Animal AgTech

Fintech + livestock: where’s the opportunity?

Fintech has the potential to improve & streamline financial services across the livestock and poultry segment. In what areas will those innovations be?


Perhaps the most notable innovation in the history of US ag industry financing was the creation of the Farm Credit system, with roots reaching back to legislation signed by President Woodrow Wilson in 1916 to create the Federal Land Bank System to provide low interest credit to farmers.

Fast forward to the current macro trend of financial tech products, aka Fintech. Much like using tech to enable or reorganize supply chains in faster/better/cheaper ways, the idea behind Fintech solutions is faster/better/cheaper financial services. Most of us have multiple consumer facing Fintech products in our personal finance stack. Consumer facing examples range from peer to peer payment services like Venmo to online only banks like Chime to trading apps like Robinhood for beginning investors (Tesla ain’t mad about it).

Last year a16z, the venture firm, hypothesized that every company will eventually be a fintech company:

“In the not-too-distant future, I believe nearly every company will derive a significant portion of its revenue from financial services. Startups will be able to launch companies faster and more cheaply. Existing financial services institutions will be able to introduce new products quickly—and spend less on IT maintenance. And most importantly, this means more choices, better products, and lower prices for consumers.”

Sounds good for a consumer context but perhaps a little far fetched for a B2B context in an industry who’s primary access to credit stems from a 105 year old system, right?

Maybe…but maybe not.

Before we look at some ideas for fintech in livestock & meat, let’s apply generous boundaries to the category and look at some fintech innovations across agriculture:

  • Grower’s Edge offers risk management products for early adopters of unproven inputs.
  • Tillable is a platform for landowners to manage farm land leasing.
  • Farmland Finder is streamlining the process for farmland buyers and sellers.
  • AcreTrader & FarmTogether offer vehicles for investing in farmland.
  • Harvest Returns is a crowdfunding platform dedicated to ag investments, both debt & equity financing for farmers and agbusinesses.
  • Genesis Feed Technologies is bringing a precision element to managing feed costs/outcomes by allowing buyers to value soybeans based on nutrient value instead of protein content alone.
  • Stable is a risk management platform for untraded commodity market risk, targeting food manufacturers.
  • Produce Pay “finds, finances, and fulfills grower supply for importers of fresh produce – a partner to growers from first planting to final liquidation.”

(Side note: one space that’s only seen a few startups is crop insurance, and even those startups haven’t lasted long before closing or pivoting. One of my favorite consumer examples of insurtech is Lemonade, the recently IPO’d company offering renter & home owner’s insurance targeting millenials and built around improving the customer experience with AI/ML and digital first. It’s hard to replicate that type of model in crop insurance given that the program is backed by the federal government, but it still seems like there are innovation opportunities.)

Where are the fintech opportunities in livestock & meat?

So as we think about where we might see financial services innovation, here are a few questions that can point us in the right direction:

  • Who needs access to capital? More? Cheaper? Nontraditional terms?
  • Who’s taking unnecessary risk?
  • Who’s playing in an inefficient or opaque market?
  • What existing financial services offer perfectly fine products but abysmal customer experience?
  • What existing financial services are cost prohibitive to large segments of would be customers?

Based on those questions, here are some ideas in animal ag:

  1. As more feedyards transition to custom feeding rather than owned cattle, could Fintech products allow retail investors to buy cattle for custom feeding?
  2. Robinhood for traded or untraded commodity markets? <ducks as market players throw shoes at the idea of adding even more volatility in markets>
  3. Rethinking how hog or poultry houses are financed. Is there a way to give increased financial flexibility to a producer taking out a $300k loan on an asset that has only 1 high value use? The real risk is asset specificity, which perhaps can’t be eliminated but can it be offset. Ask the contract poultry grower who’s contract has been terminated because the only processing plant in a 200 mile radius has closed down. You can’t solve the asset specificity problem with Fintech, but what if there were ways to increase financing flexibility? What if hog and poultry houses were an asset class open to outside investors?
  4. Mike Salguero, ButcherBox CEO, recently highlighted the financing challenges as a limiting factor to establishing a robust grass fed cattle feeding sector in the US. Since most operating loans are on a 10-12 month terms, until it takes grass fed cattle the same amount of time to finish as grain fed cattle, existing financing vehicles are insufficient. More broadly than that use case, what new financing options could give producers greater than a 12 month horizon to take different risks than traditional banks enable?
  5. What about how animal health/nutrition products are purchased and distributed to producers? What’s the Amazon-adapted-to-this-industry-and-B2B model look like, and the related financial services that naturally grow out of that model?
  6. Aligning poultry contract grower pay, both the incentives & structure as well as paymenting, with overall poultry complex objectives. For example, if a plant is selling cuts from small birds to a KFC type customer that needs extremely high uniformity, how can improved data flows be used to drive and align incentives among growers, live production, and the processing plant?
  7. And alas, the oh so vexing challenge of price discovery across the negotiated portion of markets from live cattle to pork and poultry. (Go to the google if you need current context here.)
  8. Do food companies building aligned supply chains become the financing arm for producers in their systems?

I readily admit that perhaps the above list is simply a hammer in search of a nail, at least for the North American livestock industry. But in 2121, will the Farm Credit system still be the best innovation in US ag financing history? I’m betting the answer is no.

A bigger opportunity….India?

Regardless of what emerges in the US, the opportunity for fintech is exponentially more interesting in regions of the world where supply chains are extremely fragmented, hurdles to accessing capital are higher, etc. Take India for example. Mark Kahn of Omnivore, an agtech venture fund in India, described it this way:

In India there are 80 million dairy farmers and 300 million head of cattle and negligible penetration of institutional credit and insurance across the ecosystem. FinTech in livestock represents a huge opportunity which is why our portfolio includes 3 companies in the space:

  • Animall – a mobile direct to farmer platform for dairy & cattle trading
  • Stellapps – B2B software for large co-ops and dairies, starting at the point of purchase where the institutional buyer buys milk, embedding FinTech into milk procurement processes
  • Gramcover – startup offering insurance across rural India, including crop insurance and now for livestock

It’s not hard to imagine the impact of fintech on India’s agriculture industry, if these companies can effectively scale.

Your turn. Across any geography or segment of livestock/poultry/meat, where do you see a need for improved financial services? Where is there unnecessary friction in financial transactions? What financial services innovations from other industries could be applied in this market?

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