Agriculture re-imagined: the trillion-dollar opportunity to make today’s agriculture platform companies obsolete

April 3rd, 2018

Here are edited highlights of Digiscape Leader Andrew Moore’s keynote presentation to the Melbourne AgTech Summit on 13 March.

The whole talk can be found here.

We are entering a fourth Industrial Revolution, driven by AI, nanotechnology, biotechnology and 3D printing. It has been characterized by Klaus Schwab of the WEF as follows:
  • The speed of current breakthroughs has no historical precedent
  • Almost every industry in every country is being disrupted
  • The breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.

Each of the 3 preceding industrial revolutions has produced technologies that have changed agriculture, and the 4th Industrial Revolution will be no different. In agriculture, however, the effects of the preceding “3rd Industrial Revolution” based on electronics, computation and automation are yet to be fully worked through.

 
   “Platform” companies are those for which network effects lead to economies of scale, and, often, to concentration into a small number of firms. What are the “platform” companies in agriculture?
  • Suppliers of inputs
  • Handlers & aggregators of produce
  • Finance providers

These companies capture a surprisingly small proportion of the global value of agriculture, partly because so much of agricultural production is carried out by smallholders. The majority of that value is on our doorstep, and agtech offers the opportunity to connect to it.
   Inputs (genetics, fertilizer, pesticides, & machinery) are the largest part of the existing “platform”. Until relatively recently, the large agribusinesses have had a business model based on persuading landholders to increase the amount of these inputs. This has worked really well – both for the businesses and for global food production.

There are signs, though, that input-driven agricultural intensification is reaching its limits: biophysical limits (e.g. water quality issues, GHG emissions), limits to social licence-to-operate, and business limits (e.g. the recent round of mergers).

If the 4th agricultural revolution becomes just a way to continue input-dependent intensification, then we’re in trouble. Improvements in the efficiency of resource use are needed: more efficient use of water, nutrients and energy.
   Some of the opportunities that agtech offers to disrupt input-dependent intensification and the “platform” positions of the incumbent companies…
  • Trust is the new currency. In a world where networked information flows are vital, trust in those flows is essential. There is an unavoidable tension between maintaining and engendering trust on the one hand, and swift technical advance on the other
  • AI promises to change everything.There are 16 postdoctoral fellows working with me in Digiscape, half are using some kind of machine learning or AI.
  • Everybody has a platform. 4 kinds of platform technology are discernible: see here for our thinking about this
 In this talk I spoke blithely about disrupting the platform companies, but the incumbent firms can see this coming.
  • Digital disruption is now a “known unknown”
  • The large firms understand the need to transition to greater resource use efficiency
  • Consolidation of firms is a sign of emerging pressures

The possibilities of connectivity enable incoming actors as well as exporting businesses. If platform economics take hold, then successful competitors will grow suddenly.