We are all about good news stories and promoting Ag, but this one I am sad about....
Spending time at agtech conferences and meetups as I do, means picking up on the conventional wisdom of the emerging agtech community. One pearl of wisdom that comes up regularly is the huge upside for investment in agtech start-ups because agriculture is the least digitised industry. This is based on the McKinsey Global Institute report, ‘Digital America: A Tale of the Haves and Have-mores’, 2015.
McKinsey applied a range of metrics across all industries to determine how ‘digitised’ they are, including investment in digital assets, usage of computerised systems and processes, and the interaction of labour with digital technologies. The resulting index ranked industries from relatively high to relatively low digitisation. As you would expect, ICT and Media ranked at the top out of 22. Agriculture ranked last.
This is an American report applied to US industries, but is a reasonable proxy for Australia. The problem with the narrative that flows from it – that agriculture is not yet digitised – is that newcomers to the sector may gain the impression that Australian farms are technology free zones. It reinforces an old fashioned and stereotypical image of farmers in overalls puttering along on their tractors or hanging out with their animals. The reality is far different.
There are 135,000 farming businesses in Australia ranging from highly sophisticated corporate enterprises through to small family farms, across fifteen different sectors. For most of these sectors, there is technology deeply embedded in some core aspect of the farming system. A few examples…
The National Livestock Identification System (NLIS) requires that every cow, sheep, goat and pig in Australia must be tagged, identified and traced, either individually or as part of a herd. Many tags have RFID embedded and movements are recorded and stored on the central web-based NLIS database. NLIS tagging of cattle has been mandatory since 2006 and individual tagging of sheep, goats and pigs is being progressively rolled out across the country.
There are over 50 robotic dairies operating in Australia. This includes outfits where cows take themselves in to be milked and contentedly stand on a rotating platform while laser guided robotic arms attach miking cups and then wash udders before the cow steps off and back out to pasture. RFID collars enable farmers to keep tabs on each girl in the herd from the office. The world’s first robotic rotary dairy was installed at Camden NSW in 2010, Australia punches high in the use of this technology.
Precision agriculture in cropping systems since the mid-80’s, utilises GPS automated steering driven by pre-set paddock maps, geospatial yield mapping on harvesters and variable rate applications of fertilisers and herbicides based on previous performance across the paddock. Over the past ten years there has been a strong uptake of soil moisture sensing probes and digitised weather stations, particularly in irrigated systems and increasingly in dryland cropping and horticulture. Farm management software systems abound.
Clearly, ‘least digitised’ does not equal ‘technology free’. Starts-ups and investors are not dealing with a blank canvas when it comes to new tech based products and services. Every one of these existing technology scenarios is supported by an ecosystem of software and hardware suppliers and advisors, what I like to call the ‘Rural Innovation Ecosystem’, businesses co-located with their sectors, providing technology and keeping it running smoothly. Agtech start-ups aiming to crack farming markets without understanding the technology ecosystem of their target users, do so at their peril.
There is another side to this story however, which is the real upside. What will indeed digitally transform agriculture (actually, the whole economy) is the Internet of Things (IoT). Read my earlier paper to get the full story on how IoT is currently being adopted in Australian agriculture. The biggest barrier to adoption will be cheap connectivity in rural areas, but this problem may be solved sooner than we think with solutions ranging from LoRa to low orbiting satellite networks.
Agriculture may be the least digitised industry but it is far from non-digitised. We are on a technology trajectory in agriculture that has been moving for decades. I believe that we will see the trajectory speed up significantly as rural connectivity gets solved and IoT comes on board.