Farm Finance Launch!

We know from our many discussions and interactions that there are two main pain points for farmers that need to be solved: on-farm efficiency and access to capital.

Over time we have built Oceanfarmr so the more you use the Oceanfarmr app, the better your farm operations efficiency, the better your ability to scale your operations and increase your farm profitability.

What you may not know is that over the past year we have been working with our finance partners to help develop a finance product for on-water assets that allows farms to grow.

We are excited to announce that last week we launched our second farm finance proof-of-concept (POC) and wanted to tell you a little more about it.

Background

Unlike traditional agricultural farms, ocean farming requires substantial investments in infrastructure, with farmers frequently citing access to capital as the greatest inhibitor to growth.

The problems for farmers obtaining farm finance include:

• No recognisable collateral (working in the marine estate) unless you are willing to put your house on the business!
• No readily identifiable secondary market for assets.
• Industry is poorly understood and has a perception as being risky with the impact of disasters on farmers widely publicised.
• A lack of operating record keeping and poor visibility of business operations.
• Business cash flows subject to long growth cycles of 1.5 to 2.5 years, with seasonal and cyclical impacts increasing risk.
• Difficulty assessing appropriate debt load (debt to income) given all of the above business characteristics.

Oceanfarmr has the solution!

With over 100 data points collected over time across crops, assets, and activities we have been modelling how the data can be used to provide business insights.

These business insights can then be effectively used to assess the loan serviceability of a farm.

Oceanfarmr data from your farm can be used to provide lead indicators to perform upfront assessments. This can reduce the risk of default for finance providers.

Farm Finance Proof of Concept 2 - OceanFarmr ‘Farm to Buy’

We are calling it Farm-to-Buy. For this POC we are limited to Australian Oyster farmers. Process is as follows:

Our finance partners are performing traditional credit assessments with Oceanfarmr providing an upfront assessment of farm credit worthiness based on the crop, asset, and activity information farmers (who have agreed to be part of this POC) have been entering into the Oceanfarmr app.

The finance partner makes a credit assessment and establishes a baseline of Oceanfarmr data for the POC.

The finance partner purchases oyster infrastructure (baskets, lines etc) and oyster seed of a size that will mature in about 12 months.

The farmer deploys the baskets and seed and works it as they would the rest of their farm.

Monthly compliance reports are provided through Oceanfarmr by the farmer to the finance partner confirming that the oysters are being farmed efficiently which essentially reduces operational risk.

At the end of 12-months, the farmer sells the oysters with an agreed portion of the revenues being paid to the finance provider. At that time, ownership of the infrastructure reverts to the farmer.

Oceanfarmr will provide ongoing crop and farm activity performance reports to farmer and funder to monitor crop risk and return in real time.

The aim of the proof of concept (POC) is to further validate the use of Oceanfarmr data to qualify farms for finance and de-risk the finance over the term of the funding.

The farmer is farming the crop to own the infrastructure at the end of the growth cycle.

The Future of Ocean Farm Finance

The POC has commenced with $110K of assets across 3 farms.

We have identified A$10 million of asset funding required within our qualified customer base. This first step is just a drop in the ocean as we reach into the US$1.8b regenerative aquaculture infrastructure market!

What we already know from the data is the more farmers use Oceanfarmr the more efficient their farm operations are and the higher the revenue!

In the future, we look forward to expanding our Farm-to-Buy farm finance to add another great reason to use Oceanfarmr.

We look forward to receiving expressions of interest for Farm to Buy in the future as we move beyond our POC.