Impact Hustlers - Entrepreneurs with Social Impact

Making farms more profitable & sustainable - Robin Saluoks of eAgronom

January 03, 2023 Maiko Schaffrath Season 1 Episode 121
Impact Hustlers - Entrepreneurs with Social Impact
Making farms more profitable & sustainable - Robin Saluoks of eAgronom
Show Notes Transcript Chapter Markers

Robin Saluoks, the CEO and co-founder of eAgronom, a platform helping farmers adapt to sustainable farming practices and increase revenue through the voluntary carbon market.


In today’s episode, we discuss how he built his company from the ground up.


EPISODE HIGHLIGHTS

  • [00:27] Robin's personal background & journey
  • [5:02] Farmers management app
  • [6:37] Using farming to capture carbon and greenhouse gasses
  • [9:33] Impact of farming in battling climate change and farmer’s solutions
  • [12:10] How can farmers impact carbon sequester
  • [14:58] eAgronom’s approach to measurement and verification of carbon emissions
  • [17:21] Barriers eAgronom’s clients face adopting the technology
  • [19:47] Global expansion and lessons learned as an entrepreneur 
  • [21:54] eAgronom’s market expansion
  • [24:28] eAgronom’s current markets
  • [25:31] Product translation and customization for different markets
  • [27:25] Robin's 10-year vision


KEY LESSONS & QUOTES

  • "Soil after the ocean is the second biggest carbon bank on earth" [10:20]
  • “Farmers need to implement full air crop coverage to help curb carbon sequester” [12:27]
  • “For many farmers, it seems unbelievable that they will get money for selling air but our carbon program covers them” [17:37]


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Maiko:

In today's episode, I speak to Robin Saluoks, the CEO and co-founder of eAgronom, a platform helping farmers adapt to sustainable farming practices and increase revenue through the voluntary carbon market. eAgronom is based in Estonia, has raised more than 10 million in funding and is now scaling across Europe through a network of partners, and I'm really excited to have you on the show Robin, thanks for making the time.

Robin:

Yeah, thanks for inviting me.

Maiko:

Thank you. So let's start with a brief background of yourself. I read you actually kind of grew up in the farming industry and you were actually working during your summer holidays for your father on your father's farm, so I assume the whole kind of involvement in the farming industry originates from that, but give us a bit more about your story of how you got into farming and how you became an entrepreneur, and why you now work on eAgronom?

Robin:

Yeah, absolutely. Well as you said, I'm coming from the farming family, so my father has 1,400 Hector Organic crane Farm in South Estonia, and interestingly, my grandfather has same size conventional crane farm in South Estonia, so I'm basically in the middle of those two worlds organic and conventional. And that's true, I was working in the summers in the farm, but my main target was to become a professional football player, so that was my focus until in high school we had a chance to start a student company and me with the two of my classmates started a company called Three Little Pigs and we started doing science shows for children. And what was great about this was that we learned, that building a business is one of the best ways to change the world however you want. So at the time, what we saw was that if you ask from kindergarten and children, do they want to go to school, most of them say yeah, they are already waiting for this. And if you ask the same question from the first graders or second graders, then they don't want to go to school anymore, and we are thinking, okay, where is this mismatch coming from? And wanted to make learning and studying more exciting for kids. And then we started the science show company, and it's still up and running, actually sold it to some other guys who are still working on it, and a thousands of children go to our science classes every week, and even invite us to assign shows in their birthdays. So it shows birthdays one of the most important day of year for a child. And if they invite us to teach them so they could learn some more, so that really means that learning became exciting for them, but for me personally, that was the introduction to entrepreneurship and at that moment I knew that building a business is something that I want to do. And if you have some kind of problem in your life, then building a business is really good way to fix it. Then, well, let's move forward few years I went to study computer science. I was still working on the farm during the summer time and, then even in the winter as well I was helping my father. He had 10 nextel tables and one really old software, to report to the government as well. Actually labels were mainly to plan what's going on in the farm and to give orders to tractor operators, et cetera. And at one point he started looking for a new tool to manage it. He didn't want to have the next labels anymore, and he wanted to, have some good tool that he could use to manage the entire farm. So we were looking around abit I was speaking with different companies all around the world, didn't find anything good, and I ended up building a tool myself because I was studying computer science at the time, and interestingly some other farmers saw this and wanted to start using it as well. Then it clicked me that it could grow into something bigger than just a tool that I made for my father. I teamed up with some other guys who were much more experienced programmers than I was, and we started the acronym together. So that was the beginning. Already really in the first prototype there was hummus balance calculator included. So, hummus is the richest part of the soil, 40%, this is carbon and et cetera. And, no farmer asked beside my father, and soil is super important in his farm, and well, he has signed on the wall that our customers soil. And then we started in 2016 and many years later we saw opportunity to then move more into the carbon business. And actually as you mentioned in the introduction, launched the carbon program and bring other financial benefits to sustainable farmers as well. So it all started as a farm management system for my father, and yesterday we have moved to something that is much bigger than this.

Maiko:

Wow, that's a really good case study because you just solved a very specific need for your father, and you kind of stumbled across, oh wow. Others have that need as well. And that was like mainly around kind of planning organization, efficiency, I guess, not having to use Excel sheets anymore. What was that initial product? Give us a bit more in insight into that and then we'll talk about the current product in a second?

Robin:

Yeah, absolutely. So I guess every business has to plan their activity somewhere and then manage their, orders to their people and then manage their finances, et cetera. And our tool is doing exactly the same things for farmers. So farmers are using it to plan what crops do they have on each field? What task do they want to do? Based on this they can calculate what do they have to buy, how much fertilizers they need to buy, how much seat they need to buy, then when the season starts, then every tractor operator gets tasks to the mobile app and gets to know where they have to go next and what they have to do over there. And then throughout the season farmer gets good overview, what's done and who is working on what. I can generate different reports out of it to the government now to eAgronom carbon program, some reports to the banks, to landlords, to food companies and et cetera, And then in the end of the season, farmer can also analyze, if farmer sees that one field was performing much better than the other one, then it's possible to track down where the difference is coming from.

Maiko:

Got it, and I assume that you went quite well with that approach at least initially you had a good demand for that. When did you realize, okay, we should do something with carbon sustainable practices and using farming as a way to capture carbon and greenhouse gases, and when did he kind of pivot towards that direct?

Robin:

Yeah, for us, it's all about the business model. It's still the same technology and software that is hard of our operations, so that never changed because in the carbon program and in what we do today most important is the data, and our tool helps to manage the data in the farm and verify that this data is the correct data that farmer presented to us. But few things, first of all, as I said from the beginning, our goal has been to help farmers to switch more to our regenerative farming, sequestering more carbon soil and lowering emissions using inputs as little as possible and as efficiently as possible. So that has always been the target and always we were looking ways how to reach this code. So that was one, but secondly we wanted to have even more clear value proposition for farmers. In the beginning it was, well, farmers got better overview and saved time, but it was hard to put the monetary value behind this. So we were always looking for some clear financial benefits that farmers can get if they use our products. And that's how we ended up with the carbon program, from different sources, we understood that voluntary carbon credit market is big enough. There are buyers who are ready to pay enough, so it would be already short term profitable for farmers to change practices and sequester carbon in the soil. And we decided to develop slightly different business model where we use exactly the same tool, we give this tool even for free to farmers, but they use this tool to track their changes in the farm and it calculates for them how much more carbon they have now sequestered from the atmosphere into the soil. And then we can turn this into carbon credits and sell those so that farmers can earn extra income. And then when we started with this business, it moved into something even bigger because I think in all industries businesses have to go more our sustainable, and same with farming, and it's not only about carbon credits anymore, but by verifying those sustainable practices, these farmers access better loan terms. It's really similar as if you go and buy electric car, then you get better terms for the bank. Same with sustainable farmers, those farmers get smaller land rent because landlords want that their land is used sustainably and they also get higher prices for the food they produce similar as organic farmers get slightly better prices. So, now it has grown into something much bigger, but core technology is still same.

Maiko:

Got it, amazing. We'll talk about the details of how it works, but I'd like to zoom out slightly again and just get everybody to understand how big is the impact of farming and the potential of farming to be part of the solution? Because I think not everybody may realize how big it actually is. I think if we talk about carbon offsets very often people think about trees, some people may think about capture from air or things like that but again, like sometimes the awareness outside of our bubble is not as high. So first of all, talk us through the impact of farming and the potential farming to play a role in battling climate change, and then give us the specifics what farmers can actually do, what are you getting farmers to do that gets them there and sequesters to carbon?

Robin:

Yeah, absolutely. So, I guess first of all it's not a surprise for people that farming is a big polluter around quarter of the emissions globally come from farming a lot from animal farming, but still farming produces a lot of emissions as well. The good news is that we can lower those emissions a lot. But the second surprising thing for people is that there is, much more carbon stored in soils than there is in plants. So soil after erosion is the second biggest carbon bank in earth. So there is more carbon stored in soils than trees and crust and et cetera. And this is surprising for people. and this is our opportunity where we can actually sequester even more carbon over there. So globally we can say that it's possible, if we would utilize all the opportunities, then we could sequester around 1 billion tons of CO2 annually, and just to put into perspective then the global emission, are slightly over 50 billion tons annually. So, obviously still the emission reduction is very important and most important we have to start going region rate or emission free energy production and et cetera, but in some industries, Difficult to reach to zero emissions. So in those industries, we have to find ways to offset the emissions that are remaining. And in this case farming and more widely nature based solution, are most applicable today. I really hope that the director capture will continue developing so that the price point will be accepted for big polluters as well, but in the short run nature based solutions have to step in.

Maiko:

Got it, and then from a farmer's perspective what would they currently be doing with their fields and what can they usually do to improve to actually sequester carbon very specifically? Yeah, what do you recommend them to do actually through your tool?

Robin:

Number one thing is crop cover so that farmers would have full air crop coverage. So, very often the case is that farmers are growing, are seeding something in the spring, let's say, and then harvesting it in the autumn, and then you have the winter period where you don't have anything growing. So you have the bare soil, and this is the opportunity. It's first of all bad because photosythesis is not happening on the field at the time and nothing is sequestering carbon, and at the same time soil is open for wind and erosion, so that's bad. So the number one thing is to have full air crop coverage. It means and there is a term called cover crops. Some crop that you don't grow to produce any seed from it, but it just grow it to cover the soil during some period of time, and this is obviously extra cost for farmers in the long run. It's a really good investment, so, this crop can bring some nutrients if it is legumes then with bacterias, it can capture nitrogen from there, and farmers have to both bless nitrogen fertilizers. It, also increases the hummus levels, you will have, more richer soils and your soils capabilities to store water or hire so you don't have the worry about really dry periods or long rain periods that much. And there are plenty of benefits but the challenge is that those benefits usually kick in the longer term, so in the short term, it's a cost, and this is the cost that we help to cover with the carbon program. Now if you have the full air crop coverage, then naturally you are already tilling less as well, or cultivating, turning the soil around. And this is also, good if you don't turn the soil around that much, first of all, because it burns a lot of fuel to pull the plow with tractors. And secondly, every time you turn soil around, you're making the erosion quicker. So basically soil is again disturbed, and then thirdly the consequences of those two first activities is also that you have to put less fertilizers. If you use cover crops, then you get some of the nutrients from the air or from the deep soil, and you don't have to put that much fertilizers anymore. And nitrogen fertilizers especially are the big source of pollution mineral fertilizers because the N2 greenhouse gas is coming from the soil, if you put the mineral fertilizers.

Maiko:

Got it. Okay, so quite a few steps that farmers can take. So what I'd love to understand is just learn a bit more about how you actually help measure and verify the carbon emissions that are being sequestered by the farmers that you work with. From what you just told me, there's like such a range of variables that you need to consider, it seems and I can imagine it's really difficult to actually measure this properly, so I'd love to learn a bit more about your approach.

Robin:

we are using measure and model or model and measure approach. Basically we are following VM 42 methodology, whereas the global carbon credit certifier the biggest in the world, around more than 60% of the global credits are certified by Vera, so we are using their methodology. And more specifically first of all, first part of this is the model and validating that the model that we are using is correct one and most specifically the soil model, because soil is very, difficult and complex thing. And over there first of all, the soil model that we use have to be scientific and peer reviewed. Secondly, we have to validate or verify the soil model in the region where we do the project with other peer reviewed studies that it works, for example take some studies that have done soil analysis and before and see that model predict the same results as those studies show? And thirdly, Inside our project, we have to take around 10% of the representative fields where we do very heavy soil sampling in the beginning of the project and in every five years as well, to verify that and further calibrate the soil model inside our carbon project as well. So that's one thing that we do, so that our models would be correct and secondly, to verify that the data that farmers give us is correct, and over there the biggest tool that helps us is satellite image. We use this to verify what are the crops growing on the field? Is farmer cover cropping or not? Is farmer cultivating, and et cetera. And then also we are using machinery telematics, so integrations with tractors and harvesting combines and et cetera to get additional information. And if needed, we do field visits as well to the farm.

Maiko:

Got it. And along that journey what do you see as kind of the biggest barrier now for farmers to adopt this at scale and be part of the solution? Do you see like common challenges amongst your customers or out there of people not doing this?

Robin:

Yeah, I guess it's the really new thing for farmers. It's a new concept and for many farmers it seems like unbelievable that they will get money for selling air, it seems like this for some farmers, but then if you explain that they get support when they restore their soils that they already understand it more but still to make it tenable for farmers, something that they can really already touch. Then we offer prepayments for farmers. So up 50 percent, because farmers have to do practice chains, then they already have to do some investment, they have to do some cost to do a full year of practice chains, then maybe it takes another year to verify those credits and maybe another year to sell those credits. Then it might take up to three years to actually get income. So for this reason we are working with some banks, to shorten the period and prepay half of the credits to farmers already, or pre-purchase half of the credits from farmers already. And around 20% of the farmers use this opportunity, but it's important for all of the farmers. Because very often that's the reason why they join our carbon program and not the competitors once because they see that we are ready to put the money on the table already, and there is clear market for the credits we produce because there are some other players as well who are not doing certified carbon credits and, it's not clear if there actually will be market for those credits. And it might be that farmer will do those, some practice changes and yes, it's promised that they will get some kind of credits, but it's not clear if farmer actually gets money for doing those practices. So, I guess the biggest, kind of bottleneck or challenge for us is that it's a new concept for farmers, but we managed to grow from, 0 farmers to 120 farmers in 12 months. And The growth is continuing in the future as well, we expect to double the numbers number of farmers we have today by the end of the year, and continue growing with the same pace, so there is still interest from the farmer's side as well.

Maiko:

Got it. That gives us a good segue into some of the lessons learned from you as an entrepreneur. You've been an entrepreneur for a bit, and eAgronom isn't your first business. So I'm really keen to kind of distill a few lessons learned and one, that we spoke about earlier when we chatted just before the session was the role of international expansion. I think when looking at you, you know, you obviously expanded quite early and you are active in quite a few markets and, you mentioned that you actually maybe expanded a little bit too early, first of all. So tell us a bit more about global expansion and some lessons learned from your side on how early stage startups can manage that, especially if they're coming out of markets like Estonia, where this is kind of the default thing to do very quickly, right? You can't necessarily focus too long on just a home market, you have to go abroad very quickly. So tell us more about that?

Robin:

Yeah, that's the thing definitely with companies from Estonia or small markets in general, they have to go the new market quickly. Now that's inevitable, that's something that you have to do if you want to build a big business, but the question is how to choose to market and how many markets to go at the same time. So I guess the mistake that we did at the beginning was that we wanted to go to all of the markets, straight after Estonia because Estonia was a big success for us and that was too much. And that sometime we had to narrow it down to Poland. Why Poland? Because Poland is one of the biggest agricultural markets in Europe. And we thought if we can be successful in Poland and already the company's going to be quite big, so, I guess, two lessons coming out of it it. First of all, especially in the early stage, don't take too many markets at the same time. I think one new market at the same time is enough. And secondly, this one market should be big enough so that if you really do well at that market, then you already have achieved some kind of level. And these were the lessons that we had to learn the hard.

Maiko:

Got it. And let's go a bit more detailed on that, yeah, so which markets did you expand to initially? And kind of did you do them in parallel? Tell us a bit more detail about that lesson in the early days?

Robin:

Well basically I said, and I'm from Estonia, and we started driving to South. First week it was Latvia, hired a person over there. Then next week we hired a person in Lithuania week after that in Poland then Czech Republic then Slovakia and we are already looking to hire someone in German as well. But the problem was that we didn't have much time to work with those new people. We were always looking to hire additional people, but didn't have capacity to manage the existing ones. And then we understood this and had to do the hard call at least we first of all understood it fast enough. And secondly we had pulses to do the decision quickly. And then once we started focusing only on Poland, then the growth was even the total growth of the company was much faster compared to the previous period where we had like those six or seven countries at the same time, but none of those countries were actually very successful ones. And then obviously there was this special case of Latvia as well, where we didn't put any focus, but it started growing quite early on its own as well, but the most focus went to Poland and that gave us a few things. First of all, it gave us scale secondly it teach us how to do it in the new market because doing it in Estonia was much different than doing it in Poland. Like Polish farmers rarely speak English. So, you had to find a way how to reach to them without actually speaking the language on their of their own. And then last, but not least, I guess even maybe the most important thing was that thanks to this crew, many new people outside from here, we are now able to go to some new markets. So one of the people throughout of this was, Adam our first hire in Poland, and he's now working on the Lithuanian market. He's actually in charge of all the politic and polish market right now and is working on a green loan project that we have, et cetera. And then we have another guy, Lucas, he's working on the Czech market. So basically you have this talent that starts eventually growing up out from your company and who already, has done it successfully and then can go to new markets and then grow some more talent over there. And then eventually the more capable people you have, the more markets you can go at the same time.

Maiko:

Amazing. And now how many markets are you in right now and what's kind of on the roadmap, where are you at now?

Robin:

It's a good question. Well, haven't counted it even, but we are in all politic countries. We are in Poland, we are in Czech, we're in Romania. Now we have first pilots in Africa as well, so we want to set up something in Africa already this year. I was in Tanzania in the summer, so most likely it'll be Tanzania, but it might be that some other countries like Kenya Zambia, Zimbabwe and South Africa will follow soon. And then in Europe in Central East in Europe, we are looking for partners in Bulgaria and Hungary big farming countries. And then we just hired first people, the Spanish market as well, so that's gonna be very interesting. And then we are speaking with banks all around the, actually to help them verify their agriculture portfolios carbon footprint as well. So with this it's possible that like through different channel we will expand to quite many European markets in the next year through banks.

Maiko:

Got it. I've got maybe two more questions before we wrap up and first one is, looking at all these markets that you are in already now and considering that agriculture, I imagine as one of the most local non globalized, well globalized to many degrees, I guess, in terms of trade, but I guess your customers are very different depending on where they are. So I'm just wondering, do you feel like you had to do quite a lot of customization of your product for those different markets, or does it still feel like the problems are very similar everywhere and you basically just need to translate a product and bring it to a new market?

Robin:

So product is very similar, that's not a challenge, but culture is different and farming is very much relationship based business, so you have to, farmer has to trust you before they're ready to do business. And for that reason, all of the agribusiness globally is built on dealerships. So John Deere is never selling tractors straight to farmers, I dunno, monsanto is never selling chemicals to farmers, buyer is never selling chemicals to farmers, yara is never selling straight to farmers, it's always through dealers and, those three because it's impossible for let's say John Deere to have really good relationship with hundreds of thousands of farmers, but it's possible for John Deere to have a good partnership with let's say hundred or 200 dealers. And then those dealers, each of them have really good relationship with maybe 2000 farmers, maybe 3000 farmers. And that's what we do right now as well is that we are going to new markets through partner. True companies who maybe they sell tractors to farmers, maybe fertilizers, maybe their advisors to farmers, and then now they can just add additional product to their portfolio, our carbon program.

Maiko:

Got it. Last question for you is, if you think 10 years ahead from today what does the world look like in 10 years when eAgronom is successful?

Robin:

Yeah, it's quite clear. First of all we have clarified right now we're farming is that there is big will at wish, to move it toward more sustainable. Now the next step is developing out the measurement systems and the verification systems. So it is possible to verify what are the missions in the farm and what are the like rations in the farm and which farmers are sustainable and who are not. So in 10, That will be set, so, all farmers are using some tool to verify their emissions. Second piece is bringing financial benefits to those farmers to apply those sustainable practices because if you want sustainable farming to be mainstream farming, then it has to be the most profitable way. And already today we are working on four things and, in 10 years, it'll be the same, but those four will be much bigger. So one is a carbon program where farmers who sequestered more carbon in the soil will get paid for doing it. Secondly sustainable loans. So right now what we do is that together with some banks we help to verify sustainable farmers, and these farmers get slightly better loan terms. And also we measure the greenhouse gas footprint of the entire loan portfolio of for some banks. So, in 10 years if you want to get the loan from the bank as a farmer, then you have to apply already those sustainable practices and someone has to verify, 13 food companies same thing. They're already ready to prefer and give slightly better terms to farmers who are doing those sustainable practices and growing food with low emissions. It'll be much wider in 10 years. Then last but not least landlords, I think in their opinion, in 10 years it'll be anyways. Illegal to have negative homeless balance, but landlords very more and more aware that depending on how farmers use their soil for their land it can be more valuable in the future or less valuable. And already they, some of the landlords will give better terms to farmers who use land sustainably and It'll just be more wider in 10years. So all farmers will be measuring their emissions and they will access many benefits if they apply sustainable practices.

Maiko:

Love that vision and really excited to speak with you, learn a bit more about the space, and I wish you all the best on, that journey as you develop further Robin, thanks so much for your time and wishing you all the best.

Robin:

thank you.

Robin's personal background & journey
Farmers management app
Using farming to capture carbon and greenhouse gasses
Impact of farming in battling climate change and farmer’s solutions
How can farmers impact carbon sequester
eAgronom’s approach to measurement and verification of carbon emissions
Barriers eAgronom’s clients face adopting the technology
Global expansion and lessons learned as an entrepreneur
eAgronom’s market expansion
eAgronom’s current markets
Product translation and customization for different markets
Robin's 10-year vision