Supply and demand gets smart

The Ooooby venture is great value for customers as well as growers.

Farmers frustrated with the logistics of getting paid for their produce may get an answer from business models that concentrate on improving food supply chain logistics with smart software, enabling them to buy straight from growers and cut out the middleman.

Ooooby, a start-up business operating in Auckland and the Waikato, has the big goal of disrupting the global food supply chain.

But it's for a very good cause: giving farmers and growers a better way of getting paid for their produce.

The company started with the realisation that "there's an imbalance in our food system, and we think we can counter that," says founder Pete Russell. The most important people in the Ooooby equation are farmers who are already working and making a living from their farm.

"People who are hobby-growing, that's great, they're a valuable addition, but they're not the heart of what we're doing," Russell says. "We're after existing growers, people who are already making a living from producing food, but they might be struggling with haggling with supermarkets, or with the inefficiencies of selling privately, like roadside stalls and farmers' markets.

"Farmers' markets are great, but it means that the farmer has to farm all week then sit around for a day, and the market size is limited to how many customers show up."

Pokeno growers Bill and Marilyn Brownell have a small orchard. They don't sell to the commercial market and they have found that being a supplier to Ooooby is a useful supplement to their income. "We only sell to Oooby, the Thames organic co-op, and the Grey Lynn farmers' market," Bill Brownell says. "Ooooby have been great, they're keen to get whatever we grow, because they know that we're doing it properly, we use sustainable practices."

"With Ooooby we can deliver early in the morning and we can get back to the orchard," he says. "Whatever we have available they try and work it in with the weekly programme they're offering."

The business model is simple. Customers use a website to "subscribe" to a box full of fresh fruit and vegetables.

Customer demand, and clever software, lets Ooooby know exactly how much produce to buy from suppliers, who are "as local as we can get".

"We think that domestic food can compete with imported food if you harness the efficiencies of a shortened localised supply chain," Russell says.

"You've got efficiencies with large-scale agriculture, as it's the scale that reduces the cost of production. But there's a corresponding increase in costs in the supply chain -- everything needs to be shipped all around the world, handled two or three times -- so if we can reduce the supply cost we can offset the advantage. That's why we buy local."

There are two elements that make it work. One is that buying local reduces the transport and handling costs by "at least 30 per cent, because we're reducing the amount of miles the food goes, as well as the handling, and the time the food sits in the supply chain".

The second is that Ooooby sells before it buys. "One of the great things about the technology is that we sell before we buy -- we literally don't place an order for the food before we have been paid for it." That means suppliers get a guaranteed income.

Russell expects the business to expand to other regions in New Zealand. "Our goal is to be a mainstream provider of food," he says.

"Our point of difference is our food is more local, more fresh, more convenient, and more affordable. And we can deliver that."