Farmer Fintech ProducePay Is Getting Into the Carbon-Trading Game

David Shultz

David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.

A farm

Courtesy of Karsten Würth via Unsplash

It’s not exactly easy to understand what ProducePay does, so let’s get that out of the way first.

The Los Angeles-based fintech company essentially functions as a digital marketplace for produce that connects farmers to distributors and sellers.


“We go to your farm. We understand what your production capability is. If you need capital to achieve that, we help get that set up for you,” explains CEO Pablo Schwarzbeck. “Ultimately, we help you find the buyers—or for the buyers, help them find the sellers.”

Screenshot courtesy of ProducePay

To enable the trade of perishable goods like fruits and vegetables, ProducePay has had to become an underwriter for more than 1,500 farms across the Americas. Those farms can range in size from a few acres all the way up to multinational giants that supply hundreds or thousands of grocery stores. And the only way to figure out who to trust and how to lend money is by getting boots in the dirt. Schwarzbeck, who grew up on a fourth-generation farm in Northwest Mexico, spent nearly 100 days visiting farms during the pandemic last year.

“Do these people know what they're doing? Do they have any experience farming? Do they have the infrastructure to support it? Do they have accountants? Do they have a proper staff of people beyond farming that will ultimately be able to run this like a business? Do they have the partners to buy produce? Do we trust their partners?” asks Schwarzbeck.

ProducePay makes its money by taking a small percentage of each transaction completed on their site. It also lends capital to farmers and distributors it feels will be able to pay it back . And of course they’re also collecting and selling data on the cost and distribution of crops, among other industry insights.

“Our job really is to create transparency and trust that allows both parties to feel comfortable,” says Schwarzbeck.

The amount the company charges per transaction ranges from .5% to 10% and depends on the amount of value that ProducePay can generate for the client.

“We try to take about no more than one out of every four points that we get back,” says Schwarzbeck, meaning if ProducePay can help a farmer sell 40% more produce, it’ll take 10%. If it can only help them sell 2% more, the company takes 0.5%.

This sort of clinical approach to fintech underwriting has remained the core of ProducePay’s strategy since its inception. But this summer the company added a new pillar to their underwriting model: climate pricing.

With consumer demand for sustainably grown, low-carbon foods increasing, ProducePay is adding economic incentives to its platform to encourage farmers to lower their carbon footprint.

Through a partnership with ALLCOT, a company specializing in greenhouse gas emission offsetting, the fintech company is offering a way for farmers to access the carbon market.

Schwarzbeck says that many of the growers he works with were already practicing a variety of sustainable farming techniques. With ProducePay, they can now sell carbon credits on voluntary carbon markets, meaning they get paid to grow more sustainably. The specifics of how this plays out and which carbon markets are used can vary, but the idea is that ProducePay evaluates a farm, establishes how much carbon it’s using, and then recommends Climate-Smart Agriculture practices as outlined by the United Nations. Farmers can then practice strategies like crop rotation, minimum tillage and cover crops usage to reduce their carbon footprint. Once the carbon savings are calculated and confirmed by an external audit, they can be converted into credits and sold.

When used as a way for corporations to buy their way out of causing climate damage, carbon offsets remain dubious for a large variety of legitimate reasons. However, following sustainable farming practices can actually make a difference in the Earth’s carbon budget: Rather than buying a bandage for the damage a company is doing, selling credits incentivize farmers to do less damage to begin with. And Schwarzbeck says with consumer demand for sustainable produce constantly rising, adding the environmental pillar to their underwriting model has fundamentally changed how the company is doing business.

“Consumers are really starting to vote with their wallets,” he says. “That has been such a palpable movement in the market that has literally shifted how we underwrite the farmers right now.”

LA’s Data Center Supply Crunch

🔦 Spotlight

Happy Friday Los Angeles!

The Los Angeles data center market is experiencing a significant supply crunch, ranking 12th in growth among top markets since 2020 with only 265 megawatts of colocation inventory (data centers where businesses rent space to store their computing hardware and servers). Despite this, demand is surging, driven by AI, cloud, and hyperscaler needs, with AI accounting for 20% of new data center demand nationally. This scarcity is creating a highly competitive environment, with vacancy rates at a record low 3% and asking rents rising 13-37% year-over-year. For Los Angeles, this presents both challenges and opportunities in the big picture. The city's strategic position as a global entertainment hub and its connectivity to international markets through subsea cables make it an attractive location for data centers. However, the limited inventory and rising costs could potentially hinder growth and innovation in the tech sector. To maintain its competitive edge, Los Angeles will need to address these constraints through new developments, such as GI Partners' 16 MW addition at One Wilshire, and by focusing on high-connectivity, high-power capacity submarkets. The city's tech community should prepare for a landscape of increased competition for quality data center space, higher costs, and the need for innovative solutions to meet growing demand, particularly in AI and cloud services. While Los Angeles faces a challenging data center supply crunch, its strategic advantages and ongoing developments offer a promising path forward.


🤝 Venture Deals

LA Companies

  • Daisy, a one-year-old startup that designs and installs smart home and office technology systems, raised a $7M Series B co-led by Goldcrest and Bungalow, with previous investors Bullish and Burst Capital also stepping up. The company has raised a total of $13.3 million. - learn more

LA Venture Funds


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    🌐Decentralizing Data & Vacations: Sony's Web3 Leap and Sensible Weather's KOA Partnership

    🔦 Spotlight

    Happy Long Weekend Los Angeles!

    Sony Group is making a significant push into the blockchain and Web3 space, leveraging its Sony Pictures and Sony Music divisions along with a new global incubator. The company has developed the Soneium blockchain through Sony Block Solutions Labs, a joint venture aimed at accelerating Web3 innovation. Sony is launching the "Soneium Minato" public testnet and a developer incubation program called "Soneium Spark" to foster ecosystem growth and adoption. The initiative includes strategic partnerships with Web3 companies such as Astar Network, Circle, and Optimism. Sony aims to create a fan community centered on creators and connect diverse values through Soneium, with the ultimate goal of integrating Web3 services into people's daily lives. While the company acknowledges the challenges faced by Web3, including limited user adoption and the need for mainstream use cases, it remains committed to decentralizing the concentrated power of the current internet landscape.

    In completely unrelated and more digestible news Sensible Weather, a leading weather protection provider that we’ve featured many times, has partnered with Kampgrounds of America (KOA) to offer Weather Guarantees at over 450 KOA Campgrounds across the United States. This collaboration allows campers to purchase weather protection for their outdoor experiences, providing peace of mind and potential reimbursements of up to 100% of their nightly rate if weather conditions exceed predefined parameters. The partnership comes at an opportune time, as camping has seen a significant increase in popularity, with active campers growing by 68% over the past decade. If you are looking to do some camping this fall make sure you look into Sensible Weather protections to ensure that unpredictable weather won't dampen (nailed it) your camping experience.


    🤝 Venture Deals

    LA Companies

    • Space and Time, a blockchain data warehouse developer, raised a $20M Series A led by Framework Ventures. - learn more
    • Miris, a provider of spatial content streaming solutions, raised a $26M Seed Round led by IAG Capital Partners. - learn more

    LA Venture Funds

    • Fika Ventures led a $4.55M Seed Round for Revenew, a San Francisco startup that aims to help digital platforms and marketplaces manage their payments and optimize financial operations. - learn more
    • Bonfire Ventures participated in a $25M Series A for Supio, an AI platform for personal injury law firms. - learn more
    • Amplify LA participated in a $2M Seed Round for Pryzm, a startup that provides tools and data to help businesses navigate government contracting more efficiently. - learn more

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      Personality Assessments Improving Workplace Dynamics

      Misunderstandings can have significant and sometimes severe impacts, far beyond the hilarious cake pictured above. Many organizations are increasingly using personality assessments to improve team dynamics and productivity. Tests like the Enneagram, Myers-Briggs Type Indicator (MBTI), and DISC assessment are valuable tools for developing existing teams in addition to hiring new employees. These assessments provide insights into team members' motivations, communication styles, and work preferences, helping colleagues understand each other better. By highlighting the different personalities within a team, these tests can enhance communication, resolve conflicts, and optimize task assignments based on individual strengths. As companies aim for greater efficiency and collaboration, the Enneagram, MBTI, and DISC assessments are becoming essential for transforming established teams into more effective and cohesive units.


      Image Source: iEQ9

      Enneagram

      The Enneagram test is a sophisticated personality assessment that categorizes individuals into nine distinct personality types, each defined by unique motivations, fears,and behavioral patterns. This holistic approach enhances team dynamics in a business setting by fostering self-awareness, improving communication, and facilitating conflict resolution among team members. By understanding different personality types, teams can optimize their composition, tailor professional development, and create a more empathetic and collaborative environment. This framework not only helps leaders adapt their styles to better support diverse team members but also promotes inclusivity and effective collaboration, ultimately leading to improved team performance, productivity, and retention.

      Resources:iEQ9. We recommend getting an Enneagram coach to get the most out of the results.

      Key Features: Focus on core motivations. Accounts for personality shifts under stress or growth. Offers practical, actionable guidance for personal growth. Uses a dynamic, adaptive questioning approach. Claims 95% accuracy rate through advanced techniques.


      Image Source: DiSC Profile

      DiSC (Dominance, Influence, Steadiness, and Conscientiousness)

      The DiSC assessment is a widely used behavioral analysis tool that categorizes individuals into four primary personality types: Dominance, Influence, Steadiness, and Conscientiousness. For businesses, DiSC provides valuable insights into employees' communication styles, work preferences, and motivations. By understanding these behavioral tendencies, teams can improve collaboration, reduce conflicts, and enhance overall productivity. Implementing DiSC in a business setting can lead to more effective leadership, tailored communication strategies, and optimized task allocation based on individual strengths.

      Resources:DiSC Profile.

      Key Features: Designed specifically for workplace applications. Focuses on observable behaviors rather than psychological traits. Widely researched and validated over 40+ years. Provides practical strategies for improving interactions.


      Image Source: The Myers-Briggs Company

      The Myers-Briggs Type Indicator (MBTI)

      The Myers-Briggs Type Indicator (MBTI) is a widely used personality assessment tool that categorizes individuals into 16 distinct personality types based on four dichotomies: Extraversion/Introversion, Sensing/Intuition, Thinking/Feeling, and Judging/Perceiving. For businesses, the MBTI provides valuable insights into employees' communication styles, decision-making processes, and work preferences.This helps promote a more productive workplace, and enables employees to become involved in more meaningful ways, all while leveraging everyone’s unique strengths.

      Resources:The Myers-Briggs Company.

      Key Features: Focuses on preferences rather than traits. Focuses on how people perceive and judge information. Widely used in business and career counseling


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