Startup Helping Small Farmers (Finally) Cash In On Local Foods Movement

Software maker Azoti Inc. is ready to get the harvests of small farms to bigger kitchens.

As much as the local foods movement has been promoted, it hasn’t really benefited small and family farms, said Azoti founder and CEO Dave Ranallo. Its supply chain software aims to change that by easing ordering for chefs and large foodservice operations.

“They are buying some local products. It’s from local large farms,” Ranallo said. “There’d be less (small) farmers at the farmers’ market if this were taking off.”

The six-person startup has partnerships with two of the largest food distributors in the state, and deliveries are handled by regional “food hubs” – companies such as Columbus-based Yellowbird Foodshed, which sources from nearly 20 nearby farms for households ordering shares of Community Supported Agriculture, or CSAs.

“The CSA is barely sustaining for small farmers; they’re really just suffering,” Ranallo said. “They have uncertainty across both Mother Nature and how much are they going to sell next year, how much should they grow.”

The software can now get that produce and meat to much-larger customers, including Ohio State University, the Hyatt Regency in the Arena District and Toledo-based ProMedica Health System. Azoti can work with food hubs and distributors around the country to get programs going; Ranallo is in talks with a hospital in San Antonio, Texas.

“We’re attacking an entire supply chain,” Ranallo said. “Competitiveness in the food business will propel Azoti because … whoever can solve this local puzzle first will be way ahead.”

Azoti had to dive into day-to-day operations of chefs and procurement officers to design its software to make their jobs easier, such as one-click ordering and clear pricing. The food delivery comes with a ready-made poster listing local farms and what they provided, even the average time from farm to table.

“Those kind of things get people excited, where the (small farm) price premium is now easier to bear,” he said.

It took Ranallo longer than expected to reach this point. Azoti started with its own CSA program, making deliveries to large employers and schools. The game plan was to build enough momentum to get to the larger cafeterias and restaurants, but it turned out that only 1 percent of workers ordered, and many customers dropped out. The company no longer offers CSAs, directing customers to Yellowbird.

“Most people don’t cook from home,” Ranallo said. “(And) if they are willing to pay a premium for local, they want to select which tomato or which cucumber goes in their box.”

A bigger hit was pre-paid workplace farmers markets that launched this year: Employers buy a fixed amount of produce and run markets where workers pay discounted rates. That drew 20 percent to 40 percent participation. Azoti is continuing that service; the employer uses its software to manage the program.

Ranallo credited investors including Columbus’ NCT Ventures with having patience as he built up to business-to-business sales for the subscription software. Based in the Rev1 Ventures incubator, Azoti has raised $1.75 million over four years. Revenue is not disclosed.

The name, by the way, is Italian for nitrogen, an essential crop nutrient.

Source: Upstart Business Journal, Carrie Ghose
Photo: Columbus startup Azoti Inc., which makes logistics software to connect local farmers with consumers, now offers a pre-paid farmers market in which employer wellness programs buy vegetables up-front so employees can get them free or for a nominal charge that usually goes to charity. (Carrie Ghose)

Carrie Ghose covers health care, startups and technology for Columbus Business First.