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Improving Farm Profitability

Harvest Port

Brian Dawson is passionate about making sure farming remains a profitable business. As the founder and CEO of HarvestPort, his team and him have developed technology that connects, educates and supports farmers in an effort to cut costs and increase farmer’s profitability. 

I hear from a lot of farmers that software developers don’t actually understand what happens on the farm. How are you actually making sure your products are applicable to farmers?

First, we save farmers time and money immediately. HarvestPort’s value prop is not hypothetical or ‘down-the-road.’ We start cutting a grower’s operating expenses upon the first interaction. When a farmer instantly understands what an ag-tech platform can do and can easily quantify ROI, the farmer is more inclined to adopt the solution. The farmer needs to understand the return vs. engaging in a long uncertain pilot phase. Also, more than half of our employees have worked previously in agriculture. And half of our investors are growers, processors or brick-n-mortar agribusiness service providers.

On that note, one of the reasons that North Dakota is a good spot for ag-tech to emerge is that many of the developers grew up on farms and come from an agricultural background. What are your thoughts about that? Being in California, is it hard to find tech people who understand farming?

It is indeed great that ag-tech has such strong momentum in North Dakota and, of course, if you can find folks that know both tech and farming, that’s great. But you don’t need everybody on a team to come from an ag background. In fact, I might argue that as long as some portion of an ag-tech team has a nuanced understanding of the ag supply chain, it is beneficial to have team members with diverse experiences who bring a perspective from other industries. Though I have now been in ag half my career, I actually started in oil and gas. And having built a technology startup in another sector prior to my first ag startup (HarvestPort is my second), this allowed me to approach problems without any insider bias.

Photos courtesy of HarvestPort
Brian Dawson
Founder and CEO, HarvestPort 

The stereotype of farmers who are not technology-savvy is becoming more antiquated as the new generation takes over. How will farming and farms, in general, be affected as the new generation takes over the farm over the next decade?

The next generation, specifically millennial farmers, inherently understand tech. It’s been a part of their lives. Trying out and adopting new technology is not as big of a hurdle. I expect farms to try tech more quickly but need to see ROI.

When it comes to new technology adoption, there’s the idea of having to cross the chasm to have your product adopted by the majority. When it comes to software for your farm and, in particular, apps, where do you think we are on crossing that chasm?

This speaks to the rule-of-thumb in ag-tech that often throws off venture investors: it’s not always the best technology that wins – it’s the best go-to-market. We’ve tried to deal with this by following the money upstream. We leveraged relationships with farmland operator clients to be introduced to the farmland asset manager funds they are affiliated with, which became clients, and we are now running a program to consolidate inputs purchasing across a pension fund who has many farmland asset manager portfolio investments. Following the billions of dollars to an apex investor allows you to aggregate maximum acreage with minimal effort. Of course, we had to build business intelligence product tools with the investment manager in mind. Still, it’s the best bang for the buck so to speak. 

As a company that connects stakeholders in the ag supply chain, including new tech, we consistently see new businesses that struggle to get traction on farms. And it’s the go-to-market problem I’m referencing, often times the solution works well but they don’t know how to get buy-in from the farmer on the problem it solves. With that said, in the past five years, there has been a huge shift in readiness to adopt new tech in ag. 

You have a unique product that focuses on the farmer. Can you talk about how business is usually done in agriculture and how HarvestPort is hoping to make farmers more profitable?

We’ve made a point not to try to “disrupt” the personal relationships in the agricultural supply chain. We work with local experts at brick-n-mortar agribusinesses, often crop retailers. We simply try to improve efficiency both ways, to cut costs for both supplier and farmer. Farmers working with HarvestPort see immediate cost and time savings on one of their largest farm expenses, crop inputs. 

What is your vision of farming 20 years from now?

Farmers will be able to cover a lot more ground. Fewer people will be required to get a job done. Frankly, I think the skilled farmers who understand the complexities of agronomy are digitally competent and who are savvy about mitigating risk from ESG (Environmental, Social, Governance) issues will rise to the top. And the guys who aren’t paying attention may be in trouble.


Farm Profitability

According to the USDA’s Farm Income Forecast, the net farm income, which is a broad measure of profits, is forecast to increase $4 billion (4.8 percent) to $88 billion this year. However, at the same time, total production expenses, including operator dwelling expenses, are forecast to increase $1.5 billion (.4 percent) to $346.1 billion. 

What this means for households
Farm households typically receive income from both farm and off-farm sources. Median farm income earned by farm households is estimated at -$1,840 in 2018 and is forecast to increase slightly to -$1,644 in 2019. While the median farm household income will reach $74,768 in 2019, an increase of 3.7 percent, because of the off-farm income. 

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Written by Andrew Jason

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