Trailblazing the Ranching Frontier

I have seen, and received several referrals to, McKinsey & Company’s report “Agtech: Breaking down the farmer adoption dilemma”. After giving it a careful read, I wanted to share what we learned.

I: Agtech adoption, particularly in Livestock production, remains an unexploited opportunity

On a gross revenue basis, NA livestock production is 75% as large as crop production. Yet Agtech application to livestock production remains so limited that it is not even mentioned in the report.

This confirms our understanding; livestock producers face the same challenges as crop producers, but are far less effectively served by Agtech. A huge opportunity exists mobilizing Agtech for livestock production.

II: Regulation will obsolete paper based processes

McKinsey’s report discusses “Regulation’s increasingly important role”. We agree.

Imminent publication of Canada’s livestock traceability regulation will ignite, and delivering the industries ESG response will drive, livestock producer adoption of Agtech.

III: Time to seize the opportunities

The reports final section, “Time to seize the opportunities”, outlines four strategies to drive Agtech option:

Personalizing products and business models

Flokk offers flexible functionality and pricing options, ensuring a compelling value proposition for every producer. Flokk, uniquely, offers the option for outright purchase, a precondition for many producers.
Making the customer journey easier

The Flokk adoption journey:
- Connect to WiFi
- Run configuration Wizard
- Use
I have personally taken a 150 head herd from no records to complete implementation in four hours.
Renewing trust in data storage and sharing

Flokk is unique in storing all data on the producers Flokk hand held device. The producers data is entirely, and irrevocably, in the producers physical possession.

Flokk is fully committed to transparency, and customer opt-in, for data sharing and amalgamation.
Integrating solutions versus amassing point-based solutions

Flokk’s priority is “Connecting the herd”. Providing no-effort access to best of breed shared solutions is the way forward for both Flokk and the industry.

IV: Conclusion

What did we learn? Flokk is mobilizing the strategies that others are just discovering.

How did we achieve this without expensive consultants? Simple; every member of the Flokk team has hands on experience in livestock production. We intimately know what producers need, and we are delivering it.

Flokk offers the opportunity to profit from best in practice Agtech adoption strategies, applied to a huge green field domain.

Canadian cow/calf production is a $CDN 2B industry where ¾ of its 60,000 producers manage their herds with pen and paper. This entire industry must digitize by 2025 to achieve compliance with federal animal identification and traceability regulation. Flokk offers the compelling solution for this pressing customer need with a non-negotiable deadline.

Flokk was “Born on a Ranch in Dogpound”. The entire Flokk team has hands-on experience in livestock production, ensuring we understand, empathize with, and consistently convert, our prospects.

Flokk offers a low risk and capital efficient route to early profitability, sustained revenue, and acquisition, through the rare situation where:

A stick: Mandatory regulatory compliance
Carrots:
- Subsidized acquisition
- Revenue growth
- Cost savings
A solution: Rapid and effective digitization

Come together to provide the opportunity to dominate a multi billion dollar greenfield. Flokk is Precision Ranching Realized. Proven at scale in Canada, Flokk will lead digitization of the $1T global livestock industry.

I am writing you today to offer the opportunity to profit from this unique opportunity through participation in Flokk’s $CDN 1M pre-seed round opening May 1, 2023.

Flokk device hanging on horse saddle

Flokk is uniquely positioned to secure market dominance in digital livestock herd management:

Flokk provides an accurate and current “digital twin” for every animal in the herd.
Validated through testing at the Olds College Smart farm and two complete production cycles of field testing.
Designed for commercial cow/calf operations. Most competing products were designed for seedstock/purebred operations, so are unnecessarily complex and expensive for commercial operators, the vast majority of industry participants.
Flokk’s acquisition by customers will be ½ subsidized through Sustainable Canadian Agricultural Partnership (SCAP) programs.
Flexible, subscription based revenue model delivers immediate ROI to every prospect while driving frictionless revenue growth.
Extensive engagement with customers, the regulator, the responsible administrator, industry associations, and media have established the profile necessary to rapidly and efficiently go to market.
Flokk’s built for purpose, integrated, handheld device enables every day and all weather use at the animals side at an implementation cost ⅙ that of existing products.
Flokk offers rapid and simple implementation.
Independence from application stores (e.g. iOS App Store, Android Apps) provides an unmatchable 30% revenue/price advantage over our competition.
Flokk, uniquely, will also be offered for outright purchase, a requirement for consideration by many prospects.

Flokk’s customer base is growing:

Beef continues to be the premium food protein demand for which has grown, and will grow, with global income.
Alternate source proteins have been market tested and proven incapable of matching the palatability and affordability of beef.
Other beef producing localities are now, and will increasingly be, constrained by water and rangeland availability.
As the sole agricultural enterprise achievable and sustainable by a typical family, beef cow/calf will resist the consolidation typical of other agriculture sectors.
Beef can, uniquely, use rangeland intensification to mitigate price competition from export markets and biofuel for field crops.

With a product proven at scale serving Canadian cow/calf producers, Flokk will be positioned for significant and rapid revenue growth through:

Serving other livestock producers (sheep, cervids, goats)
Automating auditing/reporting for practice certification programs (e.g. Canadian Roundtable for Sustainable Beef)
Supporting direct off-farm marketing of feeder calves
Authoritative initiation of blockchain based food safety and traceability regimes
Reporting and auditing required for monetization of GHG (methane) mitigation products
US market
International markets
Application of the Flokk platform to other domains

Recent developments include:

April 7: Flokk supports industry engagement on proposed regulation amendments

With the cooperation of the Canadian Food Inspection Agency (CFIA), Flokk is hosting recordings of industry information seminars presented by the CFIA.

April 3: Government of Alberta (GOA) launches “Farm technology program”

As part of the Sustainable Canadian Agricultural Partnership, the GOA has introduced the Farm Technology Program. Eligible expenses for this program will be cost-shared at 50% grant and 50% applicant. Flokk explicitly qualifies for this program as an Eligible Expense, Category 4, “Herd management handheld devices”.

Apps on consumer grade hardware, the solution offered by most competitors, will receive minimal support from the program as “Items that are commonly used for recreational or non-agricultural purposes (e.g., iPads, TVs, and recreational drones)” are explicitly ineligible. Flokk is actively pursuing partnerships towards establishing a single application, integrated, and assured process for cow/calf producers to receive this benefit.

April 2: Flokk releases commentary on Verdant partners “Global Food & Agribusiness Annual M&A Review”

Verdant partners prepared a review of global agribusiness merger, acquisition, and fund raising activities in 2022. We have prepared comments specific to Flokk and the Canadian AgTech space that demonstrate Flokk’s positioning for customer acquisition, revenue generation, and exit.

March 28: Flokk’s president, Mark Olson, featured in CBC Alberta’s “My Priority” project

Mark provided a summary of the challenges rural Alberta faces delivering its contribution addressing global food insecurity. A companion background article provides thought leadership on Alberta’s role in this new reality.

March 27: Canada gains full access to Japanese beef market

Japan removed the final outstanding restrictions to imports of Canadian beef, ensuring continued growth of this $CDN 0.5B market.

March 20: “Regulations Amending the Health of Animals Regulations (Identification and Traceability)” published in Canada Gazette I

Flokk’s extensive work engaging producers, the regulator, responsible administrator, provincial administrator, and industry groups has positioned Flokk as a leader in this transition.

March 16: Flokk engages engineering firm for hand held production readiness

Flokk has entered into an agreement with a Calgary area engineering firm to refine, and prepare for manufacture, our hand held device.

February 22: Flokk identified as one of top 10 most investible AgTech companies in western Canada

Flokk was included in the top 10 for the Startup TNT 2023 AgTech summit.

This week we read a LinkedIn post from Dan Schultz that resonated with us.

From the post:

If we actually want to improve farms and rural communities, we must find ways to help farmers differentiate their products and break free from a system that’s keeping them on the brink.

#agtech should empower farmers to capture unique value rather than maintain the status quo.

We absolutely agree. Successful AgTech returns a net benefit to the farm family, and advances the welfare of rural communities, rather than simply trimming cost or growing output.

Starting with emergence of effective herbicides in the 1970s, AgTech has delivered significant comfort and convenience to farming and ranching. However the cumulative effects of AgTech have left most of them less wealthy. Innovations increase production, but margins do not grow because markets take any gains away through lower prices.

And the strategy most AgTech offers to resolve this? Innovations that produce more product.

Farmers and ranchers recognize this is not sustainable and are ready to explore alternatives. But many of the solutions offered disrupt current practice, are expensive to implement, add to administrative burden, and require all the cost and effort up front while financial returns are deferred to some future date. Roadblocks are raised that constrain new approaches, rather than paths cleared.

AgTech that offers actionable solutions that increase product value will thrive. AgTech that continues to focus only on productivity will languish.

Ranchers need AgText like Flokk that:

is simple and affordable to implement
eliminates the administrative burden of product value improvement programs
provides a powerful, flexible, future proof platform
scales cost and functionality to align with every customers needs
delivers early, and growing, ROI to every customer

Again, from the post:

What most people miss in the discussion around #agtech is that it’s not just another tool in the farmer’s tool belt or a better way for the incumbents to “digitize agriculture.” It’s a reshaping of the entire industry.

Farms and farming communities are transitioning from mere production units to vital nodes in an expansive network. It’s a chance for each to lean into their strengths, offering the unique value they’re primed to produce.

We agree. Successful AgTech companies make it easy for ranchers to participate in sophisticated production networks like CRSB that increase product value for every rancher. “Connecting the Herd” is key to increasing value through participation in animal performance, traceability, practice certification, and sustainability programs.

Flokk will be the preferred partner to ranchers as they engage, and sustain, the complex, data driven, relationships they require going forward. Schultz’s post confirms our vision, and proves it valid in both the US and Canada.

It is not just AgTech companies overlooking where opportunity lies. Most advisors and analysts believe the only way for a farm to increase profit is deliver more product or reduce cost. They cannot conceive a farmer or rancher being able to add value to their product.

Fine by us. Unicorns do not emerge from minor improvements to obsolete models. They arise from using technology to extract value that was overlooked by everyone else.

This is all beautiful theory. Flokk puts it into practice.

The opportunities to add value are endless. Regenerative agriculture, corporate ESG mandates, Tier 3 reporting, space and water constraints, carbon pricing, local food, social license, carbon offsets, ultra processed food, rural development. AgTech that advances any one of these from talking point to cash in producers pockets will succeed. Address all of them, and you will dominate.
Securing your customers trust is primary to making money from brokering their relationships. Trust comes with engagement. Engagement only comes through empathy. Flokk is uniquely capable of securing our customers trust; the entire Flokk team has hands on experience ranching.
Gaining the trust of your prospects is not sufficient. You also require the trust of the partners your customers will engage. Flokk seeks out builds relationships with organizations working to add value to our customers product. Flokk was the only company trusted to support the GOC traceability regulation consultation, and is the only sustainability reporting solution provider holding membership in CRSB.
Network effects are crucial to this strategy. A strategy focused on acquiring the next thousand customers will not succeed. Thirty to 40 percent of all producers need to be on your platform to gain the attention and cooperation of network peers. This requires a ruthless focus on simple and affordable implementation, and compelling prospect engagement, to secure broad adoption of your platform.
Flokk does not advertise we advance rural communities. We act.
- Flokk looks first to rural communities for staff and service providers.
- We actively advise to, and collaborate with, institutions like Olds College.
- We publicly advocate for rural and farming interests on social media.
- We advocate to government for simpler and consolidated administrative processes.
- We contribute to, and advocate for, innovative strategies like Seeding Rural Innovation: Nurturing the Tech Frontier in Alberta

We would be pleased to answer your questions about about our current 1.2M financing round that will manufacture our seed hardware inventory and launch our marketing plan.

Flokk provides the compelling solution for ranchers to secure compliance with imminent traceability regulation. This will secure the market share necessary for Flokk to rapidly grow revenue through brokering the relationships necessary for ranchers to realize sustainability incentive revenue.

Flokk’s strategy advanced significantly with publication by the Canadian Food Inspection Agency (CFIA) of “What we heard report - Consultation on proposed changes to Part XV of the Health of Animals Regulations (Identification and Traceability), Canada Gazette Part I”.

We invite you to read our detailed response, where we respond in detail to the items Flokk is positioned to resolve or enhance.

The highlights of our response:

Of the four “Elements not well supported” that impact cow/calf ranching, Flokk resolves all of them.
From the report:

“The CFIA anticipates publishing the final amendments in the Canada Gazette, Part II in 2024.”

Final hope for those skeptical mandatory animal traceability would come to pass was extinguished when the NDP accepted the pharmacare plan, sustaining the Liberal/NDP confidence-and-supply agreement and ensuring no Federal election before 2025.

We have heard from several reliable sources the soft launch will be mid 2025, and the hard launch (i.e. penalties applied for non-compliance) sometime in 2026.

Successful bureaucrats finalize the regulations they want, then write the report that justifies them. Publication of this report is reliable evidence the amendments are finalized, will be published sooner rather than later, and are inevitable.
From the report:

“Industry and consumers have both indicated that they want CFIA to deal effectively and consistently with instances of non-compliance. This involves issuing administrative monetary penalties (AMPs) as notices of violation with warning or with financial penalty (emphasis ours), depending on the nature of the violation.”

There will be significant financial penalties imposed on ranchers who fail to comply with the regulation.

Avoiding financial penalty provides a compelling incentive for cow/calf ranchers to subscribe to Flokk to ensure compliance at minimum cost, disruption, and effort.

We would appreciate the opportunity to answer any questions you may have about participating in our current $1.2M financing round which will fund product manufacture and execution of our marketing strategy.

On 2024-09-18, The Simpson Centre released the policy paper (the paper) “Navigating Climate Change: Alberta’s Carbon Program for Sustainable Agriculture”.

The paper provides accurate, complete, and current documentation of the topic.

But Flokk completely disagrees with the recommendations offered.

There is no need for, nor any value in, more research for solution discovery, or years in delay and millions in costs resurrecting obsolete bureaucracy.

The in-progress Government of Canada “Agricultural Methane Reduction Challenge” (either overlooked, or intentionally omitted, from the paper) provides $12M funding for discovery of livestock methane reduction solutions. The papers recommendation for further research for solution discovery, a recommendation Flokk does not support, is regardless already addressed and requires no further investment.

The unaddressed challenge, and opportunity, in the space is applied research in support of solution commercialization and adoption, and investment to commercialize rancher and feeder focused solutions that facilitate their practical and affordable participation in offset markets.

Alberta has the progressive livestock producers, innovative companies, emission offset market, enabling institutions, and industry leadership in place and executing that would enable Alberta to both prosper and reduce GHG emissions by being the leader in sale of high quality emission offset credits for livestock emission reduction.

What Alberta requires to seize this opportunity is coordinating leadership, and reallocation of existing resources, to mobilize a collaborative program (the program) with the objective of realizing broad application of current, and emerging, livestock GHG reduction solutions.

It is very unlikely that Canadian retail carbon pricing will be sustained. Going forward Alberta’s industrial emission offset market will be core to demonstrating the proof of GHG reduction necessary for Canada to retain access to export markets. We can have confidence there will be robust and sustained demand for the offset credits offered as a result of this program.

This program would rapidly and affordably deliver:

impeccable GHG offsets that economically deliver significant, provable, and sustainable GHG reductions without compromising consumer (or voter) experience
significant new revenue to Alberta’s 19,000 cattle ranching and feeding families
Alberta companies holding overwhelming advantage addressing urgent demand from global markets because they, uniquely, can offer solutions proven in field, at market, and at scale, in Alberta

Alberta is uniquely positioned globally to execute this program because:

Alberta institutions Results Driven Agriculture Research, Emissions Reduction Alberta, Olds College of Agriculture & Technology, and Lakeland College offer the capacity to rigorously, and independently, validate solution efficacy and administration practices.
Industry leadership such as Canadian Cattle Association, Alberta Beef Producers, and Canadian Roundtable for Sustainable Beef are headquartered in Alberta.
Alberta has its own emissions market in TIER, providing a venue to experiment in, prove at scale, and globally market, the necessary offset sale, proof of emission reduction, and remittance protocols
Alberta is headquarters to major companies that currently, and in future will increasingly, seek high quality emission offsets, providing opportunities for collaborative customer discovery and market validation unavailable to other jurisdictions

What is required for Alberta to seize the opportunity is:

applied research that delivers consistent, authoritative, and independent confirmation of primary and ancillary impacts of livestock GHG reduction solutions and the associated administration practices and proof of administration protocols
aggressive capital seeking to drive commercialization of emission reduction, and proof of impact, solutions in, and to, Alberta
a collaborative initiative to design, implement, and take to market tools for producers (i.e. cow/calf ranchers and feed lot operators) to participate in emission offset markets, provide proof of mitigation application, and receive incentive remittance.

Livestock GHG reductions will never be realized with the current top down, outside in, approach where solutions are endlessly discussed at conferences and explored in academia but remain irrelevant to ranchers and feeders.

Securing significant livestock emission reduction requires a bottom up approach where the fiscal, labour, operating environment, and infrastructure constraints of livestock producers are considered first, then solutions selected and driven to market that provide compelling value propositions.

Flokk is uniquely positioned to facilitate the required producer engagement, and deliver the necessary producer focused digital platforms and tools, required to deliver this program.

Flokk is keen to engage with others that share this vision, and is actively pursing engagement with industry leaders and stakeholders.

Explore the milestones of our journey in innovation and community engagement.

Investment Profile Below

Invest

An opportunity to lead development of a new agricultural services industry.

A huge greenfield opportunity

Canadian cow/calf production is a $2B industry where 75% of producers use pen and paper to manage their herds. This entire industry must be digitized by Q4 2025 to enable compliance with federal animal identification and traceability regulation.

Canadian cow/calf producers have no choice but to digitize their herd management. Flokk offers the fastest to implement, easiest to use, and most affordable solution to this pressing and time constrained requirement.

Our unique, built for purpose, handheld device ensures the livestock producer, who is also the purchase decision maker, has the exceptional user experience that secures an engaged customer who will be receptive to expanded product offerings. These engaged customers will make Flokk the industry standard platform for digital livestock production management and traceabilty.

Flokk offers a low risk, capital efficient route to early and sustained profitability through providing the domain dominant solution supporting traceability, profitability, and sustainability for Canadian livestock producers.

Strategy

Our strategy is:

offer the producer unprecedented affordability and ease of use
provide a built for purpose hand held device that enabels every day use at the animal’s side
offer a menu of subscription and purchase options that ensure we offer a compelling value proposition to every producer, regardless of their preferences and requirements
focus on the requirements of the vast majority of producers; commercial cow/calf operations. Existing products are designed for seedstock/purebred producers, and are unnecessarily complex and expensive for most producers.
use affordability, easy implementation, and proactive producer engagement to rapidly displace current paper based processes and become the industry standard solution for animal side data collection and management
leverage our role as the industry standard solution to take a leadership role in advancing industry practices, opening new revenue opportunities
acknowledge, and be proactive in addressing, the skill set, infrastructure, telecommunications and IT support realities that inhibit implementation of digitization outside urban areas
ensure interests of the primary producer, our customer, remain first and foremost in our communications and execution
actively engage the producer, rural communities, educational and innovation communities, and media, to create and sustain profile as an innovative organization that proactively enables adoption of digital technologies by rural enterprises
maintain independence from application stores (e.g. iOS App Store, Android Apps), providing an unmatchable 30% revenue/price advantage over competitors

Traction

We have been on-farm testing since Q2 2021, and tested at 10 sites in Q2 and Q3 of 2023.

We have secured $220k in pre-seed funding, and $70k in non-dilutive funding from NRC-IRAP, RDAR, and Alberta Innovates.

Flokk has been selected:

among the top three, out of seventeen pitches, at DiscoveryLab@AgSmart in July 2024
as a finalist for the 2023 Canadian Animal AgTech Awards
as a top 10 finalist for the Startup TNT 2023 AgTech summit
for a feature item on RFD-TV Canada

Current opportunities

We are interested in speaking with qualified investors who are knowledgeable, engaged, and influential in Canadian agriculture, and in particular livestock production.

Our current seed capital priorities are:

seed hardware inventory
mobilizing our marketing strategy
development of new services that will drive revenue growth

More information

If you are interested in exploring a unique opportunity to lead the digital transformation of a vital industry, we would appreciate the opportunity to tell you more about Flokk.

Watch our DiscoveryLab@AgSmart pitch video

View our current pitch deck

Qualified investors will be provided access to our Data room

Please contact Mark Olson, President, Flokk Systems inc. for more information.

Disclaimer

This website is intended for general information purposes only. This website does not constitute an offer to sell, or a recommendation of any security or any other product or service, provided by Flokk Systems or any other third party. You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult a business advisor, attorney, or tax and accounting advisor regarding your specific business, legal or tax situation.

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