Farmers are Founders Blog Series: Bob McKay - Chairman and Co Founder, AgriDigital
Bob McKay is something of a household name in the Australian grains industry. A fifth generation farmer, Bob is also behind some of the biggest names in business (think Agfarm and Clear Grain) and is well respected for his knowledge and experience across the broader agricultural industry from livestock and wool, to grain and cotton, and trading and finance.
In 2015, Bob co founded AgriDigital alongside Emma Weston and Ben Reid. I sat down with Bob to find out how he is combining his love for agriculture and passion for technology to solve some of the key challenges faced by farmers across the supply chain.
K: You grew up on a sheep and cattle farm in Warren, in the New South Wales' Central West region. Tell me about your childhood.
B: My father was a fourth generation sheep and cattle farmer so farming is very much in my blood. As one of six children, my parents always had lots of help around the farm which was good as there was always a lot to do! My brothers, sister and I would spend weekends and school holidays riding horses, helping in the cattle yards and cutting burrs. After I finished boarding school in Sydney, I headed off to work as a jackaroo - first stop was a merino sheep stud in Hay, New South Wales, followed by a horse stud in Wellington, which is around two hours away from where I grew up. By this time our family farm had expanded into wheat and cotton, but I maintained a keen interest in sheep and the merino wool industry. I was focused on growing the sheep operations when I returned to the farm after jackarooing. At one point we were joining up to 5,000 ewes a year.
And then in the late 1980s the wool industry collapsed and everything changed overnight. Five of us were working on the farm and with the downturn in the wool industry, the farm operations started to get a little crowded! I saw this as a good time to exit the family partnership and strike out on my own. I had always wanted to run my own business. I did, however, retain a small portion of the farm which I still grow wheat and chickpeas on today.
K: What was your next step after leaving the family farm?
B: I started looking for work elsewhere and I stumbled across an ad in the Daily Liberal for a wheat buyer’s agent in the Warren district for the Australian Wheat Board (AWB). Somewhat to my surprise, I landed the job, and that was the start of what ended up being a 20+ year journey with Agfarm. In 2000 I took a break from Agfarm and moved to Melbourne to join AWB. I led their domestic trading business which traded over 2 million tonnes a year and later I ran the 40+ grower services’ offices and a team of over 100 people spread across the Australian wheatbelt from Geraldton to Port Lincoln to Emerald. During this time I gained a deep understanding of both the grains industry and commodity trading from a domestic and international perspective. It was also during this time that I met Emma Weston, who was then working as inhouse legal counsel at AWB.
I left AWB in 2004 and returned to Agfarm, growing that business four-fold as well as founding with Emma the Clear Grain Exchange, an independent online grain exchange and clearing house. As Agfarm grew and expanded from Warren, to Dubbo and then Sydney and across Australia, so did our team and we began working with a young grain trader called Ben Reid. Although we didn’t know it at that time… the AgriDigital founding team had been born! Eventually Agfarm was sold (to Ruralco (now Nutrien Ag Solutions) and CHS Broadbent) and Clear Grain Exchange was sold to the NZ Stock Exchange.
K: What were the driving forces that inspired you to start AgriDigital?
B: During our time at Agfarm, a significant focus for Emma, Ben and me was derisking the agricultural supply chain and improving payment security for participants. In fact in 2009, we were the first company to introduce three day payment terms for grain growers, revolutionary at the time; before then growers often had to wait 30 days or more to be paid for grain they had already delivered to a site. This is obviously a lose-lose situation for the farmer - they no longer had access to their grain AND were nervously awaiting payment. As a result, when we started AgriDigital, we were determined to keep innovating in this area and working to level the playing field for farmers.
In particular, we were very passionate about developing technology to solve the challenges they and other supply chain participants faced. We’d already seen how technology could enable farmers to manage risks across their farm; from monitoring weather conditions, to managing water usage and inputs, even determining optimal planting times. Yet once it came time to harvest the grain, farmers were on their own - often selling their grain to a local buyer or one they thought they knew well at a lower price to try to ensure they’d be paid. Selling to an ‘unknown’ buyer just wasn’t worth the risk.
Farmers were (and still are) at the mercy of the market; they are price takers instead of price makers. This makes it very hard for farmers to scale and grow their business as price risk and lack of pricing power impacts cashflow management and borrowing power.
AgriDigital digitizes all the grain harvest, delivery, sales and payment data that was once stored in notebooks, whiteboards and on scraps of paper. We allow our users to make this data accessible to those who need it (other team members, brokers, buyers, sellers and financiers) to improve operational efficiency, data security and to improve decision-making and reporting. With grain data visible and made real time the buyer and seller can operate and maintain accurate records with confidence. Over time trust and transparency is improved across the whole supply chain.
Our time at Agfarm taught us that many businesses rely on flexible finance in order to scale and grow, but this isn’t always available to the small to medium players without having to jump through a significant number of hoops. My main focus at AgriDigital has been developing our finance products. Our goal is for our technology customers to be able to borrow the working capital they need at the click of a button and have those funds in their account the next day (or sooner). And I’m proud to say we’re almost there.
K: Agriculture has been a strong theme in your life. If you hadn't been involved in ag what else could you have seen yourself doing?
B: Agriculture is a big part of my life and I wouldn’t have it any other way. I get up to our farm whenever I can and love getting out in the paddock. After a few years of drought we had one of the best chickpea crops ever this harvest, and we’re planning a significant crop of wheat for next year too. My family and I are also in the early days of breeding horses, which is very exciting.
I think I was always destined to end up in agriculture. Ever since I was young, I’ve been interested in trading, and I’d often take myself down to the Sydney Futures Exchange with my notepad and pen, watching the trades and taking notes. I learnt a lot about the agricultural commodity sector and futures markets this way which further fuelled my passion and interest for the industry.
K: What piece of technology can you not live without and why?
B: From an AgriDigital perspective, I would have to say Xero! It has really simplified our accounting function and made reconciling our books so much more efficient - it’s an incredibly quick process now. The way it integrates so seamlessly with our bank accounts is great and saves a lot of time. I see a lot of parallels in what we are doing for the grains supply chain in what Xero has done more generally for small business. Both companies aim to help our customers make better and faster decisions. - and be able to sleep easily at night!
Personally, I can’t live without my wifi enabled weather station and my Rain Bird weather app. While I get out to the farm at Warren as much as I can, if I’m in Sydney for extended periods of time, these have become an absolute lifesaver in terms of being able to remotely manage the watering system up there. I use a Holman weather station to track the weather conditions and then adjust the Rain Bird app accordingly - so if the forecast is for hot and dry conditions I can turn on the sprinklers remotely and give the place a good watering. If there’s been a recent downpour, I can turn them off, all from the home office in Sydney. Brilliant!