FarmPay, a farmer-to-farmer payment service launched today (22 March), will not only be the first electronic payment system specifically developed for farmers who are trading online, but has longer-term aspirations to unlock more value from the supply chain and support new entrants.
Launched by Hectare Agritech, the company behind online trading platforms SellMyLivestock and Graindex, FarmPay guarantees funds by providing an ‘escrow’-type account which holds transaction monies securely until the deal is completed successfully.
Hectare has ambitious plans for its new service, which is designed to boost farmer-to-farmer livestock trading. Longer term goals are to use improved data to recoup millions of pounds of value farmers are currently losing from the supply chain. As well as this, the service will support new entrants to farming and those wishing to expand by providing a unique livestock leasing facility.
Speaking at the launch of the service, Hectare founder Jamie McInnes explained that online livestock trading had seen considerable growth in the four years since SellMyLivestock was launched. However, some buyers remained cautious about trading direct with farmers they didn’t know.
“We now have 30,000 farms registered on SellMyLivestock and its sister cereal-trading site Graindex. Together these farm businesses listed almost £40million of livestock and cereals for sale on the platforms in 2017, up from £13m in 2016,” he explained.
“FarmPay removes an obstacle to those who feel more confident working through third parties rather than trading direct. The buyer’s money is held securely in the holding account until they can see the stock on-farm and finalise the purchase. Equally, the seller knows the buyer is genuine once their funds have been receivedinto FarmPay.”
Fellow Hectare director Andrew Loftus explained that FarmPay’s guaranteed payment service was just the first step in a bigger plan.
“With fragmented livestock supply chains and poor communication of market signals from consumer and retailer back to breeder and finisher, better information flow will benefit farmers, and help ensure more of their animals meet clearer specifications.
“We already include as much information as possible on our livestock listings but FarmPay will take this a step further. Each transaction will come with a unique bundle of animal data, ready to upload into your own farm software.”
Mr Loftus used industry statistics to show how up to £500 million could be recouped annually from the beef supply chain alone. “These gains come from improved Feed Conversion Efficiency, reducing waste from over-finishing, better yields of the most valuable cuts, lower transaction costs and healthier animals.
“All this can be achieved through improved flow of information both ways. For example, we know there is a huge difference in feed conversion efficiency between different beef animals. Yet if you breed store calves and invest in the latest genetics you are unlikely – at the moment – to see a return on this investment in the storering.”
“Other examples might include predicted yield, meat eating quality and environmental indicators. Buyers will only be able to recognise these new drivers of value if they have the information. This is why data at point of sale is going to be very important to differentiate UK product in the future.”
He outlined another feature of FarmPay that will be developed over the coming months: improved access to working capital.
“Hectare plans to release a range of highly competitive livestock leasing options shortly. These will not only free up working capital to invest back in the farm, but are tax efficient too”.
“In countries such as New Zealand, a more flexible approach to leasing livestock has reduced the huge capital outlay required to start up or expand in farming”.
“It’s time these finance options were available here.”