Australia overall. We believe that Australia has a natural competitive advantage: arable land, deep technical knowledge, community cohesion and a tried-and-tested export market. The growth in industry-specific support services such as SproutX, Agfunder and Agthentic is a great indicator that we’re at the beginning of an exciting period for this sector!
Long may it flourish.