Disrupting Agriculture: Startup Driven Innovation In AgriTech
Farming is no longer a matter of sickle and plows anymore. It has been digitized with the aid of technology enabling farmers to track their crops and animals, sell their farm produce as well as monitor the yield of their crops. (Innovation Village, 2017) New concepts like smart & precision farming, crop efficiency, and vertical farming bring a breath of fresh air to this field, leading to what is called AgriTech or AgTech. Bangladesh is an agrarian economy with growing population, a threat of climate change, and globalized trade need to produce more food using fewer inputs. Bangladeshi agriculture should seek new products, practices, and technologies. Farmers want yield boosts and cost savings where consumers are demanding healthier, clean food and ingredients. Data-driven is causing the disruption to meet these needs.
Farmers can be among the most hidebound of managers, so it is no surprise that they are nervous about a new idea called prescriptive planting, which is set to disrupt their business. In essence, it is a system that tells them with great precision which seeds to plant and how to cultivate them in each patch of land. It could be the biggest change to agriculture in rich countries since genetically modified crops. And it is proving nearly as controversial since it raises profound questions about who owns the information on which the service is based.
It may be noted that AgTech is brewing conflicts that arise when data entrepreneurs meet old-fashioned businessfolk. Farmers have mixed feelings about the technology anyway: although it boosts yields, it reduces the role of discretion and skill in farming—their core competence. However, the bigger problem is that farmers distrust the companies peddling this new method. They fear that the stream of detailed data they are providing on their harvests might be misused. Their commercial secrets could be sold, or leak to rival farmers; the prescriptive-planting firms might even use the data to buy underperforming farms and run them in competition with the farmers; or the companies could use the highly sensitive data on harvests to trade on the commodity markets, to the detriment of farmers who sell into those markets. (The Economist)
Start with the vastly increased supply of information everywhere from the plant genome to water management, fertilization, climate, soil, machinery, and crop protection systems. On the production side, this is changing the value chain in big ag as access to big data is transferring power to the farmer and smaller companies, while the big companies consolidate and struggle to innovate. Disruption will take big ideas, new business models, and bold people. New generations of independent companies are harnessing big data to generate new insights, practices, and products. Traditional Ag companies and supply chains will have to adapt if they want to keep up.
This transparency has the ability to disrupt value chains and will likely be unpopular with some retailers, distributor dealers, and large seed and chemical producers. Information pushes power to the grower level by creating visibility of pricing and performance of brand-name inputs. Growers will be able to use fewer chemicals applied in very precise ways. Using generic inputs with precision may well give better results than using top brands across the field. More precise planting will likely lead to the reduction in the use of inputs by about 30 – 40% which, along with squeezing margins for the big ag inputs companies, could cause further consolidation in the supply chain.
The rate of adoption of new ag-technologies is increasing, despite low commodity prices and sustained low farm incomes. In 2016, AgriTech funding figures dipped to 2.7 billion Euro from 3.8 billion Euro in 2015 reflecting the overall pullback in global venture markets. (Agfunders News, 2016)
As the agricultural industry attracts more investors and big corporations in terms of opportunities it is changing at a rapid pace, leading to a massive transformation compared to how we know it today. Decreased cost, optimized output, and innovative machinery will support farmers in optimizing their operational profits. As the innovation areas we outlined in this breakdown are only a fraction the technologies that will impact the agriculture industry, we have no doubt that AgTech has not reached its peak yet. (Startus Insights, 2017)
The disrupting agriculture is in its early days, and most of the potential for value creation is still unclaimed. But it has set the industry on a path of rapid change and new discoveries; stakeholders that are committed to innovation will likely be the first to reap rewards. We are hoping the big winners in this revolution are the producers, the environment, subsistence and small farmers, and consumers. This is the best time for disruptive acceleration in agriculture innovation, one that can empower new players in the supply chain to participate, benefit and significantly enhance crop performance.