Rapid changes in demand patterns and disruption of traditional farming models have forced major adjustments to the agriculture industry. After decades of unprecedented growth, the convergence of slowing population growth, regulatory rules that restrict commercialization, and consumer concerns about agrochemicals and high-intensity farming are expected to trigger a slowdown.
A large portion of agriculture growth has been driven by government subsidies aimed at sharpening the focus on alternative fuels to reduce reliance on foreign oil as crude oil prices hit record highs of about $100 per barrel. Now, with prices at about $40 to $50 per barrel and attention shifting toward alternative fuels, the profitability of biofuels will continue to decline despite government subsidies. In addition, social headwinds are turning against biofuels as more people question the logic of biofuels in ongoing “plate versus tank” discussions that focus on the competition between cultivating food products versus energy crops.
With digitization poised to challenge well-established business models, the industry turned to protecting margins and consolidation, evident in a series of mega deals. Today, we know that staying ahead of competitors requires new ways of thinking. The leaders in this industry are embracing opportunities to bundle technologies that provide end-to-end services for growers—from selecting crops to optimizing planting times, seeding rates, and fertilizer applications. The first company to develop an appealing digital platform and business model will increase its chances to gain a foothold and to capture first-mover advantage.
Agriculture’s top firms have everything they need: vast agronomical know-how, leading-edge technologies, and global reach to customers. Now is the time to focus on digital agriculture and lay the groundwork that could feed a billion more people worldwide.