In March, I participated in an Austrade-facilitated Australian Agtech Delegation to the US and wrote a blog about my takeaways with four main points of conclusion. Over the next month each of those key points – integrated systems approaches, farming practice adaptation, genomics / computational breeding and open data – will be expanded on in turn.
1. Would you like a system with that?
Most of the benefits of agtech will be delivered as the result of systems or integrated approaches rather than the application of individual pieces of technology. Farmers are likely to interact with agtech through service-orientated or packaged systems, rather than just buying a black box which they have to sort out themselves.
One of the most interesting sessions at the San Francisco World Agri-Tech Innovation Summit was a panel session focusing on big data products for agriculture. During the session, the facilitator quizzed an Amazon representative about future purchase plans – a matter of great interest for the audience as Amazon has dropped $US15 billion on an unprecedented acquisition spree since 2016, including the Whole Foods Markets $US13.7B buyout.
The Amazon rep put up a brick wall, but the facilitator would not back down and kept pushing for an answer on what company or technology was next in line for acquisition.
While this was an entertaining exchange it also highlighted one of the new characteristics of the agtech environment: that it is highly unlikely that one company can or will develop all the technology needed for end-to-end solutions for digital value chains – and increasingly that end-to-end solutions are what tech companies are trying to provide.
This is quite a different environment from the initial agtech value proposition, based on defined outcomes from individual pieces of technology. The technology was usually added to an existing process to improve that process (think autosteer, rate control or a genetically modified seed trait) and working out the viability of the technology investment was a fairly simple equation. Technology providers offered solutions for discrete parts of the production system and there was little information exchange up and down the value chain.
These days, however, a look inside the trade halls at agtech conferences provides an indication of how much things have changed. While there are certainly still shiny boxes that go ‘bing’, they are not as prolific as they used to be, and they are provided as the necessary hardware to enable what is really on sale: knowledge and solutions derived from analysis of the information collected by the hardware.
There are a couple of drivers to this trend. The first is improved analytical capability – we now have the capacity to make information more valuable than hardware. Going back to the rate controller example, there is absolutely no point in varying rates of seed and fertiliser if you end up applying the wrong rate. Yet, when rate controllers were first developed they were sold on the basis that it was pretty much up to the farmer to know how to make those decisions. The point of sale was a piece of hardware, and after that you were on your own.
The abundance of data and the accompanying analytics now mean that the point of sale can be accurate and reliable information about the right rate to apply, and the hardware becomes the facilitating technology to implement that information. However, the data and analysis required to make the recommendations may come from many different sources and technologies, so it is likely that a service which packages the required information will be the conduit for farmers to interact with the various pieces of technology required (rather than interacting with each piece of technology individually).
The second driver is consolidation in the value chain. Fewer companies are increasingly controlling larger segments of value chains. Agtech in the form of new seed traits, for example, is often now made available through closed-loop marketing arrangements that include stewardship programs defining how the products are used during the production process. A company providing this technology solution is going to want visibility of the production process to ensure stewardship requirements are met and to get accurate data on production and quality. While the fundamental piece of technology will be the seed trait, a technology system that monitors the utilisation of that trait will become embedded in the offering.
So, getting back to the pursuit of Amazon about their next acquisition. The facilitator never did get an answer out of the Amazon rep, but I think everyone present would have given pretty short odds that Amazon will be an active participant in the agtech market in the near future. Indeed, any company that is in the business of supplying food to consumers will need to have technology systems that connect every element of the supply chain.