Why Agri-Food?

Transforming the Entire Food Ecosystem

Where is the “food” part of this blog? I have been remiss in providing an explanation of the title for my discussions – Agri-Food Technology. Let me take a moment to shed some light on this subject.

Optimizing the Chain

Possibly the best way to clarify this concept is to talk about the food supply chain which is not yet a value chain - but more on this later. If you view food manufacturing in its’ entirety you get a sense of the opportunity for optimization of the collective industries that make up this dynamic continuum of agriculture and food. This ecosystem might not be broken but it is a long way from being efficient.

Beginning with those companies that manufacture equipment or crop inputs, including genetics, all the way to the consumer you get a sense of what many refer to as “farm to fork”. Except in this case it is really “pre farm to fork”.

 

More with Less through GEM Data

How can a food and beverage processor benefit from technology that their suppliers of raw product deploy? The answer is in the data. And how can a grower benefit from sharing that data with their business partners downstream from them? The simple answer is in the optimization of Genetics, Environments and Management practices (GEM) that delivers better quality raw goods resulting in better processing yields to their buyers who are willing to pay for it.

All processors or food manufacturing executives can readily recite the costs of production for each line item on their Income Statement. Containers, ingredients, equipment, energy, labor, transportation, etc. (COGS), and, last but most important and the largest figure of all for first stage processors– raw product – is the one that typically receives the least amount of attention from management.

Upwards of 40% of costs of producing a single can of peaches can be attributed to the purchase of those peaches from the grower. Now if one could somehow buy the same amount of product from farmers and produce just 1 more can of sliced juicy fruit or more than 1% more cases of finished goods that money would go straight to the bottom line. No more effort. No more cost (OK maybe the cans and other variable costs). Free peaches mean increased profits for processors.

Give Me Your Watch to Tell You What Time It Is

Great! So now I have told most of you something that you already knew. But how would you suggest that one go about getting free peaches? Here it is again. The data.

Tomato processors have figured it out to some extent. They know that better quality crops mean better processing yields overall. In the case of paste manufacturing it is less water and more tomato (solids) that drives improved output. There are other quality issues but for the most part it the amount of solids that receives the lion’s share of the focus.

There are only three variables that can create a better tomato. Genetics (seed, seedling), Environment (weather, soil) and Management practices (crop inputs –nutrients, pesticides, water, labor, and equipment) and the right combination of each of these can more consistently deliver not only better quality for processors but better yields for growers.

Aggregation and analysis of the GEM data in and of itself will not solve the problem of delivering a better “packout”. But combining this data with production results can and will result in greater processing efficiencies. There is, however, one operational requirement in order to achieve the desired improvements.

Traceability Not Just for Recall Management

Without traceability, knowing where the product came from (grower, farm, field, block) one cannot gain insights into what caused good or bad processing yields. And without that critical tie between processing performance and a particular products’ GEM there is no hope in determining “best” combinations of GEM.

Value Chains Share

Our old nemesis CHANGE rears its ugly head once more. The supply chain requires a transformation to that of a value chain. What this means is that processors and growers need to establish a very different relationship than the one under which they currently operate.

Chain optimization means that value needs to be shared between partners. Where there are gains there should be compensation provided to those who deliver those gains. The growers’ costs for collecting and managing the data needs not to be simply covered but should result in the payment of some sort of premium. Incentives drive behavior. Just ask my pal Melika. Ball? Cookie? Squirrel?