Building an Amazon for Agriculture
Imagine an Amazon exclusively for farmers, where you could purchase your seed, fertilizer, and chemicals from anywhere in the world for the best rate available. That’s the vision behind Agroy – a start-up with the technology in place to provide these services to farmers.
“In every other retail system in the world, you can find prices and products online,” says Agroy co-founder Brad McDonald, who also farms in northeast Iowa. “There isn’t a place for that in agriculture.”
While he admits that Agroy doesn’t have that capability yet, he says the beauty of Agroy is that the technology is set up for that dream.
Today, farmers can sign up for free at Agroyinc.com. When Agroy has a product available to sell – primarily seed, fertilizer, or chemicals – farmers in that region will get an email with information about the product and the price.
“Farmers can take that information and use it when they negotiate purchases. Or they can purchase the product through us,” explains McDonald.
Agroy leverages the scale of farmers who have signed up to negotiate a better price for the farmer. “The goal is to save farmers money,” says McDonald. For example, Agroy was able to offer farmers a savings of $35 per ton on dry fertilizer.
The Agroy network includes hundreds of farmers, spanning millions of acres from California to the Midwest down to Texas and up to Canada. While the goal is to offer products to farmers across the U.S., today the majority of sales are done in Iowa, Illinois, Indiana, and Nebraska.
In the company’s first year, Agroy did more than $2 million in sales, a percentage of which goes to Agroy.
Growing for Tomorrow
The ability to sell more products in more regions is dependent on adding additional acres and suppliers. While Agroy is encouraging all farmers to join, McDonald is offering incentives to large-scale farmers to help grow the network rapidly. Farmers with 10,000-plus acres, who have the capacity to store extra fertilizer or other products, can get paid for storing these items.
“We purchase the product, pay the farmer for the storage, and the final product we sell still ends up being cheaper than what a farmer could purchase elsewhere,” explains McDonald. “And it’s an opportunity for that farmer to make money on the side.”
As more acres are added, that helps Agroy bring in more suppliers who want access to this market of customers. Agroy works directly with seed dealers and companies, negotiating the rate for products that will be offered to Agroy’s network and setting the boundary for where the product can be delivered. While farmers aren’t able today to purchase all major brands of seed and chemicals, Agroy is working to add more suppliers.
With scale comes smaller margins. “Our goal is to be national because we would have the ability to charge less to a lot more farmers,” says McDonald.
Success in Europe
In 2012, Agroy was started in Finland. “They had phenomenal success, and 8% of all farmland is now ordering online in wholesale prices through Agroy,” says McDonald. “If we could replicate that and get 8% of U.S. farmland, that would be a massive success.”
The U.S. division of Agroy is a subsidiary of Agroy Group, which includes the branch in Finland and another one that was just launched in Asia.
McDonald was brought in to launch the U.S. division in 2016. The farm boy from Ryan, Iowa, was working in agrifinance in Chicago at the time.
Entrepreneurship + Agriculture
McDonald’s efforts to revolutionize the way farmers buy inputs have not gone unnoticed. McDonald was named by Forbes as one of its 2018 30 Under 30 visionaries.
“I think this is more of a great honor for agriculture than me. No one pays attention to agriculture, even though we are doing pretty special things,” he says. “For a company like Forbes to recognize something interesting going on in agriculture was the coolest part.”
McDonald isn’t a stranger to entrepreneurship. When he was young, McDonald’s parents told him that he’d have to pay for college himself. “Instead of getting a typical job, because I was helping on the farm and playing sports, I raised purebred basset hounds. I found I could charge more if I sold to Chicago instead of Iowa,” he says. “I made decent money and was able to pay for college debt-free because of that venture.”
After college, McDonald worked in commodity trading research in New York, for Bunge in St. Louis, and finally in agrifinance in Chicago. Today, he oversees Agroy in Chicago, making the four-hour trip to his parents’ hog farm as time allows.