Dr. Mila Kletsky President, Academic Director, Picking Alpha
Farm & Food 4.0 International Congress (Berlin, Jan 22, 2018) stands out of the whole family of similar events on Digitalization of the AgriFood sector. In this article we do not intend to review or narrate all Congress events, our goal is to focus on the major problems raised there and solutions suggested by the speakers and participants. So why do we rate this Congress so highly?
Attendees of similar events usually accustomed to listen to the successful stories and sort of “promotions” of the all-positive sides of the Digitalization. They have been focused only on “effective-to-be” achievements of the innovators working in this field, producers who deliver top new technologies and products. Speakers prefer to speak only about what they can do for the farming and food industry and never about what the customers think about this, how they really accept their technologies and products.
Nobody argues today that the Digitalization is a “Must” process for solving huge challenges which we all face due to the population growth along with the diminishing of arable lands, water scarcity and deep environmental crisis. But it does not mean at all that what happens today with the digitalization of AgriFood industry is the only, last and the best solution one can offer. Moreover it can possibly be just one of them and not the best one. Unfortunately, searching for solutions we have incidentally missed one major player – the user of the digitalization products and technologies, their opinions, their real needs and requirements.
Without users no effective implementation of the invented technologies and tools can happen. Subsequently no wonder that in 2016 the VC investments in AgTech dropped significantly due to the losses which VCs experienced after the 2015 massive investments in IT talents who invented technologies and tools for farmers. Those losses took place because “too many entrepreneurs trying to penetrate the Agricultural landscape for digitalization know too little or nothing about the industry and farmers’ needs.” (CEO, Canadian company Decisive Farming)
As a result the investments in a pure Agtech are slowing down quite significantly, whether we like it or not, have we acknowledged it or not. While in Food sector, especially services around it such as e-commerce, e-grocery, e-restaurants and alike investments are booming. Billions of dollars and euros have been poured in 2015 in Agtech innovations without asking the customer’s opinion and naturally they failed. At the same time obviously the food delivery sectors and e-commerce, e-restaurants have been much better researched and are much older that the Agtech digital technologies and tools. Therefore funds in flows there appeared to be much more successful so far. The customers’ needs there have been tested longer, much deeper and better.
We rated Farm & Food 4.0 International Berlin Congress as an outstanding event because it probably one of the first large scale events of a kind that has put Customer in a Centre of the Digitalization process in AgriFood sector. All debates at the Congress were revolving around search of ways to address needs of the customers – e.g. farmers, food companies: large, small and medium.
Symbolically it was opened by the major German AgriFood “customer” representative – Joachim Rukwied, President, German Farmer’s Association, the farmer himself and President of COPA (the largest Committee of Professional Agricultural Organisations in Europe). Who without any equivocations declared German farmers’ positions and their needs. He said: “We asked our farmers what their needs are and where they see opportunities”. He indicated that in order to pave the road to the effective digitalization of the Agriculture the farmers should be asked first of all. On behalf of the major customer of the digital products he affirmed that the major pre-requisite for the successful digitalization development is a provision of a high quality Broadband for farmers. Another not less important – is the delivery of the safety of the farmers’ Data. Yes, these are two major, very painful points which usually have been neglected by the digital providers and innovators.
From our own experience we are aware that Big Companies expect that farmers without hesitation should make their Data available for them are absolutely sure that this should be a street with one side movement and without any special safety policies for the farmers. Though there is no secret that no big company has ever even considered to open their Data for any outsiders, let it be farmers, companies or whoever else. This situation definitely does not look attractive and fair from the farmers’ side who feel that they can lose their independence and even businesses.
Another side of the digitalization is connected with technologies focused on the preservation of biodiversity, bee protection, user protection and water protection. For operating in the modern world one has to be ready to change their business models to adapt to the market. That was the major statement of Dr. Helmut Schramm, Bayer Crop Science Germany GmbH. To understand farmers’ needs better Bayer created Bayer Forward Farming where they work in collaboration with farmers to elaborate on new ways and technologies of modern farming. Dr. H. Schramm pointed that “we show at the farms how modern farming can be done in a sustainable and resource-efficient manner.”
There is a wealth of knowledge and news that farmers and all users of AgriFood digitalization need to get to make their weighed decisions on how to manage their businesses effectively and stay competitive. Not by accident Dr. H.Schramm touched a very important and widely debated topic – how to bring such knowledge to the farmers and final consumers of the agrifood products. It was very important that he stressed the indispensability of the qualified professional conversation with the customers on a contrary with some cases when certain media in pursuit of the sensations provide readers with the non- verified and unprofessional information on new achievements in the area.
Our own experience as a professional media company delivering only the first hand information to our readers – investors and companies operating in our niche – shows that nowadays global competition urges professionals to look not for the sensations but for the well-verified information, multi-sided approach, honest and truthful news. Only this approach can help address the challenges and not divert the conversation or debates to the dead end of pointless fights and sensations.
Dr. Christian von Boetticher from the Federation of German Food and Drink Industries, focused on “critical success factors”. It is difficult to argue with his central idea that we all have to recognize that Digitalization in the AgriFood sector first and foremost requires properly implemented Change Management. It is especially true if we recall that out of 100% of the planned measures in any restructuring program in any field only about 5% are usually implemented as planned.
He noticed that the digitalization would help to enhance medium-sized nutrition product producer’s competitiveness by cutting all middlemen between them and their customers and paving the direct 2 sided road between them. Also he made a very fair statement that “You need to get used to the fact that not all of startups will prevail. In the end, I can achieve the breakthrough with a startup operating successfully on the market “. But it is very unfortunate that European VC do not fully share this idea as the numbers show the European VCs in AgriFood activities are much more modest that the ones in the US.
Exactly the problem of investments in AgriFood digitalization process was discussed in the presentation of Dr. Mila Kletsky (President, Academic Director of Picking Alpha). She shared the information about dynamics of VC investments in AgriFood sector for the past 5 years. With the decline of investments in Agtech in 2016 followed by the significant growth in the first 3 quarters of 2017 it is very important to find out the underlying reasons of the former and the least processes. As it appeared the central cause of the decline was a lack of information and insights into the customers’ needs from the side of the producers of digital tools and technics. Other words it was the situation when the “new product” was introduced to the “old market” without any thorough research of the demand in this market.
Therefore the threat of the “AgTech Investments Bubble” has become really serious. Many an investor just departed the Agtech market, some of them suffering from big losses of their capital. In 2017 the situation stated to change rather rapidly the investments not only returned back but even their level has outgrown so far all the previous records. BUT in this time those were NOT investments in AgTech only. Moreover they are surging now in the Food and services around Food sector digitalization market. Well, anyway we need and we can solve the problem with investments in farming digitalization. Dr. Mila Kletsky mentioned that bringing farmers in a loop of invention, working together with them as it happens in some Silicon Valley companies and Europe, or following the example of Crowdfunding organized by farmers themselves to produce the digital products they need – could be the best and effective solution to find now.
Of course it was a conversation about emerging trends which anyway have proved to play an important positive role in AgriFood digitalization process such as Blockchains. For example – the one mentioned by Britt Kritzler, Connecting Food. Here is one more very promising example when innovative product has been made with keeping the Customer in the focus. The blockchain provides customers in the retail stores with the holistic information on the product they purchase.
Hopefully the trend initiated by the Farm & Food 4.0 International Congress in Berlin which re-accents the providers of the Digitalization for Food and Farming from focusing mainly on their own ideas to concentration on the Customers’ needs and requirements first of all will really make it possible to implement very successfully the Digitalization in Food and Farming in the very next future.
HERE you can hear some core points of the speakers’ presentations