(Bloomberg) -- Companies will be soon able to track the carbon emissions from an ear of corn to a pork chop, allowing them to market products to environmentally conscious eaters.
Farmer’s Business Network Inc. -- which has been likened to an “Amazon” for farmers -- has launched Gro Network, which will track and score the carbon intensity of grain. That will allow buyers to label their products to consumers as “green” and potentially get a higher price for farmers who use more sustainable practices.
It’s the latest effort to capitalize on growing demand for food that has a smaller environmental footprint. Pollutants can be found as early as in the fertilizers and other chemicals farmers use in their fields, which permeate the food supply system as grains move along to buyers like meat producers who feed those them to their livestock. Gro’s technology offers a score that producers can show their customers, vouching for the products’ environmental impact, opening a layer of transparency and creating a premium product in grocery stores’ meat aisles.
Agri-tech startups like Indigo, FBN and Grainster Inc. have emerged in recent years to challenge the likes of Archer-Daniels-Midland Co., Bunge Ltd., Cargill Inc. and Louis Dreyfus Co. -- the storied quartet of agricultural commodity traders that dominate the market. The trading houses historically made money by buying crops from farmers, storing and selling them at a higher price later.
FBN operates an online marketplace as well as a brick and mortar business that compares prices farmers pay for fertilizer, seeds and other products. That price comparison in a market typically dominated by a few big players who occupy retail space predominantly in local stores has reduced some farmers’ expenses by over $20,000 in a crop year, the company has said.
Gro Network, which was birthed about two years ago as a research project within FBN, is working with major grain buyers like Unilever NV and biofuels producer Poet LLC, and connecting them directly to the growers of low-carbon corn.
“There’s no reason not to work together,” Devin Lammers, the president of Gro Network, said of the company’s relationship with farmers in a telephone interview. “We’ve realized that grain buyers want to adjust their supply chains and that’s a very complex and challenging thing to do, and we found that we can play a role in that.”
While Gro is one of the first to offer supply chain transparency, competition is likely to increase. FBN’s online retail service was also met by competing services, such one from Nutrien Ltd. Along with access to product purchases, Nutrien offers advice on products that best suit the types of seeds farmers are planting.
The ability of firms like Nutrien to add similar features to their platforms make Gro vulnerable to larger companies taking share back within a few years, according to Seth Goldstein, senior equity analyst at Morningstar Research Services LLC.
“The thing with Nutrien offering the agronomy and ag services is farmers want that advice,” Goldstein, said in a telephone interview. “And FBN isn’t offering that.”
FBN says it aims to give farmers choice by providing the most information possible on pricing sustainability. And if that means competitors attracting customers away from them, so be it.
“I believe the reason that all this anti-competitive nature exists in ag, and part of the reason it’s directed toward FBN, is that the ag industry views everything as a zero-sum game,” Amol Deshpande, FBN’s chief executive officer, said by phone. “Meaning if FBN comes in and takes a customer, there’s no opportunity for anybody else to get that customer, which is nonsense.”
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