Online agchem supplier Farmers Business Network (FBN) is reported to have wound up its Australian operations, potentially costing investors millions in the failed venture.

According to press reports and industry sources, the business has folded despite leaving up an empty website and earlier this year was reportedly attempting to quit the remainder of its inventory.

FBN was modelled on a US based equity-funded online network of farm industry personnel and suppliers that was touted as a game changer in transparency and openness of information and product pricing for purchases of (mostly agchem) farm inputs.

Claiming massive funding and backing from tech giants, it promised to streamline farmer communication and product pricing. The business operated online only but was said to employ a large number of people as managers, customers service staff, and purchase/ warehouse personnel.

The business motto was: "Proudly Farmers First” and their website states: “FBN is on a mission to create a future of farming that puts farmers first by democratising information, providing unbiased analytics and creating competition for farmers’ business.”

Despite promises of revolutionising the industry, those with knowledge of the business in Australia said it failed to deliver and ultimately folded. The FBN website was still ‘live’ when visited in May 2023.

However, in press reports in March this year, FBN co-founder Charles Baron confirmed that the company was exiting Australia, citing geographical differences between Australia and the United States as a main contributor.

Industry sources say FBN Australia started with the purchase of a Western Australian based chemical importer and direct supply business called Farm Save. Farm Save had a limited range of registered products and imported or manufactured locally mainly for the WA crop market. FBN’s goal was to turn this regionally based supplier into a nationwide online direct to farm delivery of ag products.

FBN signed up many potential customers (some of whom are quoted providing endorsements on the FBN website). With the cessation of its Australian operations it is not known what is being done with the personal farm data of those who signed up is and how it is being used, stored or safeguarded.

One industry source believed some farmers were still being approached and offered product by people who may have associated with the former business.

A high profile Australian rural reseller who did not wish to be quoted said, “FBN was an expensive experiment that was never going to work given the complexities of distance, dangerous goods, logistical challenges, and low margins comparative to the USA.”

The same rural reseller said FBN was also rumoured to have been plagued by several product recalls, so product quality may have been questionable, undermining confidence in the FBN model.

“Farmers still want and rely on relationships and trust, more so than ever with an increasing focus on agronomy, precision ag, as well as needing reliability around supply in a much more challenging supply chain environment,” the source said.

The reseller also confirmed to Rural Business that FBN had advised some potential buyers in early 2023 that it had remaining inventory which it was trying to move.

“From my perspective, this is a good example of ‘theory vs practicality’ and a distinct lack of market research,” the reseller said. “Taking a business model concept from one country and applying in a different market can be fraught with danger, particularly if there is a lack of local understanding and perspective.

“Online business models are challenging in a country like Australia where logistics and distance to end users is complex. This is less so in the US. To address this requires additional infrastructure (i.e. warehouses and associated on costs such as staff, vehicles etc.) to support the ‘low-cost model’.”

It appears these overheads may have been underestimated and order fulfillment may have been compromised due to logistics failures.

The reseller said there was strong support for the Australian rural reseller supply and distribution network which is based around a physical presence in stores close to farming communities.

“Most farmers also want to support local communities and maintain services in regional and remote areas where a lot of the large acres are.”

Another Australian reseller group principal told Rural Business that a large percentage of the Australian crop protection market is broadacre with a significant usage of generic chemistry.

“By default, this is low margin territory and knowing when to buy, maximising stock turns etc is critical in managing working capital. Having the right product at the right time is also critical.

“There is an expectation by famers that retailers will have the product they need when they need it. An online model fails in this regard – they are too far removed from the end user buying behaviour and patterns.

“All this takes experience and knowledge of the market (what’s being grown and where) and relationships with end users. I suspect this was lacking with FBN.

“Understanding the customer/ farmer buying sentiment is equally important. Farmers in Australia are generally loyal to their retailer of choice and support their local communities and businesses.

“Whilst an online model may attract a certain segment of the market, research would indicate this to be less than 10%. Farmers ultimately want an omnichannel relationship, one with multiple touchpoints with their retailer – online, on farm and in branch. Just providing cheap product doesn’t address this.”

Rural Business has attempted to contact FBN to confirm the status of the Australian operation but has had no response as at the time of printing.