Ian Proudfoot on the fourth industrial revolution.
The pace of disruption continues to accelerate. Every day KPMG’s Global Agri-Food foresight team identify new products, experiences, technologies or business models. Some of which are introducing game changers that will transform the ways we eat, work and live. Not all have such significant potential, but they all build on what has gone before, tailoring existing products to better meet specific consumer needs through integrating new features, functions or experiences. We are at the start of a period we will eventually come to know as the Global Agrarian Revolution.
This may sound dramatic but given the way that technology is developing it should not be surprising. The fourth industrial revolution is being fuelled by the fusion of digital, biological and physical technologies. Combining plants, animals and soil with farm equipment and the farmer’s knowledge of their land and intuition has always been the recipe for growth in the agriculture sector. It is consequently no surprise that the sector is facing disruption as innovators and entrepreneurs challenge the way things have been done for decades, exploring how technology can be applied to growing things in new and different ways.
Examples include how farms are evolving, through changes in farming systems to new types of food being grown, processed, distributed and consumed in different ways. When I talk to groups of farmers, after the initial shocked silence (a period, I assume, when they are weighing up whether I am mad or not, having talked about insects, cultured foods, vaporised meals and the application of virtual reality on their farm amongst other things), the first questions usually revolve around how and when do I change on my farm to be part of this emerging world.
When is easy. Yesterday was too late in my view, meaning the sooner they start exploring the opportunities that disruption presents the less they will be behind faster adopters.
The how is a much bigger question and there are no easy answers.
My initial response is that it usually depends on the value chain (or chains) that a farm business is already connected to and the alternatives that are available to be accessed in the short term. A dairy farmer in New Zealand has limited flexibility to shift value chains in the short term whereas a sheep and beef farmer has more, easily accessible options available to them.
While the realities of contracts and physical infrastructure may constrain the ability to change in the short term they should not constrain bold longer term thinking and ambition. I encourage my audiences to wake up the next morning, look in mirror and challenge themselves over why they farm and the long term aspirations they hold for their business. When you understand where you are heading and why you are going there, identifying the relevant disruptions to be investigated and engaged with becomes clearer and the actions that need to be taken more obvious.
I have no doubts that this is much easier said than done. Fundamentally changing a farming system, to grow a new product, place reliance on agronomy advice provided by an algorithm or engage directly with the ultimate consumer of your food or fibre is hard.
For many farmers, their systems reflect a gradual evolution of the farming practices adopted by their parents and grandparents meaning the radical changes we expect from the global agrarian revolution will require farmers to challenge the legacy their family has provided to them. This emotional connection to the status quo has to be dealt with before you can start to think about the practicalities of change, such as cost, regulation, access to markets, biosecurity amongst other factors.
Consequently many farmers are choosing to stick to what they know, on a comfortable belief that as food producers there will always be a market for their products in a world that needs more food. While customers may be able to be found, revolutions like cultured meat and plant based milks, mean the demand for and desirability of traditional foods may shift radically and prices will ultimately reflect this.
This is best illustrated by the story of New Zealand’s coarse wool industry. Forty years ago it was the most significant export category but it has been in a steady and constant decline for decades as farmers chose to ignore the elephant in the room; the emergence of synthetic fibres, like nylon, that could be used instead of wool to make carpets. The farmers believed that nobody would buy these products in preference to a wool carpet. Today, around 97% of carpets globally are made from synthetic fibres and the market for coarse wool has largely evaporated despite its superior properties.Overlooking the risk of fundamental disruption is unwise, particularly when the products being developed to substitute traditional production are not synthetic, like nylon, but ‘clean’; they reduce the environmental footprint of food, use less scarce water, eliminate animal welfare issues, be produced safely and can deliver tailored health benefits. These are significant advantages for many consumers.
The biggest constraint on change is the status quo. The greatest driver of change is a farmer that understands why they are farming and has a vision of what they are seeking to achieve from their business. It is these farmers who are prepared to stand out who will show the path to a more prosperous future. They will set the standards that others will, ultimately, aspire to and have to meet to retain their license to operate.
It is these pioneers that will continuously challenge themselves to build deeper relationships with the ultimate consumers of the products that they grow. They will recognise the importance of engaging with the wider community to share what they are doing to meet the community’s expectations. They will seek out new technologies that enable them to produce more while reducing their impact on their land and water. They will pioneer new varieties, new crops and new business models to capture more of the value they grow. They will never be satisfied that their business has been optimised and will be seeking to maximise performance within the confines of the land and the community.
These change agents are not born to lead. They are not elected or co-opted. They will self-select. They will not see disruption as an impediment but an opportunity. They will not mind being the ‘lone nut’ dancing on the side of a hill because their conviction that they are doing the right things to do means they believe followers will join them. They will ultimately accelerate the movement that transforms the global agri-food system into one which will efficiently feed 9 billion people by 2050 the food they want to eat within the sustainable boundaries of the planet, while securing prosperity for themselves and their communities.
Ian Proudfoot, Global Head of Agribusiness, KPMG in New Zealand