A New Ag Landscape

Think Shift

P People often joke that ag is behind the curve and slow to adapt. As one of the world’s oldest industries perhaps this is warranted, but these days, you would be hard-pressed to find an industry that is evolving as quickly as ag.

This evolution could be chalked up to a convergence of technology advancement, changing demographics and a global focus to sustainably feed the world. We have all heard the classic ag line about feeding a population of 9 billion by 2050 with fewer inputs and less land, and ag has risen to the challenge. This article outlines some of the trends and what agribusiness needs to do to stay ahead.

Consolidation vs Disruption

The past 5 years have seen a wave of merger and acquisition activity through the various verticals in ag including animal nutrition, crop protection and seed and trait. While the benefits of these M&As can be debated, for all stakeholders involved, the reality is we have nearly hit a limit on the level of mega-consolidation the industry can face.

Instead, with a wave of agtech and newcomers on the scene, it has caused a stark contrast in the mature, established companies versus the scrappy newcomers looking to change the industry.

This is going to result in the 2020s looking very different than the past 10 years in ag.

The Next Decade

Relentless Advance in Tech

These days, the dominant narrative in ag is around precision ag and digital farming. While the seeds of this young segment of ag have been planted in the 2010s, it will blossom in the 2020s.

While we are still in the early stages of the adoption curve, it will continue to accelerate as the decade progresses. With mega-companies that are now entering the industry, such as TELUS Agriculture, it is allowing for new digital infrastructure to provide a foundation for newer and innovative solutions. The market for agriculture IoT is expected to grow to USD 20.9 billion by 2024.

One of the common challenges for growers and many in ag is the limitation in generating higher levels of value from the data that is being collected. Lots of data, but not enough insight. This will change with the continued rollout of 5G. As well the streamlining and codification of data will pave the way for truly predictive analytics, further providing a bedrock for new services and business models to leverage.

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Rising Commodity Prices

The 2010s saw fairly subdued ag commodity prices with a steady march downward from their peak in 2011. With commodity prices exploding the past year, this trend is highly likely to accelerate through the 2020s.

Years and years of underinvestment in the infrastructure and resources needed to produce ag commodities while everything ‘tech’ was the rage has left the industry in a unique spot. This is further highlighted by the supply chain vulnerabilities of the past year. There will be renewed focus and investment on “tangible things” that drive our economy forward and less on exclusively ethereal data-driven platforms. Other trends, including a more challenging climate, sustainability regulations and geopolitical tensions are likely to be tailwinds for prices to march higher this decade.

The Changing Customer Experience

Digital Transformation and Customer Experience

Digital transformation is synonymous with customer experience. Many ag companies through the value chain are working quickly and diligently to make major upgrades to their digital infrastructure to serve modern buyers. Not only does this mean the ultimate consumer, but also the modern grower. We often forget that growers are getting unique digital experiences from companies like Netflix, Amazon and Google, and that is framing their expectations for what agribusiness needs to provide. The bar will continually be set higher.

Changing Business Models

The changes listed above have paved the way for fundamental shifts in traditional business models and channels in the ag industry. Here are just a couple examples:

  • Outcome-Based Pricing - Digital agriculture has made it possible to leverage predictive analytics to establish yield metrics that can remove input risk for farmers but potentially capture more upside.
  • Insurance – More data that can be analyzed in real-time will allow for more accurate risk modeling that can change growers' crop insurance options.
  • New Channels - New and shifting channels will change how growers procure their inputs. We are already seeing experimentation with ag retail alternatives, ag retail extensions into the digital space (such as Nutrien’s Digital Platform), and potentially, in the near future, a more manufacturer direct model, like Tesla.

New Ecosystems

One of the key factors in building customer loyalty and turning them into advocates for your brand is providing a low-friction experience. There is a real opportunity in ag right now for many companies to create easy-to-use and rewarding digital environments for the growers' buying experience.

As highlighted above with the changing channels, we will continue to see, like other industries, demand for customer-centric omnichannel experiences that that track, engage and delight customers throughout their buying experience.

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