Grower moves grain into the 21st century
A cohesive team ... Jessica Hogan South NSW Account Manager, Machallie McCormack Victorian Account manager, Tom Roberts Managing Director, Mathew Kowalski co-founder.
Stories of internet companies being founded in the garage or basement are commonplace, but Tom Roberts’ venture had a different starting point – from the back of a tractor.
With igrain.com.au set to launch in November 2009, Roberts was still working as a full-time farm manager around Bathurst and trying to drum up interest in the grain trading platform on his mobile phone while he worked.
“I was just ringing farmers while I was in the tractor myself,” says Roberts, 25, who now works full time in the business with a staff of seven.
igrain.com.au lets growers offer their grain for sale to potential buyers such as flour millers or exporters.
It lists the grain the farmer is selling, how much, the price, quantity and quality, and where it its located. Buyers make counterbids, which the farmer can accept or decline when he receives them on his mobile phone. Farmers pay a commission of $2 for each tonne of grain sold on the site.
The business has grown rapidly. It sold around 50,000 tonnes of grain in its first year, about 200,000 the next and is on track to sell about half a million tonnes this year, says Roberts.
But even then, that’s only a very small portion of the Australian grain market, where nearly 40 million tonnes can be produced in a good year.
Roberts came up with the idea when as a farm manager he struggled to get a good price for his grain following the deregulation of the market in 2008.
“We were growing grain and I found that actually marketing grain was an absolute nightmare. You didn’t know who the buyers were or where to find them or what the prices were or how to get a guide on prices,” he says.
“I thought by using the internet we would be able to bring all these buyers together to one central place to buy grain and that way from a selling perspective you knew that you were actually taking the grain to the market and you were getting the best price on any given day.”
With deregulation, grains prices have varied widely, making a visible market increasingly important for growers. Grains can have a price range of $100 a tonne in a single year, a huge margin on a produce that mostly sells for $200 to $300.
“That’s an incredible amount of money that could be either made or lost by doing marketing well or poorly,” says Roberts.
He joined with Matthew Kowalski, who operated a feedlot near Crookwell and was struggling to find a nearby grain supplier, to found the site. Neither had a tech background, but Kowalski’s brother David is a founder of technology investor Green Lane Digital, and so was able to help out with technical and business expertise.
The partners put in several thousand dollars each to found the business, which now has five shareholders following a capital raising last year. Roberts won’t reveal how much cash was raised, only saying it was a “modest” for amount needed for more computer equipment, advertising and hiring staff.
The business didn’t need huge amounts of additional capital because it has been cashflow positive from the start, says Roberts. In fact, it made it put through its first grain sales before the site was even officially launched.
Roberts says the biggest challenge with starting the business was “getting the word out” to hard-to-reach farmers. The company advertised on radio and print, but much of the marketing was done by telephoning farmers and potential grain buyers – hence the calls from the back of the tractor.
To ensure he had a functioning market, Roberts also targeted buyers. “I called every buyer I could think of, using the Yellow Pages, Google, and directories to get them registered.” Clients now include some of Australia’s major grains players, such as Graincorp, Viterra and Elders.
Another major challenge was bringing the high tech sales approach to farmers, whose average age is in the late 50’s and many of whom are not computer literate, although that is changing.
To get around this, igrain.com.au made the website as basic and simple to use as possible. They also hold tutorials and workshops for farmers who want to use the site, and in some cases set up farmers’ internet and email for them.
The site hasn’t yet launched in Western Australia, the country’s major grain producing state, because Roberts wants to get the site right first before launching in the West.
So far about 3000 famers are registered with the and more are joining every day. Roberts is aiming for igrain.com.au to ultimately capture 10 or 15 per cent of the market. “We’ve got big scope to grow. At the moment we’re only at the very early stage, but there’s a big future there.”
And at the moment, Roberts says he’s happy running the business and says he doesn’t want to discuss the investors’ exit plan. “At this stage we wouldn’t rule anything out, but we’re just trying to grow the business and see what happens from there,” he says.