Supply chain management for the agriculture industry is a tricky thing.
First of all, the industry itself is sprawling and opaque. It all starts with farmers in the field, but as soon as those crops are harvested they move on to distribution, processing, packaging and, eventually, consumers. And that’s to say nothing of the food preparation, grocery, and restaurant and other related industries that agriculture supplies. As a result, there are several levels of stakeholders in ag, all effectively isolated from each other.
This system has performed admirably well for generations – effectively feeding a growing population of billions worldwide – but the recent advent of Big Data analytics, cloud computing, and other advanced data systems has presented unique problems for agriculture. Industry incumbents, long entrenched, are slow to adopt new technologies. This has led to complacency that has delayed the industry from fully embracing the promise of technological disruption.
Consider the fate of data on the farm.
Farmers have embraced technology to help them produce healthier, heartier, more abundant harvests. Case in point: John Deere first introduced self-driving and self-steering tractors in the 1990s, and farmers have been working with advanced GPS mapping tools for years now. It’s even been more than 20 years since the first genetically modified crops were introduced. But without a connection to the larger ag industry, much of that farm-level data is typically lost as soon as crops are harvested and sent to distributors, producers, and other customers. This can include everything from fertilizer levels, nutrient concentrations, soil chemistry information, production methods, and more.
But in today’s connected world that data is increasingly valuable, in part because of changing consumer attitudes toward food.
Supply chains in focus
In 1988, the first fair trade label, Max Havelaar, was applied to Mexican coffee sold in Dutch supermarkets. While at the time using a product label to affirm supply chain standards was revolutionary, today, thanks to Millennials, who have driven sustainably-sourced food products into the mainstream, it is routine. A 2017 survey found that 66% of Millennials are willing to pay more for sustainable foods. Additionally, foods labeled as organic, demonstrating higher nutritional value, on average carry a 47% price premium and have grown to a $43 billion industry segment as of 2016.
Consulting firm Pure Strategies recently surveyed 57 food and beverage manufacturers on supply chain goals and found that 100% of them had established product sustainability efforts, up from 82% in 2013, and 95% are evaluating and/or integrating sustainability into product decisions, up from 68% in 2013.
As a result, the Consumer Packaged Goods (CPG) industry is getting serious about sustainability as a way to improve brand value and meet customer demands. Firms such as PepsiCo and Kellogg’s, for example, have stated goals of 100% sustainable sourcing of agricultural inputs by 2020. In addition, Kellogg’s plans to improve the sustainability operations of 500,000 of its growers by 2030, and PepsiCo plans to have 7 million acres enrolled in its Sustainable Farming Initiative by 2050. Unilever has said that 100% of its soybean inputs will be sustainably sourced by the end of 2017.
These are big, bold goals, and they make CPG companies ideal customers of the farm-level data that is currently lacking in the agriculture industry. But, given the reality of the ag supply chain, much of the data CPGs need today is typically lost in the transition from field to consumer.
Consider the questions that could be answered by more effective supply chain and data management in ag:
- How do you measure and verify sustainable inputs?
- How do you track and benchmark sustainability over time?
- How do you assure data integrity throughout the supply chain?
- How do you shore-up supply of sustainable inputs?
- How do you track your inputs back to the farmer?
As of now, crop traceability, organic certification, food safety regulations, and sustainability initiatives are difficult to implement and verify, in part, because the agricultural supply chain is so opaque. This is because, as agricultural products move throughout the supply chain – from growers, to merchandisers, to distributors, and finally to the CPGs themselves – grower-level data is lost. Where specifically a given bushel of crops was grown. How exactly those plants were treated and raised. Proof that sustainable or organic promises were kept.
For CPGs today, growth is directly related to sustainability, traceability, supply chain assurance and other areas where data can provide extra insights. Without this kind of information, it is very difficult for the food industry to support its sustainability and nutritional initiatives, simply because it cannot prove that the right steps are being taken.
Analytics for ag
Enter Agrible, an agtech company in Champaign, Illinois. Agrible is developing software-based predictive analytics tools to help farmers become more efficient in their fields, while providing new sustainability and output analytics to help CPGs and other food industry stakeholders meet evolving consumer needs.
But, as importantly, Agrible also allows farmers to capture the value of the data behind each bushel produced. They do this by combining their proprietary predictive analytics tools with third-party calculators and sustainability metrics to meet supply chain needs, offering new opportunities for growers.
Predictive analytics tools: Agrible’s core weather modeling algorithms, paired with predictive analytics tools, give growers field-level insights about everything from when to take equipment into the field, to when and where to spray pesticides, to how much nitrogen each field needs — boosting production efficiency and lowering variable costs.
New revenue streams: Farmers that participate in Agrible’s Sustainable Yield Program, which allows farmers to earn premium per bushel prices for their verified-sustainable crops, are able to extend their field-by-field data advantage beyond their own properties without worry. It’s a new opportunity for growers, and a way to protect their privacy while engaging with supply chain efforts to source sustainably grown grain. The result? A way for growers to securely monetize their farming data by meeting the evolving sustainable sourcing needs of the food supply chain.
The company’s innovative, easy-to-use tools make it easier for farmers to analyze their own production schedules, with field-specific data and forecasts to help with decision-making to improve production. From there, that data stream can also be used to help verify ag supply chain issues, better managing the verification process around sustainable, organic, and other field-to-store initiatives in the food industry. Current customers and partners include CPGs, commodity distributors and checkoff programs, and grower cooperatives. These include Anheuser-Busch InBev (which recently partnered with Agrible on a project to improve barley production), Archer Daniels Midland, United Soybean Board, WinField United/Land O’Lakes, and others.
Predictive analytics are changing the way that food is produced, helping to make farmers more efficient, CPGs more profitable and the entire value chain more sustainable. Unlike many providers in the space, Agrible is providing value in two ways: delivering field-by-field predictive analytics tools to improve operational efficiency and creating new, revenue-generating incentives for farmers. The result? Driving trust and cooperation on both sides and creating additional value for the agriculture supply chain.