Agriculture 3.0: Farms go digital

SUITS THE C-SUITE By Jose Raoul J. Balisalisa

Business World (11/20/2017 – p.S1/4)

In the course of an ocular inspection for a client, an alternative to a physical visit was proposed — to view video footage of the plantation captured by drones. The client explained that they have a dedicated team that conducts aerial view captures through drones on a weekly basis per location/plantation. This allows them to gather and store data more frequently and accurately, with the option to create a detailed archive of video footage.

Given the pace at which technological disruption is sweeping all industries, it should come as no surprise that export-producing agricultural companies’ data collection processes have evolved from literally manual inspections and hand-written notes to automatic data capture via equipment, software, remote sensors and aerial drones, among others. Some also have weather stations located strategically within the plantation to capture relevant weather data (e.g., rainfall, sunlight, wind speed, photosynthetic radiation, etc.). GPS is installed in aerial spray planes to achieve accuracy and complete coverage during spraying. Weighing machines are not only used for fruits received at packing houses, but also to record the source fields/farms. The value of the resulting combined data is then used to provide farmers with insights to help them make informed decisions for optimal production.

These new technological systems demonstrate that the agriculture industry is no exception to the trend in big data and analytics.

However, it is also true that for many other farmers in our country, these developments are just “stories” because they have yet to see them in action in their own farms.

The question therefore is, are we ready for Agriculture 3.0?

An article by Ernst & Young, “Digital agriculture: Helping to feed a growing world,” states that digital agriculture is widely recognized as the third great revolution of modern agriculture (Agriculture 3.0 or Ag 3.0). The article stated that the introduction and implementation of mechanization (1900 to 1930) and genetic modification (1990 to 2005) are referred to as Ag 1.0 and Ag 2.0, respectively. Both revolutions drove efficiency, yield and profitability to levels that were previously unattainable. Today, these levels are considered conventional in developed countries around the world.

A similar paradigm shift can be expected with Ag 3.0, which is anticipated to be the most transformative and disruptive, not just at the farm, but also all throughout the entire agricultural value chain.

Research has shown that data-driven agriculture has had a large impact on the industry. In this light, we can expect data creation, analysis and decision making to increase even more at the field level, while also affecting farming operations such as through targeted field solutions, data-driven agronomic advice and smarter inputs. New software is also being developed to help emerging countries adopt modern farming practices. As technology supports automation and economies of scale, farms are also anticipated to undergo more consolidation. Companies who reap more profits from data-driven efficiency are likely to then invest in better farming technology in a beneficial cycle.

While Ag 1.0 and Ag 2.0 significantly revolutionized agriculture, digital agriculture is expected to fundamentally transform every aspect of the agribusiness value chain. It will affect not only producer buying behavior and seed and equipment product design, it could also enable dynamic pricing at the consumer retail level, with resulting implications across various business functions, including business strategy, product design, customer preferences and even the company’s organizational structure.

However, as technological advancements reach parity in the industry, companies will need to look further into digital strategy in order to compete. This has the potential to challenge traditional company roles, intercompany relationships, incentive systems and even whole business models. As with most disruptors today, digital in agriculture is increasing competition between traditional and non-traditional competitors. Given this, visionary agribusinesses are now working to strengthen their positions in Ag 3.0, some by investing in internal data activities such as standardization, storage, software and analytics, while others are looking at outsourcing strategies or licensing software from external vendors. Yet others are taking a wait-and-see approach.

As recent trends have shown us, disruption will follow in the wake of increasing digital adoption, further highlighting the need for agribusinesses to already take steps to evolve themselves in order to stand out from competitors and deliver more value-added services and products.

Despite the compelling benefits of digital agriculture, the industry still has to hurdle significant challenges, such as the potential difficulty of using software, data usage concerns, disparate and proprietary data formats, and unclear returns on investment. Additionally, it is difficult to demonstrate immediate, tangible results. Having different stakeholder groups will also make data gathering and standardization more challenging. This is further compounded in emerging countries where weak digital network infrastructure and limited capital make adoption prohibitive. The gap between modern, advanced farming and subsistence farming is growing at an alarming rate. All of these factors raise important questions for the industry.

With the world’s increasing population, rapidly depleting natural resources, and growing environmental and regulatory pressures, precision planting needs to become the new normal in order to achieve an optimum volume of production per hectare. As the industry moves forward, farmers who are not yet in the digital space should consider giving digital strategies serious thought. In spite of the very real barriers to digital adoption, today’s farmers need to take steps to empower themselves in order to gain more knowledge of how to use their time and resources more efficiently.

Digital agriculture is a game changer, and agribusinesses that are leveling up their digital strategies have demonstrated effective best practices. These include allocating annual budgets for investing for infrastructure modernization, new technologies and new techniques to interpret and analyze data. They are also collaborating with government, academe, and stakeholders from the private sector to acquire relevant training and experience for their people. Given the rapid and sweeping digital changes already happening in the agricultural sphere, players need to act now to protect their position in the food value chain.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Jose Raoul J. Balisalisa is a Partner of SGV & Co.