January 4, 2012 | Matt Wilhalme

When FarmsReach launched in 2007 it sought to facilitate connections between farmers and buyers by focusing its efforts on resolving food distribution issues with an online portal to help local farmers get their produce into the hands of consumers and address the increasing demand for organic regionally grown food.

But after the product scaled to 26 states, at a time when founder Melanie Cheng expected these marketplaces to boom and locally grown produce to become available in more and more places, transactions and volumes decreased. The main problem, according to Cheng, wasn’t the venue or point of sale, it was the “pre-marketplace.”

“Ultimately, there are a lot of different obstacles to creating a truly sustainable food system and a lot of them initiate from farms’ lack of business skills, business resources and general viability,” said Cheng. “We need to rehabilitate farming as an occupation.”

Cheng’s new focus with FarmsReach is on developing pre-market tools to help farmers more efficiently tackle everything from pricing, pack and food safety to planning and purchasing. To do so, FarmsReach plans to provide farmers everywhere with logistical software tools and also to establish a group buying program, which will function in much the same way as group purchasing organizations (GPO) do for hospitals by aggregating the purchase of supplies needed on an ongoing basis, to reduce farm production costs.

The company is also working to aggregate online business resources and programs for farmers in one location where they can find information about everything from business and crop planning to water management and more.

“If we can just rehabilitate the first mile in the supply chain, then other stakeholders that are working downstream can more easily take it from there,” Cheng said. “There is no one tool that is going to save the day. It is going to require a lot of people and multiple tools working together.”

FarmsReach’s pivot in strategy grew out of a realization that farmers need more robust tools to address the logistical issues of getting their products from the farm to the buyer, Cheng said.

“I think that many farms across the country would agree they could benefit from improvements in their business skills and operations. Many farmers will tell you they could use help streamlining their ops and marketing,” Cheng said.

Farmers’ Needs

In one day, Paul Underhill, a partner at Terra Firma Farms, spent more than six hours online just trying to buy tomato seeds for his farm, which produces more than 25 different crops.

“These websites are so bad, it literally takes me three times as long to place an order online than to call,” Underhill said. “When it’s faster to call a company, you know something is wrong.”

But finding lower prices on seed isn’t necessarily the most important factor Underhill takes into account –  it’s the variety and availability. The difference in variety available this year meant 5,000 lbs. of onions per-acre on his farm versus the 20,000 lbs. in previous years.

Purchasing other items for his farm, including boxes and other heavy material can involve several more hours of getting quotes from shippers. The inordinate amount of time required to carry out these transactions is one reason why farmers like Underhill need the more innovative and time saving tools that FarmsReach is working to develop.

Addressing Issues in the Supply Chain

In summer 2010 Cheng initiated the Produce Supply Chain Convening, a conference that brought together farmers, aggregators and distributors to discuss the many problems affecting the food supply chain.

“The lack of capital available for small and medium‐size farms, coupled with their lack of business skills, is a fundamental issue that has ripple effects down the supply chain,” said FarmsReach in its report from the conference. “Meanwhile, regulations and policy imposed by end‐buyers and the government have ripple effects back up the vertical to aggregators and producers.”

Jenny Huston, founder of Farm to Table Oakland with more than 30 years of experience working in the restaurant and food service industry, attended the conference and said one of the major issues crippling the food system today is that food costs are being pushed down on the farmer.

The food distribution system has become industrialized and because of food safety concerns, food has to go through so many different hands on the way from the farmer to the aggregator to the distributor to the consumer; and at each stage the price goes up, Huston said.

But at the same time, to keep prices low, the savings the consumer sees at their local grocer are pushed down on the farmer and their labor.

“The system is broken, it ain’t friggin’ working for anyone,” Huston said. “It ain’t working for the farmers. It ain’t working for the consumers.”

Ideally, Cheng said she hopes that her new initiative will have an impact on small and medium-sized farms and help them increase their profitability and allow them to leverage the FarmsReach aggregate of business resources to affect their bottom lines.

“In this complex industry, entrepreneurs have to think more systemically,” Cheng said. “If your new business idea seems like an obvious or easy solution, it’s probably not … I think that in the future entrepreneurs need to devote more time to learning about the intricacies of the sector and make the effort to collaborate with and learn from existing efforts – whether nonprofit or for-profit. We all need to look more broadly and collaboratively at rehabilitating healthy food systems.”

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Quick Links:

FarmsReach – http://www.farmsreach.com/

Terra Firma Farm – http://www.terrafirmafarm.com/

Farm to Table Oakland – http://www.farmtotableservices.com/