Two recent small experiences in my life have made me realize the need to be paying attention to the disruptors that we will be facing in agriculture as we move forward producing food for the world.
The first was noticing a poster in my son’s 4K classroom. It had highly recognizable logos associated with the letter the company started with. For example: A equals Apple, F equals Facebook and Y equals YouTube. I was surprised by the number of companies that are barely 10 years old and have gone from nothing to dominating parts of our lives. The other was a mention by my dad that my brother and I would see more disruption in our careers than he did in his career due to changing technology, ability and cost.
We all know that to be successful in business and if we want to remain viable and profitable in the future, we need to pay attention to disruptors in our industry. In order to help myself keep ahead of what is coming, I have made the conscious decision to listen to This Week in Startups podcasts and to read the weekly email that AgFunder sends out. This allows me to keep in touch with what is generating the interest of venture capitalists (VCs) and angel investors both within and without the agriculture industry. It has been an eye-opening experience to me to hear where potential is viewed in the ag industry and the food delivery system.
One item that has been abundantly clear is that there is a large amount of interest to produce meat and dairy products from non-animal sources: milk from pulse, eggs and meats in a petri dish, etc. It seems that this goal is a good way to attract VCs, as the belief is that there is a huge amount of inefficiency in the growing of crops and using them to raise animals, which then become food for human consumption.
I believe there is some merit to this, but it seems that what is being missed is the amount of by-products that are fed to animals (canola and corn gluten for example). I also think there is no accounting of what animal by-products are used for. From what I am hearing, the general thought process is that we are 30 to 40 years away from these products being mainstream, but nevertheless, the amount of money being invested means those of us in animal agriculture need to be aware of where our competition for market share may be coming from.
The second, more short-term phenomenon that I have noticed is the rise in investment in “on demand” food delivery services – Plated, Blue Apron, Munchery, etc. These services used in densely populated urban areas are delivering groceries and ingredients on an as-needed basis, allowing for meal prep with just the right amount of ingredients without a trip to the grocery store. I feel that there are two things that will come from the increased use of these services that are going to affect agriculture.
The first is that this has the potential to dramatically reduce food waste. I am not sure what the exact statistics are, but 30 percent food waste at the consumer level seems to be a safe number to use. So if I am only purchasing the ingredients that I need for the meal, I won’t be throwing out the other half head of cabbage that rots in my refrigerator before I get it used. Also, if food prep is being done in a commercial kitchen, they are more likely to use misshapen fruits, veggies and cuts of meat that consumers will not buy retail. But if it is already chopped before it gets to me, I won’t know, thus eliminating another source of food waste. This has the potential to help eliminate pressure on land use as we can use closer to 100 percent utilization of the product grown.
The other development that I see coming out of this type of “grocery shopping” is the development of better supply chain management. Data will be collected by these companies, and in a relatively short time, they will have good data and be able to model consumer behavior on what types of food and when it will be consumed. Then this data will be fed back to processors, who will then feed it back to farmers, whether it is through interconnected accounting software such as SAP or through companies similar to The Farmers Network, a startup looking to harness data to help farmers make better input decisions and processors make better commodity purchases. I believe that there is a time in the not-so-distant future when the food supply chain is going to be similar to “on time” ordering and manufacturing supply chains that exist in many other nonperishable industries. Lead times may be different, but the concept will be similar, thus helping to eliminate overproduction of some items (i.e, cheese), eliminating more waste, as well as limiting some of the volatility in commodity pricing.
In conclusion, I believe that for farmers who are willing to give up some autonomy and to listen and respond to nearly instantaneous feedback from consumers and processors of our product are going to have opportunities for profit that others may not. This is definitely going to cause some discomfort as we will be exposed to more new ideas than we may have developed on our own, but flexibility has always been a trait needed for success in the entrepreneurial world. Those who are going to stick to the mantra, “I farm because I don’t want to be told how to do something,” are going to continually find their margins squeezed unless they find a way to convince the consumer “their way” is the best. 
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Theo Scholze
- Dairy Producer
- Humbird, Wisconsin
- Email Theo Scholze
