Agriculture has always been the sector in which Taiwanese entrepreneurs actively engage. From crops cultivated in the farms to freshly harvested produce to products for sale in the market and finally to those dishes on our tables, potential threats that could jeopardize both supply and demand are hidden within this chain of commercial activities.
The crisis on the supply and demand under a smallholder farming structure
In Taiwan, the agriculture industry mainly consists of smallholder farms, the majority of which produce crops in low-volume and high-variety. Because of asymmetric information as well as lacking alternative channels, farmers tend to sell agricultural products to wholesalers, which have distribution networks and are rather concentrated in the market. After collecting and sorting, the wholesalers then distribute agricultural products to all types of retailers that are known to the consumers.
This industry structure gives wholesalers strong purchasing power, often resulting in a price- cutting competition among smallholder farms. In addition, in order to meet the demand of retailers, wholesalers usually combine products from different farms before reselling them, decreasing the food traceability. As a result, consumers are not able to recognize the potential threat of pesticide residues in food, which have always been a major concern regarding food safety.
Transform the structure and scatter fresh food suppliers
Holding a Ph.D. in Physics from the University of Oxford and an MBA from Massachusetts Institute of Technology (MIT) Chang Chun-chi used to serve in a semiconductor company as Vice President, handling business orders totaling over US $13 million annually. In the hope of providing his children with a better environment to grow up, Chang left the IT sector and, together with few colleagues, established the Farm Direct, an e-commerce platform selling fresh vegetables. He saw the opportunities within the current agricultural structure where he could apply changes and create innovative business models, aiming to solve the challenges of the smallholder farmers and alleviate consumers’ concern about food safety. Chang believes that the essence of social entrepreneurship is to discover an interesting business model that responds to current issues and then “Turn things around!”
The most important value of Farm Direct is that it tackles the above issues by establishing a “scattered supply chain” and focusing on three aspects: structurally improving the agriculture industry in Taiwan, satisfying consumers as well as developing business opportunities. Through carefully optimizing the locations of stores and collection points in accordance with service areas, Farm Direct manages to achieve that “every collection point should only order products from neighboring farms and serve consumers within a range of 30km, with a firm policy to never transfer stocks from other collection points or to sell imported products.”
When consumers land on the e-commerce platform and confirm the delivery locations, it is as if they were shopping at a neighborhood farmers market where all groceries are fair traded and have low food miles and carbon footprint. Farm Direct’s business model helps farmers eliminate the middlemen during the production and marketing process, allowing them to better meet the consumer demand and break free from being exploited in the price war with competitors. As for consumers, being able to keep track of the food traceability not only helps alleviate their concern about pesticide residues but also allows them to learn more about the product information.
Chang is fully aware of consumers’ thirst for having convenient packaging and options for a full range of products. Therefore, Farm Direct has set their long-term ambition to compete with local supermarkets that sell fresh food by providing various fresh products besides vegetables and fruits. In addition, Farm Direct offers same-day delivery with motorcycle couriers. With its wide variety of products and fast delivery services, Farm Direct addresses the needs of modern- day consumers by providing them with fresh, safe food efficiently. Furthermore, Farm Direct provides numerous recipes of healthy dishes on its website and consumers can easily shop relevant ingredients corresponding to a chosen recipe. Through its Facebook fan page, Farm Direct further encourages consumers to experience and embrace the taste of fresh local produce.
A solution for a better future
Facing the growing consequences of climate change nowadays, what we can do to keep the next generation from living in a disastrous world is the reason Chang decided to start his entrepreneurial career in the agricultural sector. Farm Direct may not directly contribute to reducing the risks of natural disasters, however, it addresses this global issue by calling for sustainable agriculture and respect for our mother nature.
In 2011, Farm Direct went online officially. A group of friends, having no relevant background, jumped into the field of agriculture. Throughout the journey, Chang has continued accumulating his experience and visiting farmers from around Taiwan. Always exploring and trying, Chang has gradually stabilized Farm Direct and started strategizing for the future.
Farm Direct is dedicated to “dealing fairly with producers and ensuring the food safety for consumers.” In addition to this commitment, Farm Direct is planning to partner with non-profit organizations to expand business sites, increasing retail channels for consumers. Moreover, with this partnership, Farm Direct will enable non- profits to generate a new source of income and train their employees on sales skills, leading to a quadruple win – a win for Farm Direct, farmers, consumers, and non-profits. By helping producers increase profits and ensuring the convenience and food safety for consumers, Farm Direct aspires to promote sustainable agriculture and realize its mission – “never an interference for farmers in agricultural production, but a fair intermediary for their products.”
Chang firmly believes that Farm Direct’s business model is a replicable solution and hopes to prove, by providing investors with reasonable returns continuously, that the structure of Taiwan’s agriculture industry can truly be transformed and that innovations can bring social impact and economic values, both at the same time.