All Parts: Navigating the Next Decade of AgTech
As we start out the new decade, it’s often fun to look back on what has been accomplished, what has changed and where we have came from. It’s amazing what can be accomplished and how a business and industry can change in just 10 years. For me, the last decade was my first in the agriculture industry and from my first day scouting a field to sitting here today it’s crazy what has progressed in the industry since 2010: digital becoming ubiquitous, consolidation of farms and agribusinesses, machinery capabilities, use patterns of products like seed treatment and fungicides, to the beginning of digital connectedness. While it’s great to reflect on where we have came from, what’s really exciting to consider is where we are headed and what is going to be driving that.
Stanford computer scientist Roy Amara once said “We over estimate the impact of technology in the short run and under estimate it in the long run”. Much of Amara’s comment can be attributed to Moore’s Law, essentially the doubling of computer processing technology every ~24 months. When we apply this take over the course of a decade, it can be a lot of fun to extrapolate what might happen and what’s possible. With this in mind I thought it would be more compelling to look beyond 2020 and take advantage of it being a new decade to look at what will be influencing agriculture and the implications of that over the next 10 years. The 2010’s were the digital installment period in farming, while the 2020’s will be the turning point for uptake.
To start I am going to discuss some of the macro trends that I view as having an influence on the next 10 years of farming in North America, as well as some predictions and commentary around the byproduct of these trends.
Before getting into some more of the specific changes we will see, here are some of the macro-trends that will influence and continue to shape agriculture and farming in the coming decade on a more general basis:
We will continue to see consolidation in two ways: farms and within agribusinesses including ag technology companies, retails and product manufacturers.
The trends towards scale is something that will continually occur in the coming decade. Farms want to distribute risk and costs across more acres to achieve economies of scale and retails, tech companies and product manufacturers want to vertically integrate to enhance product margins throughout the supply chain, have a full stack product offering, leverage data in more robust ways and exert more influence in the market place. This will mean unique business models in the market place, more specialized offerings for farmers and product offerings with the farmer and consumer in mind.
The consolidation from a farm perspective will give increasing rise to an ever more business savvy farmer with laser like focus on the finances and operational efficiencies within their farm business. We will see the start of a trend that increasingly emphasizes a mindset of adaptability, innovation and data analysis in flourishing operations and a significant decrease in those with a complacent mindset focusing on what has worked in the past.
Food Company Influence and Traceability/Sustainability
We will continue to hear about traceability and sustainability initiatives, hearing more in the coming decade than in the past 10 years. This will be driven by consumer demand, but will also be driven by food company initiatives and government mandates. Like it or not, farming is at the center of many hot topics like the climate change discussion and will continue to be for years to come. Part of the sustainability and traceability initiatives within agriculture will be simply proving we are using technology and practices that are environmentally friendly; this is where traceability initiatives will come in.
General Mills, Anheuser Busch and Tyson are just a few examples of companies with commitments to sustainability initiatives in the decade to come and we will see more of this. Organizations in agriculture and beyond will increasingly be rated on their “sustainability” initiatives and environmental impact.
In agriculture we often discuss how consumer demand drives the farm gate; While true, I think we need to do a better job acknowledging how much influence the food companies and grocery retails have when it comes to food. They have incentive to differentiate and sell higher value products, so even though there is a definitive thread starting with the consumer, the trends get amplified by food companies through their significant marketing spend and consumer touch points. This trend will begin to shift other components of farming like quality parameters and specs on the grain, where eventually towards the end of the decade in higher value crops we will see nutrient density assessed vs. historical emphasis on visual specs. This will be from emphasis around the food link to health and well being. These new spec requirements around “sustainable” or “traceable” grains won’t necessarily yield more money per unit for executing on, but will become the standard in order to sell the grains in the future, meaning those with the ability to measure, track and manage their production and crop will have an upper hand as those trends take off further.
Reaching and influencing the consumer is difficult as there is such fragmentation (high number), a real benefit will come form those organizations working with the food companies (lower number, high influence).
There is a plethora of technology out there: artificial intelligence, edge computing, quantum computing, augmented reality, sensor tech, blockchain, 5G and other digital tools. Plus, we will identify other technology in the coming decade. For example, in 2009 machine learning was hardly known/talked about.
All of this technology will shape the next decade of agriculture because of trends like consumer demands for transparency (sustainability and traceability), consolidation, labour shortages, farm profitability and various consideration like climate change, driving the uptake and use of technology. This will also drive unique business models that we haven’t seen in the past, trending along the lines of increased de-risking crop input/insurance products as well as more “XYZ as a service” business models. Tech will drive the physical and digital world of agriculture in the coming decade and beyond. The best way I have heard to sum this up is from Rob Saik, calling it the “convergence” of technology that will enable this technology to be used effectively.
The expectation has been that technology would come in and make life easier and more efficient for the farmer. The reality is that agtech is hard and it takes time and effort from the farmer and anyone supporting the farmer to see the benefits. Just like technology in ANY OTHER industry, it has massive promise, but it needs time to take hold and become comfortable for the beneficiaries; what’s required for it to become standard. There was a time when airplanes were deemed to never be useful on a commercial basis, same with TV, and same with successful products in our own industry like Lumiderm on canola seed; a practice I said in 2014 wouldn't be on more than 10% of the canola acres per year and as of 2019, my best estimates are that it gets treated on roughly ~25% of the canola seed that goes down in western Canada. The point? It can be tough to see the day when technology hits mass scale, but all useful technology reaches a tipping point and I believe later on this decade is when we will reach a significant tipping point, or “convergence” of all of this technology.
In 2013 there was approx. $1.5B USD invested in the Farm Tech (upstream, farmer used portion of “agtech”) space and that investment amount increased to $6.9B USD in 2018, 360% growth in 5 years. While the growth may not necessarily be 360% over the next decade the trend in terms of investment in both the venture world and the world of corporate big ag will continue to grow in absolute dollars. This reinforces the influence of technology in agriculture and farming out to 2030 and beyond.
While there are many other trends such as geopolitical issues, North American government and political dynamics, profitability at the farm gate and more, the 3 macro trends listed above I feel will have the most consistent, lasting impact on agriculture in North America.
In covering some of the macro trends, here are some of the broad predictions and happenings that I believe we will see in the coming decade because of these macro trends and the happenings within the industry. Some of these consistent with conventions, some more on the contrarian end of the spectrum.
Implications Due to Macro Trends
While there are MANY implications that one could draw from some of the macro trends I have went through, and those that I did not acknowledge, the real value in looking at trends is identifying how those impact micro trends and gleaning specific predictions or insights from those trends. Below and in the following posts I will go into some of the more specific implications we will see over the coming decade.
Jobs-To-Be-Done Theory Will Be More Actively Applied to Agriculture
Jobs-to-be-Done Theory is best defined as a group of principles that explain how to make marketing more effective and innovation more predictable by focusing on the customer’s “job-to-be-done” (need being completed). The theory is based on the notion that people buy products and services to get a “job” done. The theory goes on to say that by understanding in detail what that “job” is, companies are far more likely to create and market solutions that will win in the marketplace.
While most companies innovate by trying to improve their existing products (creating a better quarter-inch drill), the innovation process is dramatically improved by instead trying to find better ways to create a quarter-inch hole (to get the job done). The implication of this thinking is profound: stop studying the product and instead study the job that people are trying to get done. By making the job, rather than the product or the customer, the unit of analysis, it is possible for companies to achieve better results and for farmers to thrive based on this.
In agtech there is often the discussion about starting with a problem, then creating a solution vs. coming up with a solution then identifying a problem. While the data shows there is some truth to this, I believe many strong technologies out there are being written off due to short termism. The thing is, many technologies that are being deployed do solve some problem, or increase information to make a better decision, however, they haven’t been considered on a long enough time horizon or from the psychology of the farmer today. In the next decade now that we have an array of different technologies to choose from, it will be about optimizing the experience for the farmer from the perspective of the farmer, not the perspective of the company. In other words, it won’t be “What problem are farmers facing?” It will be “What problem do farmers face? How does this problem permeate throughout their operation? How can our product offer a solution? How do we make this solution work within their current situation? Who else can my organization collaborate with to ensure this works effectively for the farmer?”. This will enable companies to better showcase their product to the target customer vs. what today is more of a shot gun approach. This will increase the experience farmers have with ag technology, increase adoption as well as increase the ROI that farmers see from utilizing various types of tech.
Ag Becomes Increasingly Tech Savvy
The ag industry has many great grain marketers, agronomists, equipment engineers and more, but there has been a definitive gap in the understanding of the tech space to help farmers effectively use and benefit from various technologies: this includes the practical application of technology, to the business models surrounding tech and the soft skills required to communicate and drive the successful uses of technology in a more prosperous ag industry.
Agtech and precision technology isn’t new and there are many experts in the space, they just are much more sparse than those with expertise in soil science or plant physiology for example. But now these select experts have many more platforms to be able to reach farmers as well as the younger generation of ag industry professionals and others in the industry that are interested in learning more, as I have talked about before in “AgTech: Why It Matters Now More Than Ever”. Whether this is through the internet at large, social media or more specialized information distributing tools like AGVisorPRO there will be an ability to take the ubiquity of information/knowledge and ensure that that information is getting to where it can be used most effectively. This is one component that will help to increase the expertise of the industry at large.
Increased diffusion of information will help increase the effective utilization of technology, benefiting farmers and the industry as a whole.
The educational institutions are also catching up and attempting to get ahead of the demand for “tech-spertise”, in cases where we see significant emphasis and investment from institutions like Olds College as well as other Alberta College groups like Lethbridge College.
There is significant emphasis on the agronomy and technology components, but what I think will have a big impact as well is the focus around “soft skills”. These skills are exceptionally important within agriculture, but haven’t necessarily been emphasized as much as I believe they should have been at educational institutions in the past, as I’ve discussed here. Soft skills like the ability to communicate, collaborate, learn continuously and lead change will be the real benefit to the industry in the coming decade. With something as dynamic as technology in a space as complex as agriculture, the soft skills are just as important as the hard skills in understanding and deploying the technology.
We don’t hear about it in ag as often as we should, but augmented reality will also significantly enhance how effective an agronomist is, a company tech person or mechanic or even a sales rep is on a day to day basis, whether it be to better identify weeds, or to more effectively scout a field or to get a better idea of how to fix a piece of equipment, the tech savvy ag industry of 2030 will be constantly amplified by augmented reality.
Thanks to this better education and more passion for agtech we will soon come to better understand data by the mid 2020’s. Today we still see a lot of confusion among many in the industry as to “how valuable” data is, “why” it’s valuable, “when” it is most valuable and how to extract the most out of the data for farmers. Data on it’s own has little value. Data when used in aggregate AND when it is Clean (processed), Contextualized (relevantly tagged) and Connected (to results or outcomes) is when it has power. Whether it be to make better decisions, have access to better products (digital or physical), de-risk an operation or even enhance customer experience, then there is value. The farmers and ag professionals in the next decade will understand this more in depth and intricately than those of us working in the industry over the past decade.
To top this off one quote that I think epitomizes this is from William Gibson:
“The future is already here — it’s just not very evenly distributed.”
The technology is here, everyone has the capacity to leverage it, but it hasn’t been taken up clear across North America. In the next 10 years we will see this change and expertise will help drive it.
Traditional Soil Testing Will Become Obsolete
Soil testing is a labour intensive job. However, the resulting information and insight is instrumental to growing a profitable crop (and environmentally friendly crop). This won’t change, but the dynamics of soil testing will. Today it is labour intensive, frustrating and expensive to soil test. An individual has to physically drive to the field, take the required amount of soil cores, bag it, take it back to their office, package and fill out a form, and then send it away via some shipping method. After this, there is a waiting period while the lab does essentially every test/extraction method separately, then sending the data back to the farmer/agronomist, often by email, to finally go through and assess the requirements for the next year. To top it off, because of the time intensity this requires, it typically is done anywhere from 4-7 months prior to when the crop goes in the ground! As of 2020, this method works. Moving forward? There are better ways, and we will rapidly see those methods take over on farms across North America, leaving soil testing labs scrambling.
The holy grail of any sort of data collection is accuracy, instantaneous and passive. At best with soil testing via labs we get one of those three. Moving forward with technology that is on the market today, we can obtain all three.
NIR (near infra-red) Spectroscopy has been around in soil testing for a number of years, but hadn’t been taken out of the lab. Now there are options that can be utilized in the field, in real time. One option is the SoilReader. This disk with a spectroscopy sensor within it can mount right onto pieces of machinery taking many reading every second, giving a precise, real time soil reading as you go across the field with virtually any piece of machinery. Let’s take it up one more notch: imagine not getting blends of fertilizer in the future, but having separate tanks of single product fertilizers change rate as you are seeding based on the reading coming in from the SoilReader that’s attached to the tractor.
SoilReader has the capability to deliver on all 3 components of successful data collection, making it a product to watch (and products like it) in the coming decade as I see this type of soil information collector increasing rapidly. We have went from farm fertility management, to field fertility management, to zone fertility management, and now we will be able to manage at a sub acre level in the coming decade.
There is also new products from AgroCares that use similar spectroscopy technology that can be brought right out to specific spots within the field that gets an almost instantaneous reading of soil nutrient levels right to your smart phone, or your ag platform of choice. Similar technology is also available from AGXtend, plus some sensor fusion tech. With hand held products like those from AgroCares there is also the potential for in season tissue testing analysis giving real time insights into the physiological happenings of the plants without the wait (maybe even via drone!). That’s huge for in season foliar feeding and high value decisions.
Machine learning (ML) will also change the dynamics of soil testing over the coming decade. ML algorithms, with the right data feeding them, can decrease costs associated with soil testing. It is already being done effectively today by Farmers Edge. There is the potential to use these types of predictive models on top of the more passive, real time technologies to gain a better understanding of what is happening in a fields soil in season, with in season alerts of deficiencies based on yield predictions and real time conditions. There will begin to be an emphasis on applying predictive algorithms to in season applications beyond nitrogen and looking more at predicting shortages of other macro’s and secondary nutrients as well as micro nutrient deficiencies.
Thanks to the tighter feedback loop to obtain the soil information, decreases in cost and the ease at which to obtain the information, we will see traditional soil testing methods decrease, while increasing the total acres of soil assessed, moving it up from below 50% of acres sampled annually to well above. This will increase production and profitability at the farm gate, and satiating consumer demands.
The farms in 2030 that are the most successful will need to be data driven, and it will start soil. This won't be limited to the physical and chemical make up of the soil either, but the biological soil health. We will see farms with a much deeper understanding of the biological make up of their soil towards the end of the decade.
Seeds of the Future
While everything starts with the soil, seed is a close second. Having the right genetics on your farm along with the right traits is important to maximizing profits. Seed companies understand this. But what’s also noteworthy is how important seed will be for profit maximization of the large agribusinesses, especially in the future. With this being important to both the success of the farmers and major agribusinesses, we will see a more pointed focus on seed breeding technology and products that support the early season vigour of seeds.
When it comes to effectively bringing the best genetics and traits to market the combinations are endless. The goal is to bring the best offerings to market, in as little of time as possible. To do this breeders need to go through millions of genomic characteristics or crossing combinations. This might be for agronomic traits, but can also be for end use cases as well. Lots of this power comes from CRISPR Cas9, but there is more. What will differentiate these companies in the future is their ability to deploy algorithms that can speed up their time to market with a specific trait or to go after a specific market (eg: high protein development for plant based meats). This is where technology like quantum computing will eventually be leveraged within agriculture, likely towards the end of the decade (with costs coming down as well). We are even seeing investment in this space already today for example with BASF investing in Equinom and GenoMAGIC. This will speed up the time to market for offerings to farmers to have available to them. On top of this through data aggregation and algorithms to better recommend farmers the best option for their farms, seed companies will have a big push to know how these seeds and traits will perform in any given area and with specific agronomic practices. Seed costs will go up, but farmers will see yield bumps from seed increase more rapidly and decrease the amount of pesticides and nutrients on a relative basis to grow bigger yields. One big watch in my opinion for this decade is how BASF moves forward with hybrid wheat in North America. Syngenta has already announced they are putting a hold on their investment in the space. While I’m speculating, the economics of seed proliferation do not seem to jive as of today, but that can be overcome.
Now, it’s not just about what is in the seed, it’s about what's ON and NEAR the seed. Over the course of the decade there will be more in furrow and on seed microbial products derived through the same sorts of technology that are powering seed. Microbials are mentioned mainly because of their ability to mitigate use of synthetic chemicals, but their other two super powers are their multi dimensional abilities to increase plant health and do so over a longer time frame in the plants life than traditional synthetic products.
With this, we will see an increase in costs to put seed in the ground and more total crop input spend will shift earlier in season.
Autonomy and Sharing Economy Comes to Agriculture
Through the deployment of sensors and algorithms within agriculture there will be a very pointed movement to automation across many different tools used on the farm; from drones, to irrigation pivots, to machinery and beyond. A few months ago I talked about the stages of ag technology illustrating where we are and where we are heading. With tools like pivots being connected to numerous other sensors (more on that in “The Connected Farm”), there will be more capability to automatically take an action, or alert farmers of a need for action, based on a pre determined set of parameters to trigger. This technology is there today, however, over the course of the decade there will be a wave of uptake in North America.
When it comes to machinery, it is very apparent when one looks at big players like Case New Holland or John Deere that automation is a priority. On top of this, new players like DOT and SmartAg are being acquired by Raven. While I do not necessarily think the “tipping point” will be hit in this decade, I do anticipate a wave of adoption in autonomous tractors. With short comings in network coverage and even bigger shortcomings in 5G today, there is still some big hurdles to overcome in the next 5-10 years, with assumptions that increased connectivity through other means (cables) and 5G effectiveness will get stronger in the extreme ends of the decade.
While that isn’t surprising, the most fascinating part to me is the go to market approach from these companies along with their business model as we get towards the end of the decade. There is talks of the sharing economy further instilling itself in agriculture, it is my guess that John Deere and CNH will begin to evolve some of their approaches in the market, but also seeing an opportunity for the ag retail space to get involved in this and begin to look at how they can participate to add value to customer, specifically in the US where rolling stock is a common part of their business.
New Entrants, New Alignments, Different Competition
As I mentioned in the macro trends section, companies will continue to invest in the agtech space, specifically the digital ag space. Seed and chemical companies will continue to invest in through their venture arms and acquire in strategic ways to give themselves the upper hand in the digital space that thrives on scale and data acquisition. What I do think we will see is more collaboration amongst seed/chem manufacturers with traditional fertilizer, or plant nutrition companies. There has already been licenses and alignments announced between Bayer and Yara as I think these organizations that have been inherently specialist have realized their domain expertise gets limited without understanding more into other areas of crop production. I think before the end of the 2020's we will see major partnerships between these types of organizations, and it wouldn’t surprise me if Yara and Bayer were the organizations to make a more significant move.
On top of this, I think we will see more entry of non-traditional ag companies into the space: Google has invested in Farmers Business Network already, Microsoft is investing in creating a digital ag platform in their FarmBeats platform and then we are seeing more emphasis from organizations like Royal Bank, MNP and the significant emphasis from TELUS over the last year with investments in Hummingbird Technologies and the purchase of Farm At Hand and Decisive Farming, just to name a few. I am sure all of these organizations have various reasonings for giving a focus to ag, but one has to suspect that at least part of it is due to many of the reports showing that ag is the more under hyped and least invested in the tech space out of all industries so they see opportunity in investing and obtaining a piece of the pie, and maybe even in some cases supporting their core business.
Grain companies like ABCD’s (ADM, Bunge, Cargill, Louis Dreyfus) haven't made as significant of investment in the tech space compared to other industry counterparts. These large organizations have infrastructure that feeds the moats in their business; assets (port terminals, inland terminals etc), access (to rail, end users etc) and information (global crop information, relationships etc). Some of this moat has began to decrease over the last number of years as there has been more platform based organizations attempting to jump in on the ABCD’s territory through offering a transparent market place where farmers can attempt to go to buyers directly; FBN, FarmLead, AgXchange and Farmbucks as a few examples. However, they still have a strong offering to the market and will continue to. With that said, their investment choices will change over the coming decade emphasizing the customer experience, in fact it has already started to shift. There has been investment from ADM and Cargill in Grainbridge, which may or may not be the answer, but it’s on the right track. Companies like Bushel will be looked at seriously over the next couple of years and be layered on ancillary to their businesses and to support customers. Not to mention the ABCD’s initiatives in blockchain which will benefit them initially from a cost savings perspective, but there is be reason to be optimistic that that could trickle down to the farm level, simplifying transactions for farms. On top of this, we will see more investment from them in digital tools to better understand the market place from a weather perspective, to production perspective and more to help manage their own buying initiatives as well as look at supporting their customers in unique ways.
How Farmers Buy Crop Inputs Will Change
The past decade had more buzz around ag retail than all others combined. Lots due to Farmers Business Network coming online and inserting itself in an area of the industry that has remained largely the same for the last several decades, and some reasoning not often discussed like changing dynamics around crop input patents and perceived risk of selling to a farmer in early 2000’s vs mid 2010’s. While there was a lot of buzz, the change is just beginning. There is pressure on the traditional retail model thanks to consolidation of suppliers and farmers, increased transparency in pricing to farmers, among other reasons that I get into in “The Future of Ag Retail" and “The Re-Engineering of Ag Retail”.
E-commerce will be a part of the future, I think we will see upwards of 30-40% of crop input spend purchased online by the end of the decade, however, I think there has been a misunderstanding in what it takes to effectively deploy an e commerce offering, both by companies like FBN and traditional retailers. FBN didn’t understand the necessity for bricks and mortar and expertise initially, which is why we are seeing them invest down this path today. On the other hand, I have talked to retailers who have said “we can put up a website next month if necessary” to compete in e commerce, which entirely downplays the habit forming necessary for farm customers, the company cohesion necessary at the retail location level and the information systems and alignment at the head office level to deploy such an under taking…which is VERY similar to what has happened in the consumer retail world! Wal Mart struggling to understand that their infrastructure isn’t set up to align with their digital strategy much like traditional ag retail and Amazon who has done an excellent job, but has found out the challenges with last mile distribution.
Ag Retails will begin to better understand the challenges in delivering an omnichannel approach and align their strategy with this accordingly in the coming decade.
The biggest change in input sales has been the ubiquity of data, both to the farmer and the retailers. Data is what enables new ways to enhance the retail-customer relationship, but also de-risk both businesses and increase the success of both businesses. That’s a win-win-win! The data available allows the ability to create Yield Guarantee products, Outcome Based Pricing products or Prescription Based products program. These sorts of offerings will become common as we get into the middle part of the decade; both farmers and retails will see the value in having them (both can manage their business more effectively). I see this being a an increasingly interesting way for farmers to purchase inputs, so we will see continued uptake throughout the decade, especially as the data gets better.
I also anticipate more large retails vertically integrating. We have seen it with Nutrien and Wilbur Ellis but with the increased power the seed/chemical/fertilizer manufacturers will have, there will be a focus to have in house product options to not only wield more negotiating power, but take advantage of profits in a different area of the supply chain. This has been done successfully by Nutrien, but also is done to varying degrees in the grocery retail business (not a perfect comparison, but shows some validity).
Lastly, watch for a decline in wholesalers (distributors), for sure in Canada, but the USA as well. In Canada there is significant numbers of wholesalers, with varying degrees of value add and manufacturers getting into the wholesaling game, like BASF with RetailConnect. There will continue to be talk about manufacturers going direct to the farmer, but keep in mind there are typically two groups in between the farmers and the manufacturer: wholesaler and retailer. The wholesaler is a more likely target to move on in the coming years vs. retail, for many reasons. I do think within the decade there will be more attempts to establish a stronger relationship with the farmer by manufacturers and even attempts to keep higher amounts of the farmer paid revenue, through offerings like OBP. We may see attempts in the 2020’s to go direct, but there needs to be some stronger tactical approaches from manufacturers laid out in the short term to lay the foundation for any effort to go that route.
Ultimately, I think we will see an emphasis to add value to the farmer beyond basic services: there will be a focused effort to reduce buying friction, de-risk the farmer and increase profitability in unique ways, those retailers will be the winner in the coming decade.
Peak Synthetic Crop Input Use Will Be Reached
While I believe pesticides will be a necessity for years to come, I do believe we will see the peak use in terms of total application volumes in North America. While from what I see there is a significant chance of a glyphosate ban, there should still be a peak hit as other more toxic active ingredients such as paraquat or diquat will be next on the chopping block.
Between technology such as see and spray (this could be “see and till” too), the investments that many major companies are putting into biologicals and biopesticides and the consumer demands leaning towards less pesticide use we will see peak pesticide hit. What we will likely see in the interim is a subtle shift to more inter cropping or a term that I heard on “Growing the Future” Podcast from Dan Aberhart is “progressive cropping”, attempting to cut down on pesticide use and giving increased attention to soil health. See and spray technology will be one of the biggest technological shifts across farms since autosteer. I anticipate this technology, even with the short comings it has today, that it will be refined and scaled in field crops in the early 2020’s, and see big uptake across many farms by the late 2020’s.
The ability to precisely predict and apply products like fertilizers will contribute to less synthetic use as well. Whether it be through better soil analytics, modelling capabilities and the ability to actually apply at such an accurate level, will help support this. But what will really contribute to fertilizer use declining, specifically nitrogen, will be microbials and seed technology. This was already discussed, but microbials such as azotobacter and companies like Joyn Bio (JV between Gingko Biworks and Bayer), working to identify and scale a microbial that can fix nitrogen across all species of crops will happen this decade. I do not think we will see the effectiveness reach levels where it could help corn or wheat fix >50% of their nitrogen needs, but I do think we will see levels reached to upwards of 25-30% in a tleast some crops, which is a significant feat in and of itself. Lastly, as I mentioned seed breeding, we will see breeding for the increase fertilizer use efficiency (N, P, K and S) so that less total amounts of these nutrients available will still be able to achieve large yields.
The Connected Farm Will Takeover
The farm of the future will be connected. Not just in that it has internet access, but in that everything will be connected; bins, shops, trucks, equipment, moisture probes, weather stations and beyond. The internet of things (IoT) will continue to influence agriculture in a meaningful way. Sensors will be everywhere on the farm, and they will be connected to the cloud where the data and information will continuously feed a system and platform to help make decisions, know what’s happening, but also enable transactions (crop inputs, grain, crop insurance, banks etc). Farm management platforms will shift from primarily agronomic based, to informing logistics, to finance as well connecting the entirety of the farm to any entity desired which will lead to new and better options for farms in the realms of insurance, grain marketing and equipment operating. And this software infrastructure on the farm will increase rapidly in the coming years, being a necessity to doing business with many relevant parties, from equipment dealers to ag retailers to progressive insurance companies.
Now, today there are definitive connection short comings across North America. 5G is thought to be a savior to this, and maybe 5G will be, but not until later in the decade at the earliest. The short comings of 5G are significant today, but telecommunications companies with a vested interest in the ag space, like TELUS or organizations with a vested interest in connecting the farm, like John Deere, will look to have their own private connection offerings that are farm specific connection platforms.
Today, as a general observation, the farm isn’t viewed like a manufacturing plant, prioritizing efficiency, zero waste and lean operating procedures. That will change, in part thanks to constant connections of machines. All 4000ac of a farm (as an example) will be optimized to manage efficient operations that make the farm run like a manufacturing plant. We will see products like FirstPass from Verge Agro expand in this space from their route optimization technology today. Connecting the farm enables a more efficient use of equipment, resources and time.
There will be less than a handful of platforms that have the means to be meaningful platforms powering farms. Just like in cell phone operating platforms, there are only a few meaningful operating systems, the same will be true for ag platforms. But with a lot of apps. The same will happen in ag as well. There will be a lot of companies that focus on being exceptional in one specific area (say a finance product like HarvestPort or a sensor technology like Arable for example) and they will have an emphasis on creating API’s with the main platform operators, say John Deere Operations Centre or Farmers Edge FarmCommand for example. This will allow farmers to choose their main platform of choice, but also be able to add on tools that make their operation better by offering something that platform isn’t capable of. Based on how we often see niche use pattern digital products expand into more robust platforms in other industries, such as Amazon (books to full retail, to platform market place and beyond), there may be the potential for this to occur with other more “niche” digital tools expanding further into bigger use case platforms, however, I still believe we won't see more than a handful of platforms with meaningful acres/use.
The potential for a connected farm has benefits well beyond the traditional agronomic or financial benefits; safety and security will be improved thanks to a connected farm. With these being two large topics around farming and living in rural North America, I believe we will see these problems be addressed with the connected farm.
From a crop insurance perspective, the potential is significant and we will see a lot of new offerings in the market place in the 2020’s.
Parametric insurance has been talked about since Climate Corp was launched, but with a connected farm the possibilities really come to fruition to manage risk from a weather perspective through a weather station that will enable a pay out based on actual field level happenings. Or there is the ability to have prescriptive insurance that insures you for your crops potential based on the season, informing data and decisions you have made that season vs. a lagging yield average production history trend, helping farmers de-risk their farm in a more progressive way based on what is being done today, not what was done 5 years ago in completely different situations.
The benefits to a fully connected farm are significant. This will be one of the big game changers for farmers in the 2020’s as their farm gets more and more connected. Sensor technology and connectivity will enable real time and automated decisions at more precise resolutions to better manage the farm will be core to farming and agriculture in the next decade.
The one common thread over the next decade will be technology. Whether you are a farmer, agronomist or ag industry professional, technology will have a disproportionate impact on your work over the next 10 years. If anything is apparent, it is that you need to understand how tech can help you and where it can hurt you and your business. This was a broad overview and I think in any given topic I introduced one can drill down several more levels into the intricacies of what could happen plus, dive into many topics that I didn’t get much into such as glyphosate, socioeconomic drivers behind trends, climate change and government legislation, and more.
As I wrote about some of these trends and thoughts about where the industry is headed there is one word that constantly came to mind: Opportunity. This next decade we will see unprecedented change in the industry, some may be along the lines of what I talked about, but much will likely be well beyond the scope of what I discussed. That’s the exciting part. Change is happening throughout every area of the industry and that is where opportunity lies.