AgriMercante is redefining the business model of one of the key players in the world’s fresh produce value chains: the Shipper. AgriMercante addresses the main flaws of the current system (i.e. serving Growers poorly, costly business structures, and the inability to foster product and packaging innovation) by implementing a technology-driven, three-layer business model. The first layer delivers detailed pricing data and analytics to help Growers and Buyers understand pricing dynamics, thus facilitating the signing of flexible, risk-sharing contracts (this is critical as produce prices can be very volatile). The second layer allows Growers, Buyers, and transportation companies to connect and close transactions. The third layer is the execution layer. Once a deal is closed AgriMercante becomes the Grower’s agent responsible for execution, which may include quality inspections, shipment monitoring, export/import processes, and payments, including trade finance solutions such as factoring.
Produce Shippers are a critical link in the world’s fresh produce value chains. Their main role is to sell and distribute the produce of the Growers they represent. The business model was created in the late 1800s and it has proven to be a very successful and resilient one. Examples of well-known Shippers include Driscoll’s (berries) and Calavo (avocados). However, this business model has significant weaknesses. Some of the flaws originate from a clear misalignment between the Growers’ and the Shipper’s objectives. Shippers typically sell the Growers’ produce on a consignment basis and receive commission fees after they have completed the sales cycle. Therefore, they have the incentive to “move” as much product as possible through the system in order to maximize their commission fees. Better pricing and shorter payment collection cycles –something very important to the Grower– are not necessarily the Shipper’s key priorities. Other key weaknesses in the current Shipper’s model have become more apparent with the emergence of eCommerce technologies. These include the prevalence of costly and capital-intensive business structures, and an innovation agenda mainly driven by their largest customers – the national retail chains.