103. 13 trends reshaping the way food is produced in N. America

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13 trends reshaping the way food is produced in N. America

The Association of Equipment Manufacturers published, “The Future of Food Production”, a whitepaper detailing the drivers impacting how food is produced in North America.

The Future of Food Production explores 13 trends that are changing agriculture today, impacting farmers, and reshaping how food will be produced in the coming decade. Here are the trends,

1. Produce more with less environmental impact

“Software is Feeding the World” has covered the topic of “less is more” in almost every edition over the last few years. Precision technology for inputs like see & spray, CRISPR, biological products, variable rate applications will continue to help farmers produce more with less environmental impact. Adoption of practices like cover cropping, no-till over a period of time will augment the technology efforts already underway.

“Crop producers leveraging PA technologies saw a 4% increase in crop production, 7% increase in fertilizer placement efficiency, 9% reduction in herbicide and pesticide use and 6% reduction in fossil fuel use.”

2. Optimization of water use

An article from McKinsey & Company suggests that water supplies will fall 40% short of meeting global needs by 2030. Farmers can increase resilience through irrigation efficiency investments, and practices which improve soil-moisture holding capacity, which is a big driver of yield.

3. Increase global demand for protein

The chart below indicates, non-animal based protein will be about a third of the total consumption by 2040. Given the stalling of growth in plant-based proteins, it seems a bit difficult to believe. It is possible that the percentage share of animal-based protein will go down, but the total consumption of animal-based protein still goes up, as more people improve their economic status in Africa and Asia.

4. Shorter food supply chain

The report states that farmers will utilize a variety of direct-to-consumer marketing tactics to support the growth in demand for locally sourced food and shorter food supply chains. I am not sure this will happen over the next 20 years. There might be some pockets of shortening of supply chains, but in the long term consumer preference for a variety of food products, at low prices will overpower the demand for locally sourced food.

5. Geographic shifts in production

“A study from NASA suggests that climate change could affect global production levels of corn and wheat by as early as 2030. Increased temperatures, changes in rainfall pattern and elevated surface carbon dioxide concentrations are all having an influence.”

6. Advanced food traceability helps maintain consumer trust

I am luke-warm for the consumer demand for traceability to grow significantly over the near term. Traceability will be important to backup ESG claims, for food safety, and transparency. Food companies, and grocery retailers will win consumer confidence by providing high quality, nutritious, and relatively inexpensive food items.

7. Farmers adjust in response to emission regulation - no brainer.

8. Efforts to decarbonize create adjacent economies

This is extremely important, and one of the key reasons to drive the euphoria in carbon markets. One of the only ways for a farmer to make money for the longest time has been through yield (and quality). Decarbonization opens up the possibility to create a new revenue stream based on managing other outcomes like soil health, water quality, carbon sequestration, and greenhouse gas emissions.

9. Connectivity gap narrows

Today, just one-quarter of farms in the U.S. currently use connected equipment or devices to access data. With the rise of 5G (and beyond), more comms infrastructure, the number in the US will go up dramatically in the coming years. The use of edge computing will reduce the impact of lack of connectivity for many operations like autonomy, see & spray, precision irrigation etc.

10. Artificial intelligence enables insights-driven farming

Over the next 10 years, artificial intelligence, including machine learning, will begin to assume a prominent role throughout the entire crop-producing process, helping farmers make better crop management decisions, conserve resources and improve the way they plant, manage and harvest their crops.

According to noted geopolitical strategist Peter Zeihan, (from edition 69. The unbundling of humans (in agriculture),

Noted political strategist, Peter Zeihan provides one view for the US Midwest. He imagines a future in which automated equipment with cameras will take photos of each individual plant. The equipment will identify if the plant is a weed, or a crop and assess the health of the crop. It will give it a little jolt of whatever is appropriate (herbicide, pesticide, fertilizer, water etc.). He believes we are on the verge of production increasing by a factor of 2-3 (“on the verge of” is subjective, though within the realm of possibility.) It will turn conventional farming into conventional gardening, with a lower pollution rating and a far lower carbon footprint. (Highlighted by me)

11. Resources pour into cybersecurity

I had covered cybersecurity for farm equipment in detail in edition 70. A tractorful of vulnerabilities,

A recent cyber survey of agribusinesses, found 56% of respondents ranked cybersecurity as a top 5 risk management priority, but only 45% had a plan in place, and only 20% are confident their data is secure, with almost no one with a contingency plan to manage breaches.

Agribusinesses need to take cybersecurity seriously as it jeopardizes their freedom to operate as a business. John Deere responded to the “Sick Code” analysis and said to have increased their security spending by 750% in the last 7 years. There is no good way to calibrate this increase. Given the explosion in devices, and data collection in the last few years, anything less would have seemed inadequate.

“Freedom to operate” is not only a security and operational issue, but also a reputation issue. Customers will not trust an agribusiness and will not do business with it, if it cannot keep the physical and digital infrastructure safe.

12. Farm ownership models change

The decoupling of land ownership and farm operation will accelerate over the next decade, resulting in a farmland ownership profile skewed toward landlords. Roughly 41% of U.S. farmland is owned by people at least 65 years old. In other words, roughly 370 million acres of farmland will likely be transitioned over the next 10 years.

Schnitkey, G., N. Paulson, C. Zulauf, and K. Swanson. “Trends in Farmland Leasing.” farmdoc daily (11): 138, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, September 28, 2021. Permalink: https://farmdocdaily.illinois.edu/2021/09/trends-in-farmland-leasing.html

One of the most interesting aspects of the transition will be potentially a different mindset, and a different set of incentives, especially around conservation practices.

Many conservation practices — such as cover crops — have costs in the short-run, but also have environmental benefits, and the possibility of long-run economic benefits. Farmer tenants may be hesitant to make conservation investments on rented farmland, particularly because farmland leases often require an annual renewal

The annual renewal result in farmers bearing short-run costs without assurance of long-term benefits. Achieving greater adoption of conservation practices on rented farmland may require leasing adjustments, some of which could be longer-term agreements or additional partnership between landowners and farmer tenants.

13. New business models emerge

Even though this is the last trend on the list, I am most excited about this trend. Will technology and equipment advancement shift equipment from CapEx to OpEx? In my conversation with Mark Young, ex-CTO of The Climate Corporation (edition 52), he said,

And so apply this to ag. Why do we have millions of dollars of equipment sitting in sheds for 10 months of the year? It is almost ludicrous. I understand how it all came to be that way. But it is ripe for innovation. Autonomous equipment can do what we do today with big hardware, for one quarter of the cost. A lot of times when you have these big technology shifts, they cost a little bit more than the status quo because they don't have economies of scale yet.

You have some early movers that are willing to spend a little bit more to embrace the change, but it takes time. Imagine having one quarter of the cost in your equipment. You don't have to carry any of that equipment debt. And so the opportunity is there for agriculture to shift quickly. If you couple that with the input companies, figuring out how to do outcome based pricing is such a natural fit for a landowner.

And that partnership will require some equipment to perform the planting and the harvest. And you want that to be as error-free as possible and as precise as possible. And so autonomous equipment dovetails into that. You take all the big hardware out of the equation, and you start to actually get to that vertical integration that I talked about earlier.

Going back to the white paper,

Payment is based on the output of that equipment along with any other services that go along with it, such as data analytics and preventive maintenance. Custom farming will become another increasingly popular business model. Custom farming allows growers to farm more acres without assuming the additional risk of owning or leasing more land. Custom farming also allows growers to maximize equipment utilization and develop specialties in certain areas, helping drive productivity and profitability while keeping capital expenditures in check.

Another transformative shift will be outcome-based pricing models. Several companies have already introduced programs that guarantee a certain metric or outcome, such as a yield goal, disease-free field or irrigation equipment alert.

These transformations will inevitably be enabled with changes in technology, data, and machine learning.

What is “conventional agriculture”?

One often hears statements like,

For row crops, conventional agriculture is hyper optimized for efficiency, and has led to degradation in soil health, water quality, proliferation of mono-culture, and reduction in biodiversity.

Depending on who you talk with, there is an existing definition for “conventional agriculture”. Vocabulary is important, as it is an important part of storytelling, and people’s reaction to that story.

A recent paper published in Global Food Security (March 2022) argues that the phrase “conventional agriculture” has been weaponized. The authors argue that the current definition makes the discussions about the future of agriculture “sterile and unproductive.” The authors believe a more productive approach is to focus on where and how different farming systems can contribute to the sustainability of agriculture.

The authors argue the current portrayal of conventional agriculture has two aspects, around its characteristics and negative effects.

Characteristics

Open systems, where the main purpose is the production of food (i.e., grain and vegetables), which is eventually removed from the farm
An imbalance between input and output because ‘along with the food products, soil, water, nutrients, and energy are also removed
Heavy reliance upon ‘high input of synthetic fertilizers and other agricultural chemicals, intensive tillage, and mono/limited rotation cropping systems
High production input costs that include machinery, labor, chemicals, fuel, and tillage equipment’ which ‘are often not considered by producers, and the focus is on yield only.

Negative effects

Soil degradation, physically and biologically, where a significant amount of soil organic carbon (SOC) has been depleted with strong adverse impacts on soil functionality, including the ability to overcome drought and severe frequent wet events.
Negative externalities related to water quality, greenhouse emissions, etc. (added by me)

The authors conclude by saying,

The politics of naming, differentiating and othering are widely recognised in political and policy discourse. We suggest that these politics are particularly pernicious in relation to agriculture because of the very high degree of agro-ecological diversity, combined with diversity in the historical, socio-cultural, technological, economic and policy contexts in which all agriculture is embedded.

Specifically, the discursive construction of conventional agriculture as a uniform normative enterprise is intellectually dishonest, and will do nothing to further the cause of more sustainable agriculture, greater food security or improved soil health.

I do agree with the assessment to a large degree, purely on the basis of putting a common label without really understanding the context within which agriculture is practiced in a given situation. Context and nuance are important, and often difficult. We want to use a simple representation of the world.

If we want to influence the future of our food and agriculture systems, we cannot fall into the trap of reductionism. What do you think?

Agriculture’s Austin Powers

When Austin Powers’ arch-nemesis Dr. Evil is cryogenically frozen, and sent into outer space, Austin Powers decides to cryogenically freeze himself, in case Dr. Evil comes back in the future. The cryogenic freezing of Powers is an insurance policy in the event Dr. Evil returns in the future.

Image source

Climate change is Dr. Evil for food and agriculture systems of the world. The sad irony is many of us are contributing to climate change, and making Dr. Evil, stronger. We not only need to stop contributing to climate change, but also need an insurance policy against drastic climate change events in the future.

Surprisingly, the same technology used by Austin Powers is being used to buy us an insurance policy.

There are more than 1000 global seed banks. They are essential to build agricultural resilience when faced with climate change and disaster. These institutions store seeds, samples of genetic material and multiple varieties of plant species, recording the agricultural evolution of the area in which they are located.

For example, the Svalbard Global Seed Vault in Norway is a prime example of a resilient seed bank with more than a million samples from maize, rice, wheat, peas, and vegetables. The seeds are stored at -18C, and tightly sealed. It allows the seed samples to remain viable for thousands of years.

The Vault is the ultimate insurance policy for the world’s food supply, offering options for future generations to overcome the challenges of climate change and population growth. It is important to establish local genebanks which preserve local knowledge, races, and support the local community.

We should do more for mitigation, and risk management solutions across the risk spectrum.

SOURCE: Global Resilience Institute at Northeastern University Made By: Ally Roden

In The News

Is the world running out of farmers, farmland, or the number of seasons to make a transition? “The percentage of people who work in agriculture has dropped from 44% in 1991 to an all-time low of 26% in 2020. The percentage of the North American workforce in agriculture has dropped drastically over the years, from 70% in the year 1840 to around 3% by 2000.

CropTrak adds a financial framework into its standard platform. The connection of on-farm decisions to calculate payments for growers, haulers, and service providers for contract management and compliance will lead to greater digitization to support crop verification, contract, and sustainability data.

Breakthrough insect control among new innovations.

The rise of the sprayer drones - larger, faster, and more efficient

Anuvia raises $ 65 million Series D to scale production of sustainable fertilizer using organic material. The product is supposed to decarbonize existing practices, and improve yields for row crops.

Deeper bore wells, with better structural design with valves to control discharge can save 13 million liters per month in Indonesia. But the implementation is not smooth sailing due to upfront costs.

Clusters of weather extremes increase risks to corn crops. “By the year 2100, increases in heat waves, drought, and excessive rainfall combined will double the risk of climate-related failures of corn harvests in at least three of the world's six major corn-growing regions in the same year.”

10 digital technologies transforming agriculture - no surprises here.

Covercress and Bunge enter in a long term partnership to process grain to develop renewable fuels. Covercress has developed a “ rotational, oilseed cash crop to provide winter and early spring soil cover between corn harvest and soybean planting. It says its crop, based on the native plant pennycress, will produce low carbon intensity oil that’s slated to be used to produce fuels. The crop can also generate revenue as animal feed and high-protein meals.”

$ 106B (with a big B!!) finance gap in sub-saharan Africa and southeast Asia for agriculture business.

Ida’s Farm Emissions Optimization model predicts an optimized set of interventions that a farmer can implement to improve emissions intensity while balancing other key metrics.

Ministry for the present? The heat in India is breaking 122 year old records this year, with March being the hottest on record.

ADAM Platform

@PlatformAdam

The current extreme #heatwave in #Pakistan and #India as seen today, on the fourth intense hot day, by #Copernicus #Sentinel3 LST (Land Surface Temperature, not Air!). LST collected on April 29 shows max value exceeding 62°C/143°F. Gaps due to cloud/snow/nodata. #ClimateEmergency  pic.twitter.com/0MCMkcSg0t

April 29th 2022

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Tractor Junction is a digital marketplace to buy, sell, finance, and insure new and used tractors as well as farm equipment and rural commercial vehicles in India. .

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About me

My name is Rhishi Pethe. I lead the product management team at Project Mineral (focused on sustainable agriculture). The views expressed in this newsletter are my personal opinions.

Rhishi Pethe