Pathway to unlocking digital power in agricultural sector
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Pathway to unlocking digital power in the agricultural sector – new report

A “game-changing” four-step pathway to help unlock the power of technology for the agricultural sector has been outlined in a newly-released global report by agribusiness specialist Rabobank.

The report, Digital Pathway to Power: the Trigger for a Deeper Relationship between Farmers and the Supply Chain, details the key considerations for farmers, farm input companies and other supply chain businesses to increase accuracy in their business decision-making by implementing and better using technology.

This could include everything from fertiliser and ag chem application to optimal stock feeding programs.

Initially, the benefits would be improved decision-making and increased return on investment in new technologies, the bank says.

But over time, “we believe this approach will be a game changer for agricultural supply chains”, says the report author, Rabobank agricultural analyst Wes Lefroy.

Along the way, the report says, adopting this framework would also trigger deeper relationships between farmers and the agricultural supply chain – providing the opportunity for farm input companies to develop technology platforms and play a greater role in on-farm decision-making. This would see their role transforming from that of supplier to coach.

Pressing need for technology

Mr Lefroy said for many farmers, it remained a challenge to transition to making decisions based on hard data rather than on past practice and intuition.

Rabobank Agricultural Analyst Wes Lefroy

Rabobank Agricultural Analyst Wes Lefroy

However, with the increasing complexity of on-farm decisions, he said, pressure was mounting for technology to take a lead.

“On farm, the complexity of decision-making has been increasing for some time, driven by factors such as growing farm size, changing climate and increasing regulation,” he said. “More and more commonly, we’re seeing farmers having to make decisions with a lower level of confidence. And, for many, these are complex decisions about situations they haven’t had to face in their entire careers.

“The intellectual power to optimise many on-farm decisions has now moved beyond human capacity and there is greater need for technology to play a central role.”

Hurdles to adoption

For many farmers and farm input companies, though, the report says, extracting value from existing technologies requires significant investment of funds and time, as well as technical expertise. This has seen very few farmers reporting increased financial returns as a result of the use of technology.

“Two major hurdles have been limiting the capacity of technology to play a fundamental role in farm decision-making,” Mr Lefroy said.

“Firstly, technologies have lacked the ability to collect data from the required number of variables. For example, when farmers are making decisions about nitrogen applications, they are having to estimate current plant nitrogen status and responsiveness to additional applications, as we do not have the tools to measure all the factors that influence those variables in a cost-effective manner at a high spatial resolution.

“Secondly, in many cases, analysis tools do not account for different relationships between these variables. And the actual process of collecting data, analysing it and acting on it is arduous and complex, which limits return on investment and increases the opportunity cost.”

Digital pathway to power

Mr Lefroy said the Digital Pathway to Power report outlined a framework of four steps that need to be considered in order to enhance the capacity of farmers and input companies to unlock the benefits of technology.

These covered:

  • Collection of the right data for all the physical on-farm variables in the required resolution and quality.
  • The automatic transfer of data collected to an analytical platform in a safe and timely manner – currently “the main pain point for many farmers across the globe”, the report says.
  • Analysis tools that process a succinct answer/solution in a form that is easy for farmers with little or no experience to interpret.
  • Autonomous execution of a response, with greater speed and accuracy than traditional execution techniques.

The report says this type of framework – when up and running – could fundamentally change the way that we see decisions made on the farm. We could either see machines, or platforms that ‘do it all’ – data collection through to execution.

For example, Mr Lefroy said “a drone could scout for pests, process and then analyse the data on an invasion and then ‘execute’ on that data by going and spraying them. All without farmer intervention”.

“Alternatively,” he said, “we could see an ‘app-store’ style approach, where users can choose different applications for each step in the pathway, and the platform facilitates that process along the pathway, from data collection to execution.”

Farm input companies – from supplier to coach

Farm input companies have a key role to play in developing and facilitating this approach, the report said.

And in doing so, this would enable these companies to play a bigger role in farm decision-making, helping them transition from supplier to coach.

“Companies, and more specifically input companies, are in an advantageous position to implement solutions like this to support farm decision-making,” Mr Lefroy said.

“The access they have to many farmers enables input companies to achieve scale and build solutions with the required accuracy, and to support decisions based on a wide-range of data sets and experiences – in many cases greater than that of a local farmer through their knowledge and experience,” he said. “Further it enables the relationship between farmers and those in the supply chain to deepen, with the role of the farm input company effectively moving to that of coach to improve users’ decision-making.”

This could also open the possibility for input companies to evolve their business models, even basing payment on outcome rather than on a product basis, he said.

Strategic implications

Mr Lefroy noted it would be important for farmers to assess the strategic implications of what this systemic change may be for their farm business, such as their approach to data-sharing, the types of skills employed within the business and the partners they engage.

“In the area of data for example, farmers are going to face a growing number of requests from companies to share data – which also represents an enormous opportunity,” he said.

“It is critical for both farmers and companies to assess their approach to data-sharing, and how they can work together to create a pathway of mutual value for sharing data.”

While some of these new platforms may be at least five years away, Mr Lefroy said the Digital Pathway to Power approach could help provide direction for long-term investments in ag tech.

“We think those technologies that play a role in at least one step in the pathway and connect into a platform that can facilitate completion of the other steps are going to be best positioned for farmers to invest in,” he said.

 

Rabobank New Zealand is a part of the global Rabobank Group, the world’s leading specialist in food and agribusiness banking. Rabobank has nearly 120 years’ experience providing customised banking and finance solutions to businesses involved in all aspects of food and agribusiness. Rabobank is structured as a cooperative and operates in 40 countries, servicing the needs of about 8.6 million clients worldwide through a network of close to 1000 offices and branches. Rabobank New Zealand is one of the country's leading agricultural lenders and a significant provider of business and corporate banking and financial services to the New Zealand food and agribusiness sector. The bank has 32 branches throughout New Zealand.

 

Media contacts:

David Johnston
Marketing & Media Relations Manager
Rabobank New Zealand
Phone: 04 819 2711 or 027 477 8153
Email: david.johnston@rabobank.com


Denise Shaw
Head of Media Relations 
Rabobank Australia & New Zealand 
Phone: +612 8115 2744 or +61 2 439 603 525 
Email: denise.shaw@rabobank.com

 

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