Size Important to Big Players
Technology adoption will
gather momentum over time and the necessary changes in the way that we produce,
process and deliver food (fiber, feed, fuel) will occur. This is not prophetic. Most of us know that it will happen but note that there is no
mention in the above statement as to when that will happen or how
it will play out.
Crowded in Here
At last count there were well over 100 information
technology companies making some sort of play in the ag and food “space”. The
most notable insider players include Deere, Monsanto, Syngenta and Trimble,
with what appears to be a number of others sitting on the sidelines putting
their digital strategies together while waiting for the market to respond
enthusiastically in utilizing technology, therein making some innovators wildly successful selling
products and services to growers, processors and supporting agribusinesses. As
everyone knows, it has not happened yet.
Gorillas Watching and Waiting
What about those outsider horizontal marketers like Google,
Microsoft, Verizon or Oracle? Are they watching this opportunity and trying to
determine when they should make their move? It appears that the potential for
growth in this emerging business sector is large enough for even the tech
giants to strongly consider an agri-food foray. Unfortunately, they cannot
simply acquire their way to success. The reason? Buying these miniscule,
relatively speaking, startups is tedious, expensive and fraught with risk. Let’s
face it, there are no more Climate Corps out there to snatch up for a cool
billion dollars.
Where would I put my money? Given the choices I might lean
towards the technology companies. Here is why. They understand the business
models that have proven to be successful for the horizontal markets, aka – free
for users, and they know how to turn data into dollars. They are also doing it
in a number of vertical industries and that knowledge can be transferred when they
engage the agri-food market.
Domain Expertise Required
The downside of the IT corporations entering ag and food is
that they do not understand the market as intimately as those companies that
have been selling tractors, seed or crop inputs for many, many years. They will
need a partner or partners to help them in building the predictive analytical
models needed to revolutionize the way that we manage our food, fiber, feed and
fuel supply chain.
Integrate and Integrate More
Before change can occur more and more growers will need to
continue to integrate all of their available technologies (ERP, imagery,
guidance, apps and more) and, specifically, the Internet of Things (IoT) tools
that measure, monitor and control. These devices will continue to have limited
value until they are interconnected across the enterprise and then, eventually,
across the entire supply chain. At the point that this occurs the data will
have the real, not proposed, value that
meets and, ultimately, exceeds market and investor expectations. Then, and only
then, will we experience the transformation to a true value chain.
Bigger Can Be Better
How does this all come about? There are a number of answers
to this question but suffice to say that the short answer is “consortium”.
Agri-tech startups will need to integrate, merge, acquire and generally work
together to make themselves more valuable and appear larger, not just to the
growers or processors, but also to those sideline companies who will enter the
market in a big way.
