CUSTOM AG SOLUTIONS, INC. — Department of Agriculture SBIR Phase I: 8.12

Description

In the U.S. small and mid-size farms account for 78% of the beef cattle industry's $29.5B in annual sales. Unlike large producers who commonly develop and utilize comprehensive marketing plans most small and mid-size producers do not work to optimize their production and marketing strategies. In short smaller producers must view the expected benefits of such actions as not exceeding their expected costs. In failing to utilize available market information analytical tools and risk management strategies smaller producers realize lower marketing results than large producers leading to reduced profitability and sustainability. Custom Ag Solutions (CAS) proposes to develop and commercialize a cloud-based cattle marketing portal (CMP) designed to improve smaller producers' marketing capabilities and financial results. The portal will enable producers to 1) track their individual cattle lots 2) access and analyze relevant and timely market information and 3) evaluate and create improved marketing alternatives that consider a combination of production practices marketing strategies and risk management tools. Provided under a Software as a Service model and accessible by PC tablet or phone the CMP will leverage existing data platforms previous research and proven application development methods. Project objectives are to 1) demonstrate that improved marketing methods (e.g. production practices and/or marketing decisions) can be identified as both practical and economical for producer adoption and 2) demonstrate that the CMP can be made functionally accessible such that small and mid-size producers are likely to use the portal to analyze and implement better marketing methods and realize improved profitability. Commercialization Potential The $29.5B beef cattle industry enjoys a stable though mature market which is unlikely to change substantially over the next 20 years. Over 700000 small and mid-size producers account for 78% ($23B) of market sales with 128000 producers running 50-499 cows forming the addressable market for the proposed cattle marketing portal (CMP). Annual revenues for these producers range from $35000 to $500000 to total over $16B in 2012. With 128000 producers in the addressable market an aggressive marketing and education campaign conducted primarily through producer associations is projected to result in a market penetration of 20% within five years. At 20% penetration the CMP will have 25600 users managing around $3.3B in revenues. If the proposed CMP improves marketing results by 3% users' average annual revenues will increase by $100M ($1000 for a 50-cow operation up to $14000 for a 500-cow operation). If annual CMP access fees average 10% of the annual revenue improvement the proposed innovation will generate $10M in annual revenues.