Finance & Consulting

Finance & Consulting Blog

My Unexpected Intro to the Ag World

By John Zhang ’19

April 29, 2021

Tags Finance & Consulting

When people think of the agriculture industry, “traditional” or “old fashioned” are words that come to mind. Given this perception and that I’ve always been more interested in sectors that are fast moving or innovative, working in the agriculture industry was something that I never expected. However, I found the sustainability aspect of “ag” to be really interesting, so out of curiosity I checked to see if there were any ag companies in Boston (where I currently lived) that were involved in sustainability, and I came across Indigo Ag — an agtech company focused on improving farmer profitability and sustainability through biological and digital technologies.

This focus on innovation and sustainability really appealed to me. At the time I was working at Wayfair, and although I really enjoyed my current role, the company culture, and most importantly the employee discount, I found Indigo’s mission to be more meaningful and I wanted to learn more about the ag industry. Given my interest, I checked out the company site and found a job opening on their pricing team that I really liked, as I would get to work on the different business lines at Indigo and apply a mix of the technical and quantitative skills that I had picked up in both my last job and at Hamilton. From there, I applied, talked to a Hamilton alum at Indigo about her own experience there (which was very helpful, and makes me further appreciate how great our alum network really is), and got the job. Since joining Indigo, I have learned how complex and unpredictable the agriculture  industry can be, and that the modern farmer’s responsibilities are much broader than farming itself. 

Nowadays, farmers face challenges such as trade wars, unpredictable commodity markets, and climate change that have led to more and more farms going out of business. In order to adapt to these challenges, farmers now need to be skilled in areas beyond “traditional” farming, such as utilizing financial hedging tools to manage market risk, determining the most cost-effective supply chain routes to transport crops, or working with new technologies like IoT. 

There are clearly a lot of different things for farmers to deal with, thus the goal of Indigo is to develop new digital technologies that help farmers manage market risk, optimize their supply chain, and improve sustainability, as well as biological products that improve crop yields. Personally, I work on our pricing team, and have been focused on creating pricing guidelines/methodologies for our Grain Marketplace and Carbon businesses.

Grain Marketplace is a tech platform we’re building that facilitates transactions between grain growers and buyers (somewhat like Ebay or Amazon), which is more efficient and flexible than the manual processes used today. I’ve been working on understanding demand elasticity based on our fee prices, and setting up data reporting through SQL and inputs from account teams. This work has been really interesting and I’ve been able to learn a lot about how farmers and buyers manage market risk.

Since commodities are such a volatile market, farmers need to use a variety of financial tools to hedge against market changes, such as call or put spreads (this is called grain marketing). As a result, understanding these trading/hedging strategies is important, and I’ve spent a lot of time learning about trading and risk management.

Indigo Carbon is our carbon offsets business, where we incentivize farmers to adopt carbon negative practices by paying them for every ton of carbon removed from the atmosphere through carbon-sequestration practices (e.g., cover crops or no-till farming), then we verify each ton of removed carbon as a voluntary carbon offset, and finally find buyers for these offsets, with these buyers mainly being companies looking to reduce their carbon emission levels.

Along with my team, I have been involved in figuring out optimal prices for carbon offsets to generate sufficient supply from farmers, and evaluating how we should bring these offsets to market. It’s really interesting to learn about the economics of climate change, because even though climate change is an environmental problem, it’s also an economic problem with the potential to create trillions of dollars in economic damage. 

Agriculture is a very complex and tough industry where farmers and buyers face a variety of challenges that can be environmental, economic, or political in nature. This also means that ag is an industry with a lot of potential, with significant opportunities for people with backgrounds beyond agriculture, such as data scientists, finance professionals, or bio-researchers to work together and solve these challenges.