How this economist-entrepreneur is cultivating a new market for organic products
This 12-part series highlights women-led ventures in the green economy.
As an ag product, you know you’ve made it to prime time when you’re traded on the commodity market. Your presence is a sign of prominence, importance and yes, market demand.
Take orange juice as an example. The product of a clever 1920s U.S. marketing campaign urging households to drink orange juice for breakfast, OJ is now traded on the Intercontinental Exchange. But those oranges used to make the juice are not distinguished between sustainable and unsustainable, organic and not.
In comes Kellee James, who founded Mercaris as a platform to trade organic, non-GMO and certified agricultural commodities.
James was as an economist at the Chicago Climate Exchange (CCX), the first electronic trading platform and registry for spot, futures and options, covering carbon, sulfur, clean energy and other environmental derivatives. Unfortunately, the "cap on carbon" legislation never was passed to make CCX viable in the long term, but James’ five-year stint was valuable in identifying a real-world problem.
I’ve met numerous entrepreneurs who have a solution looking for a problem, which is always a tough place to start. James identified that the lack of information about agricultural commodities was preventing the organic industry from flourishing and so recruited her then co-worker, Chris Duesing, to co-found Mercaris. James observed a key trend — consumers wanted better information. James elaborated, "Consumers do not just want milk, they want grass-fed milk. They want organic milk." Yet the commodity markets were not responding with needed information. Mercaris stepped in to fill the void.
Mercaris tracks prices to help buyers and sellers in sustainable agriculture trade better, which in turn leads to better farmworker health, higher quality soil and less pesticide runoff. Organic trading is one way of putting a price on the benefits of zero pesticide and zero chemical fertilizer use in agriculture, thereby enabling better compensation for organic farmers.
In addition, organic farming helps solve climate change through carbon sequestration in soils. In a 2017 study, Northeastern University researchers found that soil from organic farms were 26 percent better at retaining carbon than soil from non-organic farms.
Mercaris started selling data in 2014 and fully launched its platform in 2015. It has a two-pronged business model: a subscription model where customers access data and analytics; and a trading fee for anything bought and sold over the platform. Customers range from handlers of the raw commodity itself (such as grain elevators and flour mills) to brokers and banks that need the information to do their due diligence for a deal or to expand their understanding of the market. In that way, Mercaris is similar to DTN and S&P Global Platts.
At 10-plus full and part time employees, Mercaris recruited staff from a range of specialties, including software coding, economics, sales, accounting and communications. "The degree is less important than real world experience," James said.
She highly values experience in agriculture-related startups and commodity trading experience for relevant roles. As a member of Chicago’s 1871 incubator, Mercaris recruited staff by using the 1871 recruitment service and online tools such as LinkedIn.
Eventually, however, James met a specialized recruiter at a conference that she described as "a gamechanger." Specialized recruiters develop deep sector expertise that enables them to have access to a more relevant pipeline of talent.
Iconoclastic thinking is probably one of the keys to Mercaris’ success. Although challenging tradition is prevalent in entrepreneurship in terms of disrupting markets, it’s not so prevalent in terms of disrupting the status quo of gender and ethnic diversity. Mercaris is unconventional in both ways.
James admitted that she, like many, had been a part of organizations that illustrate the good, the bad and the ugly. "It’s easier to create a good organization from the beginning than to fix one later," James explained. James reports to the team quarterly just as if she would report to the board. Her leadership style is open and transparent, while creating an easygoing atmosphere.
Whereas Mercaris previously concentrated on product development, the next phase of growth will focus more on sales and marketing. Mercaris currently follows organic corn, organic soybeans, organic wheat, non-GMO corn and non-GMO soybeans; the growth plan includes adding products such as coffee, expanding services such as a market mechanism for price discovery and hedging price risk.
If successful in this next round of growth, Mercaris will have played an important role in bringing sustainable agriculture to the mainstream, supporting ecosystem health and farmer well-being along the way.