Ag Tech Sunday - What Did We Learn in the Last 5 Years About Digital Agriculture

By: "Farm Tender" News
Ag Company News
Feb 09, 2019
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By Matija Zulj - CEO & Founder at Agrivi

Exactly 5 years ago, on February 1st 2014, we have officially launched Agrivi Farm Management Software to the market and started our incredible journey with vision to change the way food is produced, positively impacting over a billion people.

This 5-year journey took us through some amazing experiences, we witnessed fantastic farmer improvements like increasing their profit margin for more than 100%, we reached farmers in 150 countries, established collaboration with the entire value chain, but also gathered very valuable learnings from hard moments and challenges we went through.

5 Learnings from Our 5-year Journey

If I need to summarize some of the important things we learned, then I would select these 5:

#1 Life Has a Different Timeline in Agriculture

Agriculture is the largest industry worldwide that employs over a billion people and generates over 2 trillion USD value for the global economy. In the same time, it is the most conservative industry that waited for a decade longer than other industries to start with digital transformation. Climate change brings many challenges, old and inefficient growing practices are in line for replacement, low profitability makes farmers on the edge of sustainability.

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With so high needs for improvement, why didn't the industry accept the new technologies and positive change earlier? The answer is multidimensional, but can be shortly explained through:

* Seasonal way of working where agricultural season (mostly) has annual life-cycle and farmers are used to make important decisions on investments/improvements once per year, not every day or month, so this makes adoption slower compared to other industries.

* The critical mass of new generation of farmers is needed for a transformation and we needed to wait for such farmers who bring business mindset into agriculture, are keen to improve and are tech-savvy. This finally happened.

#2 SaaS Is Great, but for Service Delivery

99% of software companies in agtech space heavily rely on SaaS business model and this is really great. However, there are few things that are a bit different compared to the most of other industries:

* Farmers still prefer in-person contact which simply beats the digital interaction and makes online customer acquisition not the most attractive primary channel for go-to-market strategy.

* Physical access to farmer gate is hard, unless you are not addressing the premium high-value market segment, there is simply no business model for going directly to SME farmers just with the software.

* Partnering with companies from the value chain who already have access to farmers is a great leverage that brings results.

This means that SaaS is great business model for delivering the service, but farmers are initially reached mostly through the existing non-online channels and with the support of the companies from the value chain.

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#3 Set the Right Customer Expectations and Deliver the Results

Over $30 billion USD investments into agtech industry in the last 5 years empowered many agtech companies to build solid products and strongly push their marketing activities. Most of the companies promised incredible yield improvements to farmers and rarely they were able to deliver such results. All these false promises made farmers careful when deciding about digital technologies usage.

Our goal is to help farmers be economically and environmentally sustainable by empowering them to make better agronomic and business decisions through efficient management of their operations, costs, yields, risks and time. Things don't happen overnight and we really do see significant farmer improvements in few years (e.g. 100% profitability increase), but expectations need to be set right and with a clear timeline. False expectations never lead to a success, but delivering promises brings happy and long-term customer relationships.

#4 It Is About Change Management

Companies often compete in having better products, finding the best product-market fit and that is very important for achieving the success on the market. What we have learned is that we really are in a blue ocean market where most of the farmers do not use anything like our product yet. Our biggest competitors still are pen and paper or sometimes spreadsheets.

Digitization of analog way of managing farms means we need to change habits of a farmer to switch him from gut-feeling decision making to data-driven decision making. By default, most people resist to a change, even though they might know the change brings better times. To make this transition successful, we need to bring the farmer into a comfort zone where the change is perceived with no or minimum risk.

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That's why, we take a lot of attention on our customer success activities to ensure we really are there for farmers in every single situation. I dare to say, having the best product seams like prerequisite, so having extraordinary customer success team is more important for the market success.

#5 Creating Win-Win Scenarios Through the Value Chain

A lot of agtech companies are funded by investors who seek for disruption and unicorns. Disruption usually brings significant business model and/or conceptual changes within the industry where shortening the value chain and weakening the power of incumbents (long-established businesses with dominant positions) are some of the most common expectations.

I am a strong believer in an efficient value chain with minimum amount of stakeholders needed to deliver the goods from producer to the consumer. However, it is important to understand that this doesn't mean everyone between producer and consumer will or need to disappear. There are valuable stakeholders without whom the industry simply wouldn't work, or would work less efficient.

If an agtech company is capable to create a win-win partnership with companies within the value chain who have direct access to many growers, than the company has a high chance for the strong growth.

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No Matter the Challenges, Progress Is Significant, Future Looks Great

There are many challenges when it comes to agtech industry, but the progress made in the last 5 year is significant. Industry has matured, is growing further rapidly and new generation of farmers leads the adoption of new technologies.

Entire agricultural value chain has started to change and all stakeholders base their future strategy on digital agriculture technologies. This is already empowering and speeding-up a lot of agtech companies.

The time for digitization of food and agricultural value chain is here and will never go back. The future looks positive and I am looking forward to see how the next 5 years will look like.

https://www.agrivi.com/en