Can Putting Farmers Online Make Food Biz More Sustainable?

The idea of buying food from a local farm might seem like the very opposite of high tech. But FarmsReach, a California startup that won the audience choice award at our Green:Net conference this week, hopes to make it easier to buy directly from farms by putting produce online.

The company has developed a web marketplace to make it easier for buyers — such as restaurants, hospitals and schools — to order produce from nearby farmers, and for farmers to manage their sales and deliveries. Farmers list the produce they have for sale on the site, and buyers can search for the fruits and vegetables they want and place orders, either picking them up at nearby farmer’s markets or having them delivered.

Founded in 2007, FarmsReach officially launched its beta program at Green:Net on Tuesday, although it had a “soft launch” two weeks ago. Some 60 restaurants have already signed up to use the site, including Americano Restaurant & Bar, Globe Restaurant and Absinthe Brasserie & Bar in San Francisco. The company also lists 11 farms on its site, including Capay Organic Farm, Heirloom Organics and Dirty Girl Produce. On the beta site Wednesday night, searches turned up anywhere from 16 to 0 results.

FarmsReach is tackling an industry under immense financial pressure. Most farmers are in financial trouble, with the average farmer making only 20 cents for every dollar you spend on food and with 60 percent taking second jobs, CEO Lana Holmes said during her presentation Tuesday. “We’re putting a livable wage into pockets of farmers and hopefully paving the way for sustainable food in America,” she said.

By making it easier to buy, FarmsReach hopes to entice more buyers to patronize local farms, a task that today often involves hours of calling and faxing. “It’s a logistical nightmare,” Holmes said. The company thinks facilitating relationships between farmers and buyers will help boost demand for local produce and lower the amount of energy used in the supply chain.

While the beta is free, the company later plans to make money by charging farmers $10 per month for its services plus commission on sales over $200. FarmsReach plans to use data from the site to provide farmers with information about buyer demand, Holmes said.

But the company faces some challenges. For one thing, most farmers aren’t technology-savvy and also tend to be too busy with actual farming to spend much time managing the business, Holmes said. Right now, FarmsReach is inputting much of the farms’ produce on the site, she said. “Obviously, we’ll have to hand that off.”

The company’s first order highlighted the danger: The inventory information from the farm wasn’t up-to-date, and the farmer had to call the chef who had placed the order to explain that the produce wasn’t available. “We know that user adoption is probably our biggest hurdle,” Holmes said, adding that she believes farmers will find the rewards to be worth the growing pains.

Success will depend on whether enough sellers and buyers find the site easy enough, reliable enough and valuable enough to use regularly. “The question is whether an industry who counts on the timeliness of getting this food can count on this,” said Nat Goldhaber, managing director of Claremont Creek Ventures and a judge at Green:Net’s startup contest. “If so, it’s a very interesting product. If not, it might never get market penetration.”

FarmsReach also is looking for money. The company, which has been backed by angel investors so far, is seeking $1 million-$1.5 million in its first round of funding. Meanwhile, it hopes to accumulate a track record of successful transactions in the second quarter, Holmes said. The company plans to roll out its full-blown site — with many more users — in time for the spring season and is aiming to break even by the same time next year, she added.