March 2021 agricultural “platforms” in a digital era

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Figure 13: Key strategic choices for defining an agricultural marketplace 
business model
Source: ISF Advisors and RAF Learning Lab analysis
or sub-commercial funding. Other Platforms 
are cross-subsidized by their operators’ other 
businesses—for example, agribusinesses 
generating offtake and export revenues (e.g., 
EthicHub) or tractor equipment manufacturers 
(e.g., JFarm, Trringo) running and operating an 
equipment rental marketplace beside their core 
business. Given the nascent nature of agricultural 
marketplaces, it remains unclear what revenue 
model—or combination of models—works best, 
and in what contexts. But whatever monetization 
strategy is used, marketplace funders and 
operators should ask two fundamental questions: 
1) Are farmers, buyers, and service providers 
gaining value from the interactions happening on 
our Platform? and 2) Can we capture part of that 
value without discouraging users from joining 
and transacting through the Platform? 
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Building and defending networks
Regardless of how agricultural marketplaces 
are designed, their long-term sustainability will 
depend on how fast they can achieve, and how 
long they can sustain, scale. As for any Platform, 
reaching a critical mass is particularly important 
to trigger network effects and achieve demand-
side economies of scale, making the marketplace 
more valuable as the number of users increases. 
But for agricultural marketplaces, in particular—
where transaction sizes and margins tend to 
be small and there is often a need for large 
capital-intensive investments—fast growth is also 
fundamental for driving supply-side economies 
of scale. This is especially important to enable 
marketplace operators to break even at the pace 
private investors demand. 
At the same time, Platforms must be careful to 
guard against growing too fast, as this may lead 
to negative network effects: improperly-managed 
growth in Platform users can decrease the value 
proposition to users by increasing search costs 
(for Platform users to find each other) or make 
it more difficult for the Platform operators to 
effective curate users, thereby lowering the 
average value of users and their interactions.