Capturing better information for farmers with Farmhedge

At the National Ploughing Championships 2017, Bank of Ireland is hosting three cutting-edge agribusinesses at its stand.

One of these, Farmhedge, offers a free app created by John Garvey. It uses the location of your farm to create a set of hourly and 10-day weather alerts and handy tips for things like: grass growth; environment and safety; harvesting; fertilising and seeding; and animal health.

John Garvey, a lecturer in Finance & Risk Management at the University of Limerick, said: “I work in a university; but I grew up on a farm outside Ennis, Co. Clare, so I’m familiar with the day-to-day challenges that farmers face.”

Better prices from big farm supplies

John was intrigued by one challenge in particular: How could individual farmers reduce their input costs and make their businesses more profitable?

Specifically, how could they coordinate their decisions with other farmers to get better prices from big farm suppliers.

Farmers on family-owned Irish farms don’t have huge market power in terms of negotiating the price of supplies like animal feed with suppliers,” he said.

“Farmers can come together with other farmers to form a larger buyer group with more power to negotiate.

“But there’s a catch; there’s a big underlying cost there in terms of administering the buyer group and sometimes less flexibility for members of the group in terms of who they can buy from and the product range they can select from.

“Also, suppliers don’t always like negotiating with buyer groups,” he added.

Was there anything he could do to improve communications between farmers and suppliers for their mutual benefit?

“I did a lot of research into transaction costs and I started to think: How would an efficient agribusiness market look?”

What if he could use the power of smartphones and the internet to create a platform where farmers and suppliers could meet and make deals? The result of his thinking was Farmhedge.

“The core idea behind the Farmhedge app is to use technology to capture better information about farmers so that, in the first instance, we can lower sales and distribution costs for suppliers and create a mechanism for them to pass the savings on to farmers in the form of lower input prices.”

How does it work?

Farmers download the app to their smartphones, type in some brief personal details and then drag a marker to show the exact location of their farm on a map.

As soon as Farmhedge has this information, it starts sending them accurate, timely weather information and alerts for that day and the next 10 days.

“This is good information which we’ve converted, so it’s easy to use,” John explained.

Once signed up, Farmhedge begins to send weather forecast information for the farmer’s location and tips based on it.

These tips include: ‘conditions for silage making’; ‘check vulnerable animals for heat stress’; and ‘risk of compaction on heavy soils’.

But that’s not all. As farmers join Farmhedge, suppliers can see their details, too, and they can use this information to organise them into groups that make sense for their products.

“They might choose to create a group based on a specific location – 60 farmers in south Galway, for instance. Or they might create a group based on farmers’ past purchases,” John added.

Having this information enables suppliers to target their communications much more precisely and, thereby, minimise their sales and distribution costs.

A discount for farmers

They can then decide on the type and volume of product they want to offer to that group and establish a discount for farmers based on selling that volume.

These offers pop up as alerts on the My Deals section of the Farmhedge app.

John explained how it works, saying: “Take the example of fertiliser, an agribusiness can push an offer to the app of 100t of fertiliser available from them at €270/t for delivery to your farm next Tuesday.

“You can say, right, I want 10t of fertiliser. Let’s say that there’s 60 farmers in your group, well, you know the number of farmers active and the amount left on the deal and you know when the deal closes.

But you don’t know how much fertiliser an individual farmer has booked. Farmers value their privacy. They don’t really want other farmers knowing their business so we respect that by keeping individual orders private.

International investment in Farmhedge

In the past few weeks, Farmhedge has been selected from among 265 high-tech companies in a global competition run as a joint venture between Baywa – the German agricultural cooperative – and RWA, which is the largest cooperative in Austria.

Over the next six months, they are going to invest in Farmhedge, which is one of the smallest companies they selected.

“Let’s say Baywa or RWA need 2,000t of wheat by next week and they can offer €300/t. They could communicate this to the farmers and then farmers across Germany and Poland would go back and say they can sell a certain quantity of wheat.”

All these offers come in from individual farm businesses; they have to be recorded and a running total updated plus the progress against the target of 2,000t to ensure they don’t end up with too much or too little wheat.

John said: “Right now, they do this through multiple phone calls and emails, so it’s a very messy process which is expensive for Baywa and RWA to coordinate.

“Using Farmhedge, they’ll be able to create a group of wheat farmers and communicate directly to them and the farmers can make their offers directly.”

The Farmhedge platform automatically keeps records of offers so, at any time, Baywa and RWA will be able to see the farmers who have signed up and the progress towards getting the 2,000t they need.

Find out more

Farmhedge will be exhibiting at the Bank of Ireland stand at this year’s National Ploughing Championships for the remaining two days of the event. It’s located at: Block 2, Row 11, Stand 262.

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