We recently announced the formation of our advisory board, a group of talented individuals who will help inform and guide our business strategy, and provide useful industry connection. One of the three members of this board is Mary Shelman, who is well known in the agricultural sector as an industry visionary. Mary brings 30 years’ experience in business and academia, and is recognized as an expert in the global food and agribusiness sector. She was most recently director of Harvard Business School’s Agribusiness Program and is former chairman of the board of RiceTec Inc., where she guided the largest U.S. rice seed company from its formation to commercial product launch.
I sat down with Mary to learn more about where she sees our industry heading, and emerging trends that may have bearing on Crop Enhancement.
Mary, could you please share some of the key trends that you are seeing in terms of sustainability within the foodtech and agtech sectors?
Over the last decade, we’ve woken up to the challenge of feeding a larger, wealthier, and more demanding population while living in a world with limited natural resources. Agriculture today has a significant environmental footprint, producing 13% of greenhouse gas emissions and using 70% of global fresh water. So if we need to increase food production by 60% or more by 2050 (as projected by the FAO), we can’t follow the same approach. Looking ahead, we must continue to increase productivity per unit of input (land, fertilizer, crop protection, and especially water) on areas already under cultivation in order to provide enough nutritious and affordable food while preserving the environment.
One important trend to raise productivity is the “digitization” of the farm. New technologies are helping producers collect sophisticated data from many sources and model outcomes under different scenarios, which allow them to optimize yields through precise applications of inputs. These technologies often combine both hardware and software innovations: for example, sensors will measure daily field conditions, nutrient levels, and plant growth and integrate with GIS and weather information throughout the growing season. The same approach can be used for animals, such as dairy cows. These advances can help farmers maintain soil, plant and animal health and become more resilient to site-specific and regional challenges. Precision agriculture is really about doing more with less—using data to optimize every farm and the unique challenges it faces.
Another trend is the use of technology to track products from farm to fork, which allows better supply chain management—including lower waste—and also provides greater transparency and the possibility of direct consumer engagement. For example, every package of Driscoll’s berries has a unique 12-digit code on the bottom. Consumers are invited to input the code and to take a survey about the quality of the package they’ve purchased. In addition to providing consumers with a way to trace their product back to the farm, the code provides Driscoll’s with actionable insights into short-term quality issues and helps refine the company’s long-term breeding targets.
A third trend relates to consumer preferences. Consumers today care more about where their food comes from and how it was produced. Transparency, authenticity and “clean” labels are prized. We’re also seeing a greater awareness of the connection between diet and health, and diet and the environment among mainstream consumers. In the U.S., this is leading to a shift away from meat (especially beef) and higher interest in plant-based proteins. In the coming years, we may see proteins produced through tissue culture rather than from a physical animal (i.e. beef without the cow).
How about trends specifically in the area of agricultural crop protection?
For most of the 20th century, the crop protection industry focused on discovering new active ingredients. Over the last twenty years, we’ve seen a new paradigm, with crop protection moving into the plant itself (such as Bt corn). We will see more of this strategy as precise gene editing techniques such as CRISPR are applied to agriculture. However, many consumers in the U.S. and abroad remain concerned about biotech in general and the use of synthetic chemicals. Today a number of companies are working on innovative products including microbials and biochemical pesticides that have greater efficacy and are lighter on the environment. Future solutions will require greater adoption of integrated pest management (IPM) strategies, more frequent crop rotations, and the use of pest controls derived from naturally-occurring sources and/or novel technological approaches.
In addition to your leadership of the Agribusiness Program at HBS, you have led an international ag company (RiceTec). What that kinds of differences are there in domestic U.S. ag vs international Ag? What are some of the things that companies should be aware of as they enter regional markets?
Most farms in North America are large, well capitalized, highly sophisticated, and have access to the latest information. Distribution and marketing channels are well established. The U.S., in particular, benefits from strong IP and regulatory systems, a large domestic market for ag inputs, and favorable perception of technology—all of which have made it into an epicenter of new product development for seeds and crop protection products.
Internationally, ag varies by market. Some countries, like Brazil, are similar to the U.S. in average farm size and sophistication. But in many areas, farms are much smaller, knowledge and access to credit may be limited, land rights may not exist, and distribution channels for ag inputs may be immature. Infrastructure, including roads, may not be developed, making it difficult for farmers to get to market and sell their output at a price that is higher than their production cost. These factors, especially the fragmentation, present significant challenges to companies with new products to sell. And no matter the location, government plays a large role, particularly in the crop protection sector where new chemicals must be registered.
It’s exciting to see many new companies start up in the ag sector, from data-focused plays to alternative foods to new materials. At the same time, it seems that new approaches and new technologies will take time in terms of penetrating into the food and ag industries. How should startups think about go-to-market and navigating the unique challenges of commercialization specifically in the ag industry?
Given the complexity of agricultural supply chains, it’s essential to understand the entire value chain and how the profits and risks are spread across that chain. Just because your product creates value does not mean you can capture market share or build a profitable business.
For new products, it is also critical that the company and its investors understand the time horizon. Agriculture does not have the same commercialization timeline as software, where you can release a product early and then fix bugs as they come up. Most crops have one production cycle each year, meaning there’s one opportunity to sell. In addition, the farmer’s livelihood is on the line with every decision, making them understandably slow to adopt. To gain farmers’ trust requires demonstrated performance through multi-year trials under many different conditions. Some product flaws don’t show up until field-level production or a particular climatic event.
For example, in RiceTec’s early days, we launched a very high-yielding new rice seed variety based on excellent small plot and field trial data. Unfortunately, we found that, in large scale production, many plants fell over due to the stalk not being strong enough to consistently support the heavier grain weight. We didn’t see the problem until the variety was grown on a number of commercial fields spread over different geographies, soil types, and growing conditions. That led to a multimillion dollar write-off and sent us back to the breeding and selection stage for two additional years. Fortunately, we had kept our investors well informed about the risks and opportunities. They were confident in our ability to solve the problem and recognized the large potential prize for success.
Global climate trends and food security are on the minds of many world leaders and companies. Where do you see crop protection technologies having the most impact?
Rising temperatures and more variable precipitation will likely lead to higher levels of disease, pests, and even weeds—all of which reduce yields. Farmers will need new tools and technologies to understand and manage these threats in real time, as well as more targeted applications to avoid environmental damage and keep production costs low. Massive crop failures and soaring ag prices are not an attractive option in a world that must reliably feed 9.6 billion people, the majority of whom will be living in cities and thus depend on the commercial ag system for their food.
These challenges present a strong business case for greater investment in biologicals and other novel crop protection technologies, such as coatings, that are effective, easy to apply, and environmentally friendly. We also should develop systems to learn more quickly, for example by creating peer-to-peer networks that allow growers to share information about successful pest control strategies. And like other areas of agribusiness, the crop protection industry must work harder to attract the best talent if it is to successfully meet future challenges.
See also: Original Article