The startup uses big data to solve one of the industry’s biggest problems.
According to a study published in 2011 by the Food and Agriculture Organization of the United Nations, nearly one-third of the global production of food for human consumption is wasted – most of which occurs before getting to the consumer.
With the global population projected to increase almost 30 percent by 2050, meeting the needs of developed nations, let alone those currently afflicted by poverty and hunger, will become an even harder task for the agriculture industry.
AG Tools – a UCI Beall Applied Innovation Wayfinder startup that brings big data, analytics, reports and forecasts to the agriculture supply chain – believes that starting at the source, with the farmer, is the best bet for a sustainable future.
The Current State
“I always say that farmers are like painters,” said Martha Montoya, CEO of AG Tools and board member of the California Department of Agriculture. “Just like painters who go into their studio to create beautiful paintings, farmers run amazing farms, but they do not always see the bigger picture of the world outside of where they operate.”
There are a multitude of variables that affect the agriculture supply chain from farmer to buyer, and there is a vast disconnect between everyone involved. And, in this era of industries becoming more and more data-driven, it’s important to stay informed on the latest consumer trends all over the world so that smart decisions on the farm level can be made proactively, rather than reactively.
Farmers typically rely on a free online portal provided by the U.S. Department of Agriculture that offers a few data sets but does not come close to the level of information needed to make truly informed logistics decisions. Furthermore, if a farmer were to compile the data themselves, it would require multiple man-hours and spreadsheets to have an impact – an unrealistic feat for farmers who have little time to sit behind a computer and conduct research in an industry where changes that affect the supply chain can happen fast.
Supply chain issues can be as simple as a truckload of produce waiting at a closed border – truck and refrigeration system running – due to a holiday that was not taken into account. Carbon footprint aside, the extra days at the border cost money and, because it is largely a consignment industry, the cost comes out of the farmer’s paycheck.
Industry Intelligence
Montoya spent years sourcing goods for the processed food market in the Americas, which helped her understand every aspect of the supply chain, including buyers, suppliers, farmers and shippers.
Her experience in global logistics gave her insights into the intricacies of processing procedures that influenced shipments. Through those experiences, she came to realize that no amount of processing could make bad produce taste as good as high-quality produce.
Soon after, Montoya was asked by friend Aslam Khan – accomplished franchisee and CEO of Falcon Holdings Management, a business management company – to help his company procure fresh produce directly from producers. Montoya then began her transition to fresh produce.
In an effort to keep her finger on the pulse of her supply chains, Montoya began making a list of variables after she noticed a weekly shipment of bananas from Ecuador would routinely be late for a variety of reasons. Among the reasons were problems at the Panama Canal, workers not showing up the day after payday, little-known local holidays observed on business days and changes in fuel prices. The list of variables became so exhaustive that Montoya eventually hired staff whose main role was to call and verify that nothing on that list had changed to ensure a timely delivery. And it worked.
Montoya had eliminated so many of the pain points in her supply chains that her work became relatively predictable in an industry plagued with unpredictability. That was until a new variable made its way into the process: human error when verifying the list of variables. In the fast-paced, high-stress world of buying and sourcing food, a single human error can result in big losses.
Always looking to improve the process, Martha Montoya sought help from her brother Gustavo Montoya, now chief technology strategist at AG Tools, to build a program that automatically sent alerts when there were changes in the supply chain. The alerts quickly became overwhelming and Montoya realized she needed a new approach.
Martha asked Gustavo to observe the supply chain from the ground level to see if there was potential for a more robust solution beyond alerts. After examining the processes for two seasons, he knew it was possible from a technology standpoint, but the most important piece of the puzzle was simplifying it, since those who might benefit from this proposed tool do not have time to learn a new software.
A Smarter Solution
Gustavo Montoya began recruiting his team of software engineers by searching in his area of central Washington and found that many prime candidates were children of farm workers. He also found engineers with similar backgrounds in the city of Zamora – known for its berry farming – in Michoacán, Mexico.
This combined experience gave the team a unique advantage, as everyone involved understands how farmers can benefit from the software and has a deep passion for their work.
The AG Tools software aggregates real-time data from around 40 trusted entities, including government agencies, as well as other metrics in an easy-to-use portal. The service empowers farmers, shippers and buyers by providing daily reports full of actionable information about their specific commodities, including market insights and supply chain logistics.
This means that a time-strapped worker can make informed decisions, from getting the best price to diverting shipments that would otherwise be wasted due to storms or labor strikes at the final destination.
While the technology side of the company is spearheaded by Martha’s brothers Gustavo and Oscar Montoya, where they focus on developing the AG Tools software and work to bring more functions to users, Martha focuses on the business side, including sharpening her business acumen at the Cove @ UCI Beall Applied Innovation. There Martha uses the services of Small Business Development Center @ UCI Beall Applied Innovation, attends Wayfinder workshops, and takes advantage of as many Innovation Advisors as possible.
“I’m a student again and I love it,” said Montoya. “And the free business guidance from industry leaders offered with the Innovation Advisor program is priceless and a huge advantage for AG Tools.”
A Sustainable Future
While the AG Tools software is currently focused on specialty crops – fruits, vegetables, nuts, herbs and flowers – the software architecture is built to expand to other commodities in the future, which will only increase its worth to the agriculture industry. The software is competitively priced, too. Martha Montoya knows that a farmer can recoup the cost of their annual membership after using it to make an informed decision on just one shipment. But money is not the goal; a sustainable future for farmers, the entire supply chain and the world’s agriculture production is. By ensuring a smarter supply chain, everyone from the farmer to the consumer aims to benefit.
“We start our weekly conference calls with one question: ‘Who is number one,’” said Martha Montoya. “And that’s the farmer. If we can help farmers, everyone else in the supply chain is safe. Because without the farmers, we have no food.”
To learn more about how AG Tools is connecting the agriculture industry, visit ag.tools.