Editor’s Note: Dmitry Filatov, is a partner at Sistema_VC, the Russian venture capital firm investing in big data and machine learning, new generation infrastructure, cognitive tech, and emerging niches. It has made some investments in agtech as part of this focus. The firm recently hosted a conference on agtech and here Filatov shares the key industry trends that emerged including tailored food, AI-assistants for farmers, data-driven supply decisions, and more.
*Disclosure: Connecterra and KisanHub are both Sistema_VC portfolio companies. Connecterra is also an AgFunder investment.
The agricultural field is no longer as conservative as we used to imagine. With the implementation of digital technologies, new biotechnological solutions and the leapfrogging development of robotics, agriculture has a brand-new reputation. Investors sure sense the potential: they poured $17 billion into Agri-FoodTech in 2018, according to AgFunder, which was 40% more than in 2017.
Today, each component of an extensive food supply system is being digitalized. And in the future, each component could create new specific markets. There’s also a big need to increase the labor efficiency of agriculture, the quality of products and supply chain transparency. Agricultural businesses have many private contractors; how can the documents flowing between them remain transparent? Introduce digital signatures. How can we reduce fraud? Introduce computer vision into the supply chain.
To highlight this trend, Sistema_VC hosted a special conference on AgTech and the future of the food industry, where experts from the field discussed how the industry is being digitalized and modified by new technologies. Founders of startups from the UK, the Netherlands and Russia, shared their insights about innovative solutions from machine learning and big data to virtual reality, that are already improving food production and food quality. Here are the main trends they highlighted at the event:
1 – Farming is shifting towards more informed decisions
Saad Ansari, founder & CTO at Connecterra, the developer of a smart assistant for dairy farmers, that collects and analyzes data on cow behaviour, thereby improving the quality of milk produced and providing better care for cattle: “Some large agricultural enterprises are shifting towards data-driven farming, and some even call themselves technology companies instead of agricultural firms nowadays. Among farmers, we see great adoption as well. A farmer has to make many decisions, and it becomes more and more important that the bigger decisions are informed decisions. The need for technologies that give the farmer actionable insights (at any point of time when he needs it) is therefore growing.”
From the point of view of large-scale farming, Ksenia Kimelman, director of development at Belaya Dacha, Russia’s largest salad producer, shared her insights on how the company introduced decision-based farming. For example, they have already integrated smart solutions developed by DNT that help the company monitor weather factors with the sensors installed. This kind of monitoring gives insights about the best time to harvest and helps optimize the costs of growing and processing the plant. Belaya Dacha has also introduced technologies that manage the fleet of machines that cultivate the land.
2 – The end of a “one size fits all” approach
Sachin Shende, founder & CEO at KisanHub, the developer of a cloud platform for supply chain optimization for agricultural companies, believes that one of the challenges for agriculture is a “one size fits all” approach as far as agronomic advisory is concerned. Agronomic advice, which is hugely important in boosting yields, quality, and productivity, is provided often at a large scale. Individual fields and variations within them are not factored in. This is especially challenging when the farm sizes are as big as in Russia. Agronomists cannot walk such a vast area to monitor the crops in a traditional way. This is where technology will play a role in monitoring as well as providing hyper-local solutions.
3 – AI-based farming contributes to better ecology
Artificial intelligence has the potential to not only ease the farmer’s load but also to make food production more sustainable, improve the ecological situation and provide better care for animals.
“The extensive development of agriculture affects wildlife: we destroy one thing by developing another. Highly intensive agriculture means breeding cattle altogether in one place. AI can help with that. It can help you track and analyze the way different species interact with each other,” believes the Tuda-Styda team, a platform based on AI, that shows how our eating habits are linked to the environment, agriculture, and terraforming.
Ilya Elpanov, founder and CEO at Esh Derevenskoye, an online platform for selling food products from farms and small producers, suggests that the agricultural sector is developing in line with general, valued trends about consumption globally, e.g. mindful consuming, resource-sharing and process delegating. “Hence we can see how innovative technologies are developing now, pushing forward biodegradable packaging, which not only does good for the environment but also makes the life and freshness of products last longer.”
4 – Shifting towards artificial food and vegetable meat
Andrei Zyuzin, deputy director for innovation and digitalization at EFKO, one of the largest companies in the Russian agro-industrial complex, which produces oil and dairy products and develops biotechnological solutions, highlighted that the world is inevitably shifting towards artificial and vegetable meat. Nowadays, vegetable meat (like “Beyond Meat”) is already offered in some fancy restaurants, as well as in fast food cafes. “This trend will definitely prevail, which we can already observe in the Western countries,’ he noted.
One of the main challenges for these products is gaining consumer trust: how does the consumer know that a new product like this is safe for him to eat? There’s still an answer to be found, but Zyuzin believes that at some point artificial food and vegetable meat will eventually be trusted at a large scale.
5 – Digital agronomy and digitalized food supply chains in emerging economies
Shende, KisanHub: “If you look at India, you can see that most farmers and agronomists there have got smartphones. They can access technology. Emerging technologies have leapfrogged: when adopting telephone communications, they just jumped from a zero point to a completely mobile state. I guess the same thing is happening with digital agronomy and digital supply chains. Eventually, emerging economies will move from unorganized supply chains to organized and digitalized supply chains. While the UK and Europe have had organized supply chains before, now they’ve got to have them digitalized”.
6 – Consumer-oriented food production
Elpanov, Esh Derevenskoye: “You shouldn’t just focus on the idea of an organic product or one produced on a small farm, but rather on the farm-to-fork concept: when you can take your phone and order a product, targeted at you, which is not stored in stocks. You get the product made by a particular producer just for you. So, you can learn all about the product and track its delivery by video.”
Shende, KisanHub: “Ultimately, some consumers will demand certain types of food. And you can see that it’s already happening. People are demanding a plant-based protein or organic tomatoes of specific shapes and tastes, quality. At the moment, supply chains are not that flexible, not that dynamic, not that responsive. However, at some point, consumers will drive change, and they are already doing it. E-commerce platforms like Ozon and Amazon, have taught consumers about the segmentation of products. Let’s say if 50,000 people want to read the first book about Harry Potter, the publishing house can print it overnight and ship those 50,000 books the next morning. If you transfer this model to organically-grown tomatoes, you’ll see that it’s not the same. You don’t just grow tomatoes overnight. I think consumers will drive the change in tomorrow’s supply chains. These chains will be dynamic, and they will be shorter. Just like there’ll be direct-to-consumer, there’ll be a direct-to-farmer approach. So, farmers don’t just plant some crops just because of historical knowledge. They are going to plant what is demanded by the consumer”.
7 – Moving food production closer to consumers
The vegetables that are storable and can produce high yields are usually grown at a large scale, but aren’t always tasty, claims Dmitry Tarasov, director of manufacturing and selling products at iFarm, the developer of automated vertical farms, which allow you to grow plants in the urban area efficiently all year round. It is reasonable to move vegetable and plant production closer to the consumer (which means – to the city), shortening the journey the food has to make from the fields to our tables. By doing this, you can also cut the costs of supplies.
Ksenia Kimelman also supports the idea: “At Belaya Dacha, we are watching vertical farms closely. We know all the risks associated with weather conditions, especially for such a sophisticated product as lettuce, whose freshness doesn’t last long after it’s cut. If the lettuce is ripe, unlike other cultures, it cannot be cut later than it should, even if there’s bad weather. However, vertical farms allow us to ignore the risks associated with weather conditions, sunlight, and rain.
8 – Food delivery chain transparency
The niche of farm products is discredited, says Ilya Elpanov. Most consumers don’t trust it, because the quality and safety of farm products often leave much to be desired. Therefore, it is essential to verify each supplier. It is impossible to create a traditional marketplace without having to check everything out on site yourself.
Elpanov also believes disclosing data about products and making it accessible to the consumer is particularly relevant for the agricultural sector because this is the field where the healthy eating habits of consumers are crucial to the introduction of innovation by both small and large businesses.