For producers or groups of producers wanting to sell directly into wholesale beef channels, three big issues have created challenges to the marketplace: scale, balancing the carcass and logistics.
“If you have a steakhouse that has to buy hundreds of ribeyes every single week, it’s probably pretty hard to find many producers who are going to be able to fulfill that procurement spec weekly,” says Farmshare CEO Henry Arrowood. “No. 2 is balancing of the carcass — you might find a restaurant that wants to buy all your primes, but what are you doing with the rest of that carcass? And No. 3 is the logistics — how do I actually get the animal to the processing facility, secure a slot, secure the cut order, then get that product out into the hands of the buyer? That is exactly what our platform does.”
Arrowood shared on a recent AgriTalk episode about how the system provides a way for wholesale buyers to connect with smaller producers who can offer local, differentiated and value-added products.
“If a set of producers match the parameters of what the bid of the buy side is looking for, we start to show them these opportunities that they can participate in,” Arrowood says. “We show them the price point at which the customer is looking to purchase. We show them the target product and volume that they’re looking for, and then we aggregate that supply into an order and route it to one of our processing facilities for manufacturing.”
Finding a market for the entire carcass has remained a challenge to the smaller, regional producers who want to sell meat. Until now.
“Big packers have become these efficiency machines where they’ve been able to create all these different market opportunities to balance the carcass and create, good returns across the entire animal. That doesn’t exist on a small scale,” Arrowood says. “It’s really hard for any given producer to go out and create similar opportunities for the entirety of their carcass. That is what we’re doing.”
By using artificial intelligence, Arrowood says the company creates pricing models and yield distribution models to price optimize the entire animal for the end producer. If one buyer claims the ribeyes, the system figures out additional buyers for the strips, tenderloins, ground beef, etc., he says.
“It’s our responsibility to create a diversified set of customers on the buy side that we can move this product to, school systems, hospitals, really good targets for us in terms of moving that ground product,” Arrowood explains. “There’s a lot of restaurant groups that are looking for a different product than they might be able to get through the institutional food service companies. So, that’s where we’re moving some of that prime product.”
The idea for Farmshare came to Arrowood when he experienced the challenges in the beef supply chain firsthand.
“During the pandemic, I left San Francisco and moved out to a cattle ranch in Montana, and that’s where I am right now. And it didn’t take me long, when I got to this seventh-generation cow-calf operation, to realize there were some pretty deep inefficiencies in the supply chain and that of every dollar that I or any other city slicker was spending on meat in the grocery store, only 14 cents was making its way back to a producer’s pocket.”
As a tech pro, Arrowood began imagining what could be done to create more streamlined distribution that would give fair financials back to the end producer and help independent processors.
“I think that technology serves a very unique and interesting opportunity to rethink the way in which meat travels throughout the value chain, and the money that ultimately gets back into the hands the people who do the work,” Arrowood says.
Farmshare works with processors in more than 25 states across the country and is ready to expand its reach.
“We like to think of ourselves as bringing modern tooling to the independent processor,” Arrowood says. “For maybe the first time, we’ve built a set of tools for the independent processor that help to increase efficiency and maximize the throughput of their plant and ultimately drive them towards doing greater capacity within their facility.”
By automating and streamlining several manual processes and complexities that exist for processors today, Arrowood says the system can mitigate the amount of phone calls, paper pushing and filing that an independent locker has to go through in order to successfully manage their business.
“Our customers are saving five to seven hours per day on all the administrative sort of burden and complexity of their business,” he says.
He says packers have a lot of efficiencies, technology and staff to help them future proof their businesses.
“What we’re doing is building that as a shared resource and shared set of infrastructures that we can then sort of co-op out into the ecosystem for the independent processor,” Arrowood says.
This management system creates opportunities for efficiency throughout the supply chain while keeping the marketing between the buyer and the seller. Within the Farmshare system, the animal does not change ownership to the processor and the restaurant connects directly with a group of independent processors.
“We’re facilitating the transaction between those two parties,” Arrowood says. “We’ve used this network of independent processors as the manufacturing layer to actually turn that animal into a consumable product.”
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