Orbia, an online farm products trade platform majority-owned by Germany’s Bayer AG, is betting that a deal with U.S. grain merchant Bunge Ltd will pave the way for a planned international foray, Chief Executive Ivan Moreno said on Monday.
Under the partnership with Bunge announced in September, Orbia’s 170,000 registered farm users in Brazil can sell produce online to the U.S. firm, which secured exclusive origination rights to the platform.
Moreno, a former Bayer executive, said in an interview the deal allows farmers to sell corn and soy on the futures or spot market in exchange for cash or credit to buy inputs on Orbia for use in future seasons, a transaction typically known as “barter.”
Farmers can also acquire seeds, pesticides and fertilizers from 120 accredited distributors using the platform, which gives them loyalty points that can be swapped for products or support services.
“Bunge’s presence adds a lot of liquidity to the business model,” Moreno said.
The company is preparing to expand into Colombia, Argentina and Mexico next year and allow the sale of coffee and wheat on the platform, Moreno said.
Orbia’s launch coincides with the emergence of a younger generation of Brazilian farmers keen to go digital. Farm managers aged 25 to 35 represent 35% of the leadership, up from 20% in 2013, Moreno said.
As more growers go online, Orbia could capture up to 20% of Brazil’s 110 billion real ($19.6 billion) market for farm inputs in three years, Moreno predicted. In a single week in August, farm input sales on Orbia reached 140 million reais.
Traders other than Bunge could join in as buyers, Moreno said, without giving a time frame because the duration of Bunge’s exclusive origination rights is confidential.
Source: Reuters.com