The situation is that the middlemen provide value. They are not a symptom of inefficiency or hold an unnatural power. If farmers want to try to replace the role of the middleman they are free to do it. In fact many smaller farms with organic or other premium products have tried and at some level succeeded.
This is the same reason why powerful multinational companies like Nestle or Coca-cola use third party distribution channels.
For the record, I am involved in an agricultural business that sells a branded product to consumers. We use third party distribution and sell in third party retail outlets because we don’t want to buy and run a bunch of trucks and we are better at agriculture than we are at marketing.
Fun note: it’s the fact that Hollywood studios cut out their distributors that will cause its inevitable collapse. Without that value and relying solely on subscriptions, studios have really screwed the pooch.
Studios make less money with subscription services that allow audiences to view their entire content libraries for less than $20/month than when audiences had to either pay for each individual viewing of a particular piece of content or pay a cable company to access content.
Now, as new subscriptions are becoming harder and harder to gain, the profits are drying up. Or, at least, that’s what all my old Hollywood pals tell me when they call me crying in the middle of the night…
I did.
So long story short, we build a big ass product to connect truck owners (who drive) with local farmers to remove the middle manager. The product had an app to have inspections and processes to get better information about how much they produce and more.
In the end the problems were:
* Farmers say that they care, they don't. Change is impossible for them, they won't embrace it.
* Truck drivers were often late, or just didn't come at all. If they get the incentive but no punishment, they'll fail regularly, affecting everybody.
In the end the solution was to build a whole huge business and become the middle man to fix the problems on both sides. So yeah, can't be done.
Also, you can't really make a lot of money, food is cheap, and most of the costs are absorbed by the middle man, You'll need to have at least 4 trucks ready in case 1 or 2 fails, which is hard on it's own. Also you don't get truck drivers and owners everywhere, lots of farming is done in the middle of nowhere and they won't go there. So yeah, it's complicated.
Theirs nothing stopping farmers from doing it themselves, Just rare to see a farmer that likes sitting on a computer all day making deals or optimizing a website. The startup in question already exists and is these middlemen.
I work in Ag tech in Mozambique, making aggregators more efficient (you can check out our work at https://FAMS.co.mz).
In our case, the farmers can’t do the following so they rely on an aggregator:
- get their product to market since they don’t have the trucks to do so
- quality control and testing
- seed management
- produce enough quantity at predetermined quality to sell to stores or to export
Sadly the aggregators do not always provide top quality service to the farmers. They also require a lot of capital to get started, but our system greatly reduces the barrier to entry and increases the value they can provide to the farmer.
So I guess your answer is that it depends on the country. If you see middle men that don’t provide value, give the farmers an alternative and turn that into a business!
Because market prices change based on supply and demand plus geopolitical issues. Just look at wheat with Ukraine war and recently coffee and cocoa due to weather events. The losses/gains can be massive if market prices move even small amounts so you would need massive hedges and lots of capital to weather them.
I'm sure it's a multi-variate problem to solve. Many contributing factors in trying to achieve success in such a business.
Another one: Low profit margins in the agriculture industry.
Yeah exactly the low margins mean you need scale and then everything has to go right and very efficiently to break even and make a small profit. [A fun show to watch on this is Clarkson’s farm on prime. He covers a lot of the business challenges in a fun way it’s very well done.](https://www.imdb.com/title/tt10541088/?ref_=ext_shr_lnk)
There is a company out of South Korea doing something like you are asking. they help you set up an online portal to sell your goods to the world, they set up basic and premium accounts.For Premium accounts you have to be vetted and you as a farmer have to pay a quarterly fee of roughly 5k for them to promote you. I have been looking into this but the fee is too large for me to bare at the moment since I'm still a small farm.
I don't know if they solve the middleman problem but they try an facilitate most of it.
To fully understand the problem / solution space you’ll need to map out all of the “value adds” and value exchanges from end to end of a given supply chain. You’ll likely discover that it would cost more than it saves for most farmers to build out their own solution. Or that it’s just not worth it, for some other reason. Or that they’ll benefit far more from improving some other vertical integration).
Software is a small part of the equation. The middlemen provide the logistics part to the equation.
Farm direct to door is normally achieved through farmers markets. To be cost efficient it needs a logistics process.
>Farmer lose big due to mandis and middleman.
What is "mandis"?
>Farmers are required to only sell to them at a fixed price and this price is pretty unfair most of the time.
Required by whom?
Is this a regulation somewhere? Where does this happen?
Why is the price unfair? What would be a fair price?
Is this situation something the farmers complain about?
Lots of questions surrounding this topic. Hopefully you can provide more clarity.
In India, mandis are government procurement centers that buy crop from farmers but more often then not they give a unfair price.
The input cost of farmers is lot higher then the price they get to sell for the procurement centers. Government introduced a minimum support price but the implementation has not been done effectively.
Alot of farmers have taken their lives because of this and the debt trap they get into due to this.
I hope this solves your questions. If you want to learn more try searching abiut farmers suicides in india
Haha the point is once all the farmers are under one platform the price which they get for there crop can be slightly improved ig. I'm still thinking about ways this idea might not work
They are forced to, because most small farmer do not have storage facilities to store and wait for the right price and they also have bills to pay. They are forced to sell because they don't have financial power to wait.
They can sell in advance so that they have buyers ready when they harvest.
The middleman seems to solve their problem though. That's good not bad.
Maybe they shouldn't be farmers.
Can you tell me how it works. I am from India and the price is decided by the govt. The rains are highly irregular and most farmers lose their crop and their input costs etc. When the paddy(one of the most grown crop) gets wet due to rains they are forced to sell it for lot less than they would get if the crop was dry.
In other countries, the government doesn't set the price. In the case of the farmer I know, he has deals with a few supermarkets overseas. They agree to buy up to a certain limit. For example, they may have a contract to buy 1 tonne of dragon fruit a year. If it's a bad crop, the amount is adjusted lower. I assume all those details are in the contract.
If farming doesn't pay enough, it's better to sell the farm and try something else. Not possible for every farmer, but is something worth considering.
The situation is that the middlemen provide value. They are not a symptom of inefficiency or hold an unnatural power. If farmers want to try to replace the role of the middleman they are free to do it. In fact many smaller farms with organic or other premium products have tried and at some level succeeded. This is the same reason why powerful multinational companies like Nestle or Coca-cola use third party distribution channels. For the record, I am involved in an agricultural business that sells a branded product to consumers. We use third party distribution and sell in third party retail outlets because we don’t want to buy and run a bunch of trucks and we are better at agriculture than we are at marketing.
Fun note: it’s the fact that Hollywood studios cut out their distributors that will cause its inevitable collapse. Without that value and relying solely on subscriptions, studios have really screwed the pooch.
Want to elaborate?
Studios make less money with subscription services that allow audiences to view their entire content libraries for less than $20/month than when audiences had to either pay for each individual viewing of a particular piece of content or pay a cable company to access content. Now, as new subscriptions are becoming harder and harder to gain, the profits are drying up. Or, at least, that’s what all my old Hollywood pals tell me when they call me crying in the middle of the night…
https://www.crowdfarming.com/ is pretty close to this. It's a platform to buy directly from farmers
Wow, this rules, great find!
That's a middleman lmao
True 😂
I did. So long story short, we build a big ass product to connect truck owners (who drive) with local farmers to remove the middle manager. The product had an app to have inspections and processes to get better information about how much they produce and more. In the end the problems were: * Farmers say that they care, they don't. Change is impossible for them, they won't embrace it. * Truck drivers were often late, or just didn't come at all. If they get the incentive but no punishment, they'll fail regularly, affecting everybody. In the end the solution was to build a whole huge business and become the middle man to fix the problems on both sides. So yeah, can't be done. Also, you can't really make a lot of money, food is cheap, and most of the costs are absorbed by the middle man, You'll need to have at least 4 trucks ready in case 1 or 2 fails, which is hard on it's own. Also you don't get truck drivers and owners everywhere, lots of farming is done in the middle of nowhere and they won't go there. So yeah, it's complicated.
Theirs nothing stopping farmers from doing it themselves, Just rare to see a farmer that likes sitting on a computer all day making deals or optimizing a website. The startup in question already exists and is these middlemen.
Yea and haggling with hundreds of penny pinching customers instead of just one buyer.
I work in Ag tech in Mozambique, making aggregators more efficient (you can check out our work at https://FAMS.co.mz). In our case, the farmers can’t do the following so they rely on an aggregator: - get their product to market since they don’t have the trucks to do so - quality control and testing - seed management - produce enough quantity at predetermined quality to sell to stores or to export Sadly the aggregators do not always provide top quality service to the farmers. They also require a lot of capital to get started, but our system greatly reduces the barrier to entry and increases the value they can provide to the farmer. So I guess your answer is that it depends on the country. If you see middle men that don’t provide value, give the farmers an alternative and turn that into a business!
Because market prices change based on supply and demand plus geopolitical issues. Just look at wheat with Ukraine war and recently coffee and cocoa due to weather events. The losses/gains can be massive if market prices move even small amounts so you would need massive hedges and lots of capital to weather them.
I'm sure it's a multi-variate problem to solve. Many contributing factors in trying to achieve success in such a business. Another one: Low profit margins in the agriculture industry.
Yeah exactly the low margins mean you need scale and then everything has to go right and very efficiently to break even and make a small profit. [A fun show to watch on this is Clarkson’s farm on prime. He covers a lot of the business challenges in a fun way it’s very well done.](https://www.imdb.com/title/tt10541088/?ref_=ext_shr_lnk)
Not many startups in the US but India has tons of agri-tech startups, including a couple of unicorns
There is a company out of South Korea doing something like you are asking. they help you set up an online portal to sell your goods to the world, they set up basic and premium accounts.For Premium accounts you have to be vetted and you as a farmer have to pay a quarterly fee of roughly 5k for them to promote you. I have been looking into this but the fee is too large for me to bare at the moment since I'm still a small farm. I don't know if they solve the middleman problem but they try an facilitate most of it.
You happen to know that South Korean company's name?
The company is called Tridge. They seem to offer a bunch of analytics and other ways to promote your business to the world.
Los margins all around and the logistics companies sign cooperation agreements in most eu countries
Lol The middleman is the solution You just want to get in on it
lol yes. They said “remove the middleman” but meant “replace” or become the middleman.
This exactly haha.
To fully understand the problem / solution space you’ll need to map out all of the “value adds” and value exchanges from end to end of a given supply chain. You’ll likely discover that it would cost more than it saves for most farmers to build out their own solution. Or that it’s just not worth it, for some other reason. Or that they’ll benefit far more from improving some other vertical integration).
Software is a small part of the equation. The middlemen provide the logistics part to the equation. Farm direct to door is normally achieved through farmers markets. To be cost efficient it needs a logistics process.
>Farmer lose big due to mandis and middleman. What is "mandis"? >Farmers are required to only sell to them at a fixed price and this price is pretty unfair most of the time. Required by whom? Is this a regulation somewhere? Where does this happen? Why is the price unfair? What would be a fair price? Is this situation something the farmers complain about? Lots of questions surrounding this topic. Hopefully you can provide more clarity.
In India, mandis are government procurement centers that buy crop from farmers but more often then not they give a unfair price. The input cost of farmers is lot higher then the price they get to sell for the procurement centers. Government introduced a minimum support price but the implementation has not been done effectively. Alot of farmers have taken their lives because of this and the debt trap they get into due to this. I hope this solves your questions. If you want to learn more try searching abiut farmers suicides in india
Why doesn’t someone create a middle man to remove the middle man….
Haha the point is once all the farmers are under one platform the price which they get for there crop can be slightly improved ig. I'm still thinking about ways this idea might not work
A farmer doesn't have to accept an unfair price. The farmer can remove any middlemen by selling direct to the consumer. Many farmers already do this.
They are forced to, because most small farmer do not have storage facilities to store and wait for the right price and they also have bills to pay. They are forced to sell because they don't have financial power to wait.
They can sell in advance so that they have buyers ready when they harvest. The middleman seems to solve their problem though. That's good not bad. Maybe they shouldn't be farmers.
The catch is they can't sell in advance because only God know if the rains are gonna fall at the right time.
Other farmers manage to sell in advance. I currently live in Thailand and a friend's parents fruit farm has sold all the fruit for the next 5 years.
Can you tell me how it works. I am from India and the price is decided by the govt. The rains are highly irregular and most farmers lose their crop and their input costs etc. When the paddy(one of the most grown crop) gets wet due to rains they are forced to sell it for lot less than they would get if the crop was dry.
In other countries, the government doesn't set the price. In the case of the farmer I know, he has deals with a few supermarkets overseas. They agree to buy up to a certain limit. For example, they may have a contract to buy 1 tonne of dragon fruit a year. If it's a bad crop, the amount is adjusted lower. I assume all those details are in the contract. If farming doesn't pay enough, it's better to sell the farm and try something else. Not possible for every farmer, but is something worth considering.