Farmer-First Go-To-Market Strategy
OK, so you’re in an R&D, business development, or product develop role and have been tasked to create an emission reduction technology for Agriculture (Ag) or Animal Health and Nutrition (AHN). Obviously, this technology will be used on-farm, so you get to work. You and your team spend two to ten years creating the technology, give it to your sales team, and it does LOUSY. You’re stunned, the company is stunned, shareholders are irritated. What happened? There is a BILLION DOLLAR market for emission reducing technologies. It should have worked.
Over the last 5+ years, there has been a major disconnect between product development and farming, and it’s been weighing on my mind lately. When a product geared towards the farming industry is being developed, the go-to-market strategy must be fleshed out early – like before you start your R&D journey. Why is this important? Just because a producer or farmer will EVENTUALLY use the product, doesn’t mean the purchase will be driven by the end user. Farming isn’t a transactional industry. Nestle doesn’t drive up to the dairy farm and purchase the milk directly. It goes through a whole supply chain. The same goes for Ag (typically). Add the futures market to the mix, and it’s a convoluted mix of theoretical money and multiple handling steps. Oh yeah, did I mention some farmers and producers only get paid about once a year?
OK, OK, OK, this is a bit much. Let’s use an example to make my point. Let’s discuss emission reduction technologies. But we need to setup the landscape first.
The globe has a warming problem which we know causes a lot of other farming related issues. Global warming is a big – but general – problem that is getting tackled in what seems like a million different ways. Methane is a short-lived greenhouse gas that has roughly 28X the warming capacity of carbon dioxide. So, methane is a quick way to slow warming while carbon initiatives take shape to slow global warming in the long-term.
There are a variety of products and technologies being created to reduce or remove methane from the atmosphere and cattle have been the target for a lot of these products. But let me be crystal clear – PRODUCERS DON’T HAVE A METHANE PROBLEM. If you walk onto a dairy farm or ranch and ask them about their problems, they will not say methane (unless they have a methane digester, but that’s a topic for another time). They have a PROFIT PROBLEM – which is obviously caused by a lot of other things. Your methane reducing cattle product will not be purchased by the average cattle producer. The financials are not there, even if it has some sort of production benefit.
Let’s switch focus a little bit. Due to the increasing pressures to create and execute sustainablity strategies, Food and Beverage (F&B) companies have pledged to reduce their carbon footprint. Furthermore, these companies made these pledges BEFORE there were viable solutions available to do so. And the icing on the cake, there aren’t agreed upon ways to VERIFY that these companies are actually doing what they say they are doing. All F&B companies are making it up as they go because the industry isn’t mature yet. No one knows which technologies will give them the best results. And, as folks in the farming industry know, each farm, ranch, and dairy are different. So, when a large F&B company sources their raw materials (ingredients) from 100+ different producer/farmers, it gets complicated quickly.
This brings me back to the initial concept. Farmers don’t have a methane problem, but large F&B companies do. These companies must figure out how to reduce their carbon footprint and do it by 2030. There is a real need for products that fit into their supply chain. From where I’m sitting there are a few ways to market your new product that aims to reduce carbon dioxide, methane or other greenhouse gas emissions – find the people with the problem. And that’s your go to market strategy, folks.
What does this look like? It can be partnering with F&B companies directly. We are starting to see some pretty cool strategic partnerships take shape, and I think this will only continue. In Ag there are the grain elevators and in the dairy industry there are co-ops. These are places where inventory is aggregated and then sold as larger quantities. These co-ops and grain elevators usually pay a premium for desired traits or qualities. By partnering with these types of businesses, you can start to shape the supply chain from the middle. And guess what, these companies also have sustainability pledges to fulfill. Shocking, I know.
But here is the MOST IMPORTANT PART: farmers, ranchers, and dairymen must be compensated to use such technologies. Carbon reduction is not value-added for the farmer (yet), but it IS value-added for the upstream producer (elevators, co-ops, F&B). They can market this emission reduction and gain increased revenue from such practices. Therefore they must pay the premium - simple supply and demand. Producers hold all the power right now – I’m just not sure they know it yet.
Remember, farmers and producers have a PROFIT PROBLEM. Find a way to tackle both the climate and profit problem, and your technology is a sure thing. And from my experience, these companies are willing and eager for good emission reducing technologies. So go out there and start networking with these types of companies. But PLEASE, PLEASE, PLEASE, keep the end user in mind when CREATING your technology. Because nothing will fail faster than a technology that can’t be easily integrated into the farming system. So, if you are in an R&D, business development, or product development role and need insights from a farmer or producer, reach out to me. I can connect you with the right people.
