Farmers Edge (FE) is an ambitious digital company that’s passionate about leveraging data-driven technologies to empower modern farmers. With an overarching goal to help farmers produce more food, Farmers Edge has adopted a sentimental focus driven by a desire for sustainable farming.
What Does Farmers Edge Do?
Farmers Edge is a pioneer within its field, having developed analytical platforms that have transcended its landscape. It was founded in 2005 by Wade Barnes and Curtis MacKinnon in Manitoba, Canada as an agricultural platform for enterprises to manage daily business activities.
With the potential to deliver value across the entire agricultural ecosystem, Farmers Edge offers field-level analysis and predictive modeling delivered by a reputable team of data scientists. The company’s FarmCommand platform allows users to monitor the state of soils, equipment functioning, crops, weather conditions, and perform statistics on an enterprise’s activities in real-time.
Data is received from the following:
– Green Aero Tech (Drones)
– The Weather Company (Weather station)
– Landsat 8, Sentinel 2, Planet (Satellite imagery)
– Airbus
In March 2021, FE went public and launched an IPO with a starting price of $20 per share. However, the company was trading at $2.75 per share by November 19th, with the Canadian entity Fairfax Financial Holdings (FFH) as the main shareholder. An apparent drop in share price suggests the company is moving in the wrong direction, which raises the question of whether it’s worthy of investment?
Well, despite great ambition and promise within a thriving field, Farmers Edge has become somewhat of a disaster for investors due to its unprofessional management team and FFH losing millions in recent years.
As a company that seems incensed to burn cash, you’d be wise to assume FE is unlikely to become profitable. However, let’s take a deeper look into the company’s pitfalls, beginning by assessing the company’s lackluster financial performance:
Poor Financial Performance
In the midst of investing in FE, FFH lost $10.5m in 2017 and a further $32.7m in 2018. It acquired 43.5% of FE for $95m in March 2017 and had reported a $10.5m loss by the end of the year. If these losses were a sign of things to come, there were already many red flags surrounding the future of the business.
In the next year, FFH provided $64m in additional funding and again reported losses, this time of $32.7m. As of December 2019, the FFH owned 50.4% of FE, estimated at $43.8m. However, further losses only cemented the company’s failing status.
FE is currently unprofitable and is not forecasted to become profitable, something that leaves a lot to be desired. To support this point, FE has stated it can’t predict whether it will become profitable over the next three years, a statement that doesn’t inspire confidence in prospective investors.
To consolidate these concerns, FE’s cash burn relative to market cap is worrying, and the company doesn’t appear to be positioned to deliver on its growth plans.
Soon after its IPO, FE’s market capitalization crashed in subsequent months, from $612.54m in March all the way down to $115.2m in November 2021. This huge decline would suggest the company is currently in dire straits.
Poor Management
CEO of Farmers Edge, Wade Barnes, has employed acquaintances and relatives to high-level positions within the company. For example, he hired his school friend Trevor Armitage for the position of COO and his wife Marina Barnes as CMO. Unfortunately, these internal biases have influenced business proceedings, especially when Marina encouraged entry into CIS and US markets without any substantial results. One of the biggest inconsistencies derives from the company’s Russian office being located where Marina’s mother lives in Krasnodar, rather than in Moscow where there are more business opportunities.
The official biography of Marina Barnes has changed significantly over the years. In the beginning it said she led the development of the company’s Eastern European division from 2009-2013, with her activities resulting in multi-million dollar sales opportunities.
But FE’s revenue from its Eastern European division is only about 2% and they’ve lost 1.6 million acres in the region. FE now states that Marina Barnes has served as General Directory of the company’s subsidiary in Russia since 2016, suggesting some discrepancies that don’t quite add up.
When she met Wade, Marina Barnes was an interpreter and had nothing to do with agtech. Now she’s a CMO of a business where there are multiple claims about poor management and statements about mistreatment of employees.
“Farmers Edge has the highest turnover of employees I’ve ever seen”
“Upper management lives in a bubble”
Source
Four Top Managers Left FE in 2021:
– Joel Duda – July 2019 – May 2021: VP Technology
– Perry Liu – March 2015 – March 2021: Investor and Board Observer
– Lori Robidoux – 2005 – 2021: CFO, Chief Corporate Development Officer;
– Jorge Padua – 2016 – 2021 VP of Operations Latin America.
With such a high employee turnover in such influential positions, it’s clear to see there is considerable unrest in the organization from the top down. Regardless of who’s responsible for these decisions, with so many managers leaving there is likely to be a trickle effect through the organization that leads to undesirable results.
And that’s just the tip of the iceberg, there are many more negative customer testimonials that are worth exploring.
Negative reviews
Just in case there wasn’t already a cause for concern, farmers have also left negative reviews on FE, the very stakeholders the company is intending to bring value to:
“Talked to some farmers, they have poor customer retention. Their brand is not solid, especially in Canada. They have a track record of losing a lot of money” – Source
“Tried it last year. Didn’t work for me. Once they got their money you hardly hear from them. I was on the lower plan but a neighbor did their soil sampling a VR program. They ended up hiring most of the soil sampling done by the guys that normally do it anyhow because the farmers edge guys didn’t get to it. Seems like they’re more concerned with getting bigger than servicing the acres they already have.” – Source
When negativity is spewed directly from the customer’s mouths, there is bound to be considerable doubt.
Is Farmers Edge Worthy of Investment?
Despite being an ambitious company that aims to deliver differentiated value to farmers, many red flags suggest cause for concern. Having analyzed the issues outlined throughout this article, Farmers Edge seems to be a very risky investment that ultimately isn’t worth it.