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Farmers and Entrepreneurs May Need to Rethink the Path to Agtech Adoption

July 18, 2019

Next week’s AgTech Nexus USA event in Chicago will convene the major players in the agtech ecosystem in Chicago for the first time. Illinois Soybean Association checkoff program (ISA), the co-host sponsor for the event, is presenting a thought leadership keynote by Jonah Kolb, ISA agtech advisor and Managing Member of Moore & Warner Ag Group.  The event and presentation are part of the Association’s overall effort to engage producers, investors and entrepreneurs while exposing them to the world-class agriculture, technology, business, and academic assets within the state.

Adoptable disruption and rethinking the path in agtech

The future of row crop production is exciting and compelling, and as innovators and investors discuss the “possible,” an important question lingers: how – and how fast — will the farmers raising the food, fiber and fuel today evolve their practices and business models to be successful as tomorrow’s farm leaders?

Yes, the row crop future is exciting

Digitized information. Autonomous vehicles. Sub-acre crop management. New and responsive supply chains.  The stakeholders convening in Chicago next week will discuss a future of farming that both excites and challenges today’s soybean producers.  The Midwest and row crop producers are ready for their fair share of agtech investing – last year at $6.9 billion in upstream Agri-Food tech as reported by AgFunder.  As the Illinois Soybean Association looks across key areas, exciting innovations and business models readily emerge.

Autonomous vehicles for farming are not just about the much-touted “driverless tractor.”  For Illinois – the largest soybean producing state in the nation – grain transport and logistics are a major endeavor.  Autonomous semi-trailers integrated into smart networks will create opportunities beyond just “driverless” to help optimize harvest logistics, fine-tune hauling costs, and open new points of delivery.

Today Illinois producers are some of the most efficient and sustainable in the world for commodity soybeans, and farmers still seek new opportunities to continuously improve and unlock premiums, efficiencies and profits.  Technology is increasingly playing a role in helping producers connect with specific end-users – whether those end-users seek a particular amino acid profile for livestock feed formulation or a stack of digital records verifying on-farm production practices.

Adoption – especially in a year like this – remains a challenge

Agtech startups and investors alike have learned how difficult it can be to get a farmer to open his wallet for a new piece of agtech.  On-going trade issues and challenging weather during planting make this year no different.

Innovators and investors are finally moving beyond the “widget problem” – isolated tools and tech that address only single problems – to broader systems of systems and solution-oriented offerings.  Paul Schrimpf of Meister Media noted an important development in the State of US Precision Agriculture Report released in June:  “Investment in disrupting technologies has given way to more partnerships and collaboration among manufacturers, which deliver gradual improvement to the production process of corn and soybeans.”

This evolution may better address the demand from farmers for integrated systems offering holistic value, and more work remains to be done.

At the farm gate today most agtech sales continue to focus on dollar-per-acre and bushel-per-acre benefits.  While this places ROI and profitability at the forefront, these benefits can be difficult to be easily and readily realized.

At AgTech Nexus, Illinois Soybean Association’s thought-leadership keynote “Adoptable disruption and rethinking the path in agtech” highlights an over-looked pathway to agtech adoption and farm gate value:  enabling the farmer as a commercial counterparty.

Rethinking the path in agtech – it’s more than bushels per acre
Jonah Kolb

“The agriculture of tomorrow will promote farmers as part of a high-performing network of business peers who operate under similar norms and expectations,” notes Jonah Kolb, who will present the Illinois Soybean Association (ISA) keynote.

It’s broadly acknowledged that agriculture is one of the world’s least digitized industries.  When agriculture interacts with key partners – like finance, insurance, consumer packaged goods – it can generate tension between 21st-century business norms and agriculture’s sometimes 20th-century status quo.  In this tension, Illinois Soybean Association and Kolb see the opportunity he’ll address on-stage at AgTech Nexus.

“Midwest farmers run significant business operations.  They are counterparties who borrow working capital, lease farmland, and sell into markets increasingly hungry for production information.  But sometimes agtech overlooks these roles when focusing in-field.  How do we support farmers in these commercial relationships?” asks Kolb.

Many of the developments in agtech in the last half-decade have focused on production issues and on-farm use cases. But a farmer’s interaction with his banker, landowner, and grain buyer creates an opportunity for agtech to bring value through these commercial relationships.

The case-in-point example:  seeing a farmland investor and farmer hit it off with real-time information sharing on production practices and financial reporting.  “In our farmland investing business, we’ve seen over just a short few months an investor buy multiple farms around a single farmer to whom they wanted to lease the properties.  It was a huge opportunity for the farmer, but being a great ‘farmer’ was really just table stakes for that relationship,” says Kolb.

“What sealed the deal was that farmer having integrated IT and management systems that allowed him to push the reporting the investor wanted and needed for deal underwriting and ongoing management.  That farmer’s tech and systems investment over the prior few years turned out to be a small price to pay for growing his farmed acreage by more than 20% in a single relationship.”

Agtech as an access point to key resources – capital, land, and markets – is an angle to adoption and implementation that is still novel. 

“It shouldn’t be a surprise that Rabobank and Conservis announced a joint venture last year,” says Kolb.  “What surprises me is that we haven’t had more such partnerships announced.  It’s a missed opportunity to help ag up the adoption curve.”

Blockchain and distributed ledger technology (DLT) will only make it easier for farmers to share – and protect – the information sought by their business partners and the supply chain.  “Today we see companies like Indigo that have experimented with price premiums for farmers who can deliver the stack of digital production records alongside a load of grain,” says Kolb.  “We’re only at the tip of the iceberg.”

Just like bushels-per-acre promises, however, convincing farmers of agtech’s broader business value will be difficult if it’s hypothetical.  “When an agtech company can bring a new business partner to the table for a farmer, or deepen an existing relationship, there’s value,” says Kolb. “But it needs to be real and tangible.”

At the same time, Kolb challenges farmers: “There comes a point when we need to set aside the ‘tech expense’ mentality of searching for the immediate payoff and look at the future with a ‘tech investment’ mentality – this mindset shift is needed to identify the ways a farming enterprise can invest in integrated systems of solutions and capabilities that will make it the preferred business partner for other parts of the supply chain and ag ecosystem.”

Kolb’s ISA thought leadership presentation, “Adoptable disruption and rethinking the path in agtech”, will be available after the conclusion of AgTech Nexus USA July 23rd. For additional information contact [email protected].

*This post was sponsored by Illinois Soybean Association, an AgFunder Network Partner. Find out more here.*

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