Indigo Ag expects the current 1 to 2 percent payments it derives from services related to transactions on its online Marketplace platform could rise to 4 or 5 percent, according to the start-up’s chief executive.
Speaking Thursday at BMO Capital Markets Farm to Market conference in New York, David Perry said Marketplace – Indigo’s e-commerce platform connecting buyers and sellers of farm produce – is the key element of the company’s broader effort to de-commoditize agriculture and encourage more sustainable and specialized production.
In response to an audience question about “take rates” on the platfom, Perry explained that while commodities without specifications trade on Marketplace free of charge, the company does charge for services like hedge to arrive and forwarding contracts, financing options and more specialized goods.
“Today that will be about, we think it has about a 4 to 5 percent possibility,” Perry said.
Indigo representatives did not reply to messages seeking further detail.
“We’re just enabling capitalism to work in a way that it really doesn’t in ag, because farmers are selling to an intermediary who is paying a commodity price and the farmer has no idea of what happens downstream of that,” Perry said.
Presenting a day after the Boston-headquartered company was named number one on CNBC’s 2019 Disruptor 50 list, Perry said Marketplace facilitates plain commodity-type transactions for free, charging primarily for related services like “hedge-to-arrive” and forwarding contracts, financing options and more specialized goods.
Indigo has also launched Indigo Transport, a unit that helps buyers and sellers efficiently find transportation options similarly to Uber Freight.
“By having Transport, we’re able to show bids on Marketplace that are net of transportation, so a farmer can look at bids and know immediately what is most attractive, without regard to how far away it is and vice versa,” he said. “We think we can get it to the point where either farms are hauling it themselves, or it goes through Indigo Transport.”
Indigo is exploring how Transport can participate in the shipping and rail portions of grain transportation, Perry said, adding that while most bushels of grain are transported by truck at some point, the majority use more than one mode of transport to reach their destination.
The company hopes to establish partnerships that would allow it to offer rail without owning assets, according to Perry, who said Indigo also often encourages farmers to invest in their own storage capacity.
“It’s generally a good investment in today’s world and it gets to be even more so as production gets to specialized and you get to differentiate on quality,” he said.
Perry stressed that Indigo is a mission-driven company aiming to increase farm profitability, the sustainability of agriculture and consumers’ access to healthy foods.
If the company is successful, Perry said, by 2025 the sector will have collectively determined how to feed 10 billion people by 2050; $5 billion will have been added to US farm income; and farmers within Indigo’s network will have reduced nitrogen use by 50 percent and chemical insecticide and fungicide use by 90 percent.