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The platform is killing the middleman

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By Diana Princess Yamashita

IF VIDEO killed the radio star in the 1980s and ’90s, the social web has its own version of the generational killer: The platform killed the middleman.

Our most famous platforms, such as Uber and Airbnb, don’t show this statement in action. They simply bridge two sides of a marketplace — cars and passengers, rooms and renters — and make the connection more efficient, maximizing what was once just unutilized capacity. But the platforms with longer supply chains do show the death of the middleman.

Take for instance the case of agriculture. Farm-to-table is so in vogue as a restaurant and conscious consumption choice because it is so unnatural. Food rarely makes its way straight from farmers to our homes. Instead, crops usually go through a whole chain of middlemen, who add their own margin to the cost of goods but nothing else of value for either the producers or consumers. Expressed as a term, the traditional supply chain might look like farm-to-middleman-to-second-middleman-to-third-middleman-to-fourth-middleman-to-fifth-middleman-to-table.

In this supply chain, middlemen hurt both farmers and consumers. Middlemen take away profit that could otherwise go to farmers, who, in the Philippine context, are primarily impoverished subsistence farmers who could use every centavo. On the other side of the equation, middlemen make healthy food prohibitively expensive for many Filipinos. If there can be blights on crops, middlemen are blights on the distribution process.

APPROACHES TO REMOVING THE MIDDLEMAN
Fortunately, some agri-tech companies are challenging the hold of middlemen on agriculture. In China, there is Meicai — which translates into “beautiful vegetable” — and that’s arguably what it delivers to consumers in 12 to 18 hours, beginning when an order is placed. Meicai began when founder Liu Chuanjun noticed that the price of 500 grams of corn had held steady at 90 cents for over 10 years, even though the cost of producing it had risen dramatically.




Founded in 2014, Meicai is now a unicorn several times over, proving that there is tremendous value to be gained in restoring profits to farmers and making fresh fruits and vegetables more affordable to consumers.

The success of Meicai shows that middleman can be cut out of the equation, so long as you have a sizeable enough customer base. Middlemen, after all, are only entrenched in the supply chain because farmers have relied on them so long to go-to-market. If tech companies can provide them with an even better go-to-market channel, then the heyday of middlemen is done.

The way that tech companies provide this go-to-market differs. In the Philippines, for example, fin-tech Asenso Tech Pte, Ltd. has created an end-to-end business enabler that rests on four pillars, including an aggregated demand marketplace that lowers the cost of agricultural inputs, responsible capital, microinsurance, and a consumer-facing marketplace that helps farmers get their products directly in front of customers.

“When harvest comes, we will create localized marketplaces so our farmers can take advantage of over 400,000 sari-sari stores (micro stores) and 40,000 karinderias (eateries) within our ecosystem,” explained Winston Damarillo, a serial tech entrepreneur and Asenso’s founder and chief strategist.

Asenso, in short, takes a two-pronged approach in helping farmers go-to-market. It sells raw goods to stores, who sell the products individually, as well as to eateries, who combine the foodstuffs into higher value meals. Such diversification across multiple customer profiles accelerates Asenso’s rise as an all-inclusive platform and frees farmers away from the lock of middlemen.

Asenso’s model has already received acclaim — the company recently won the Asian Development Bank’s (ADB) Global AgriFin Innovation Challenge over 39 other entrants. In doing so, Asenso won a grand prize of $10,000, and, more importantly, a pilot roll-out in partnership with ADB. The pilot will undoubtedly help Asenso further refine how it can provide even more value in taking farmers to market.

How agritech products like Meicai and Asenso are bridging the gap between farmers and consumers and producing more value in the process should be an example to other industries traditionally full of middlemen. Examples include everything from artisan fields like woodworking to major industries like healthcare and public service.

Rethinking how value is created and delivered is the fastest path to innovation in fields long thought already on the cutting edge. For every middleman that we cut away, it’s more value we’re providing to consumers and producers, the most important part of the process because they together create supply and demand.

 

Diana Princess Yamashita is a journalism student at Colegio de San Juan de Letran-Manila, and working as an Executive Assistant for the chairman of an IT company in Manila, Philippines.

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