Food waste is a major problem.
Only in the United States, approximately between 30% and 40% of the supply ends up in landfills. A report The United Nations estimates that about a third of the food in the World Every year, 1.300 billion tons are wasted, worth almost $1 trillion.
Given the scale (and social implications) of food waste, it's no surprise that there's a whole cohort of startups trying to tackle the challenge from various angles.
Yume's platform helps manufacturers turn potential food waste into cash. Divert aims to address grocery store waste with algorithms. Ida is applying AI to try to avoid surpluses in supermarkets. And Chocó is promoting a more sustainable food system for restaurants and suppliers.
Another of the companies that fight against waste of food is based in Los Angeles. ProducePay whose mission is to provide producers and buyers of fresh produce with greater transparency (and flexibility) in the grocery supply chain.
«ProducePay is on a mission to eliminate economic and food waste caused by the volatile and fragmented nature of today's global fresh produce supply chain,” said CEO Pat McCulloug. “Our platform is giving producers and buyers greater control of their businesses by giving them unprecedented access to capital, a global trade network, insights and supply chain visibility.”
Pablo Borquez Schwarzbeck founded ProducePay in 2015, shortly after graduating from Cornell with his MBA.
Schwarzbeck's first exposure to produce supply issues was on his family's asparagus and grape farms in Mexico. As a young man, Schwarzbeck, who is now CEO of ProducePay, worked for Giumarra Companies, a fruit and vegetable producer, where, he says, he came to truly understand the magnitude of the disadvantages that growers face.
“A single shipment of produce typically travels 1.600 miles and will be handled by four to eight brokers,” Schwarzbeck said. “Along the way, factors such as unpredictable weather, fluctuating markets, crop diseases and pests create a constant state of instability that wreaks havoc throughout the supply chain. “This volatility and unpredictability, coupled with the fragmented and speculative nature of the supply chain, results in huge inefficiencies and wasteful practices.”
ProducePay's platform helps connect (and finance) producers and buyers of fresh produce.
As Schwarzbeck alluded to, producers face a number of pressures, but one of the most acute is strong competition for contracts from buyers. In a report From the environmental organization Feedback that investigates international food supply chains, six in ten farmers admitted to overproducing to avoid losing contracts, resulting in supply exceeding demand and, by extension, waste. food.
ProducePay's solution has two aspects: supply chain monitoring and financing products for food producers and suppliers.
ProducePay provides working capital to help producers and distributors pay for things like operating expenses, technology upgrades, and land acquisitions. Additionally, ProducePay extends liquidity to producers and distributors after harvest, allowing them to achieve seemingly stronger cash positions for their next crop cycle, and to distributors to attract the most sought-after producers by offering faster and larger payments.
Are the loan conditions favorable? Some clients think so: McCullough says ProducePay now works with more than 60 commodities in 20 countries and has financed more than $4,5 billion in crops so far.
"This success is based entirely on trust," he added. “Producers trust that we are there to help them grow. And we have created a strong network of producers and buyers who we know can deliver on their commitments.”
Beyond standalone services, ProducePay combines its financial products with supply chain visibility tools to create what McCullough calls “predictable business programs.” The programs have retailers commit to pricing and volume before the growing season begins in exchange for products from vetted producers. ProducePay's team of agronomists monitors and communicates the quality of orders from the field throughout each program, during transportation and upon final arrival.
One customer for whom ProducePay created a program, Four Star Fruit, is leveraging it to connect with growers, advertisers and retailers in ProducePay's network of about 1.000 customers, bypassing "non-value-added middlemen," McCullough says. “We are addressing volatility with capital, technology and our team of agronomists to more efficiently capture all the value that is lost due to these middlemen and other inefficiencies,” he continued.
ProducePay's business, which takes a cut of every transaction through its platform, has proven to be quite lucrative, with revenue increasing 76% last year compared to 2022. Trading volume on the platform increased almost threefold According to McCullough, transaction volume is on track to reach $2.000 billion by the end of 2023.
Obviously satisfied with the numbers, investors are pouring more money into Schwarzbeck's company.
ProducePay announced that it raised $38 million in a round Series D led by Syngenta Group Ventures with the participation of Commonfund and Highgate Private Equity, G2 Venture Partners, Anterra Capital, Astanor Ventures, Endeavor8, Avenue Venture Opportunities, Avenue Sustainable Solutions and Red Bear. Angels. The new capital, which brings the total raised by ProducePay to $136 million, will go to support the company's expansion into Europe, Asia, Africa and Australia and the growth of the ProducePay team of approximately 300 full-time employees.
“Although many industries have seen a slowdown, fresh produce will always be indispensable and continues to grow as consumers demand healthier food options,” McCullough said. "We saw it during the pandemic and we continue to see that upward trend."
