5 minute read 6 Nov 2019
Scientific coworkers in modern agricultural glasshouse

How farms will transform to digital operations

By Rob Dongoski

EY Agribusiness Leader

Focused on strategy, digital transformation and M&A for EY clients in the agribusiness and food sectors.

5 minute read 6 Nov 2019

The farms of future will play an increasingly important role in combating complex economic, social and sustainability issues. Find out how.

In 1940, the average farmer supplied enough food for approximately 10 people. Now, some 80 years later, breakthrough advancements in equipment, genetics and digital tools have enabled farmers to feed more than 160 people who live far beyond their immediate communities. During the Great Depression, an orange from Florida was considered a luxury due to logistic and transportation hurdles. Today, we all benefit from a global food chain that enables consumers in New York City to eat fresh fruits from South America in mid-February.

We now live in an era where the hindrance of seasons and geography go mostly unnoticed by the everyday consumer, and widespread famine and hunger are distant thoughts for much of the global population. While progress is undeniable, agriculture still faces unprecedented challenges. In only a few decades, our planet could be home to more than 11 billion people, and current agricultural production practices will need to adjust to produce more food with fewer resources.

Changing consumer demands

In addition to their ongoing mission to feed the world, farms and agribusinesses are also under increasing pressure to help counter climate change. Consumers in growth economies are demanding more animal proteins, while consumers in developed economies demand greater transparency with smaller carbon footprints. Given that more people are moving to cities and farther away from their food source, this would seem to create an unsolvable paradox. How does a food industry with significant reliance on transportation and geographic concentration reduce its carbon footprint?

The disconnect many people have from what they are eating has spawned intense interest among many urban consumers to visit farmers markets and take part in other food-gathering activities that bring them closer to the source of their food. Yet, despite consumer interest in getting closer to the source of their food, the next wave of change in agriculture will be marked by players who find a way to deliver solutions that advance the global food supply chain. To that end, it will be characterized by the deployment of emerging technologies, sustainable practices and innovative business models on farms on a global level. A key feature of this next wave will be the emergence of farms as lean, next generation enterprises that deploy digital technologies that are more likely to be found in a manufacturing operation than a traditional farm. 

The Transformative Age has arrived for farming, and the change will be rapid. When most consumers think of farms, the words “data,” “connectivity” and “lean operations” are not likely the terms that come to mind. That will no longer be true.

Looking forward

  • The farm of the future will have highly digital operations from a vast array of connected devices, fed into machine learning algorithms and monitored on management dashboards. Integrated farm management platforms and sophisticated data collection technologies, which include the use of drones and robotic field scanners, will constantly enhance on-farm decisions for profitability and soil health, borrowing practices from today’s leading practices in manufacturing processes. With access to real-time data, farm management platforms will then connect with systems of key business partners, like Industry 4.0 factories.
  • Lean and automated operations set the stage for farms to transform into health food operations, producing diverse, high quality foods and fibers for consumers who demand greater transparency and lower carbon footprints. Transformation will benefit all types of farms, and business-minded farmers with large operations will generate the largest returns through both scope and scale.
  • As rural 5G connectivity becomes more prevalent, data capture from Internet of Things devices will enable future farm operators to quickly make decisions that inflate profits, as well as capital deployment and risk portfolios. How? By analyzing field conditions, these devices could alert farm operators, or even robotic drones, on the right time to fertilize, irrigate or even harvest crops. By taking much of the guesswork out of farming, these next-wave technologies will free farmers to focus on other value-added activities, such as bringing new crops to market, analyzing past and predicted performance, and satisfying emerging consumer tastes.
  • Technology will help farmers manage resources, create a more sustainable farm operation and proliferate through all types of farms in the future, from large commercial row crop farms to specialty crop farms and from organic dairies to high-tech, egg-laying chicken operations.
  • Advancements in manufacturing and 3D printing will also enable the health-focused, digital farm operations of the future to generate many of their own inputs, including machinery parts, from crops that they grow themselves and create a closed-loop, circular system. Industrial greenhouses and vertical farms will deploy efficient tray and irrigation technologies to increase nutritional value for a growing global consumer segment living on plant-based diets. This will also appeal to the rapidly growing group of food consumers who want to know the story behind how their food traveled from field to table.
  • Farms will rely on blockchain-enabled transparency that will verify that foods and fibers are sustainably, ethically and wholesomely produced. [ACS3] Adopting this type of technology will help to mitigate the risk of foodborne pathogens, such as an E. coli outbreak, which some operations have already put into practice. In addition, innovative outcome-based pricing models, fueled by real-time data collection and automated processes, will allow farmers to pursue the long sought efficiency frontier that diversifies risk and promises a more predictable return.

Conclusion

All this is not to suggest the end of the family farm, however. Small-scale producers, who lack the luxury of diversifying operations, will be able to take advantage of the sharing economy, using resources and equipment as needed. In the future, farmers who practice strong resource stewardship and reduce greenhouse gas emissions may unlock additional cash streams through carbon credits and other climate-related incentive programs. Agricultural production currently accounts for 9% of total greenhouse gas emissions by economic sector, with animal agriculture accounting for nearly half of that. Many consumers may eventually begin to actively seek producers who take steps to reduce carbon emissions through industry scoring and sustainability grading.

With a focus on cost and profit advancement, transparent operations, carbon footprint management and deep connections with consumers, farms of the future will usher in what we envision as the “Next Wave of Agriculture.”

The farms of the future will play an increasingly important role in combating complex and interconnected economic, social and sustainability issues. They will serve as leaders in addressing tomorrow’s toughest challenges by seeking agribusinesses partners to bring change and progress to the food and agribusiness value chain. Deployment of advanced technologies focusing on digital and analytics, science, robotics and automation will define how agribusinesses and farmers cooperate and reach end consumers while tackling today’s most complex problems. Today’s farms will transform to resemble closed-loop, health-focused operations that produce even healthier, higher-quality foods, fibers and fuels than today and create a long-lasting, sustainable environment. 

Summary

In a few decades, our planet could be home to more than 11 billion people, and current agricultural production practices will need to adjust to produce more food with fewer resources. In addition to their ongoing mission to feed the world, farms and agribusinesses are also under increasing pressure to help counter climate change and other neo consumer demands. But the Transformative Age has arrived for farming, and the change will be rapid. When most consumers think of farms, the words “data,” “connectivity” and “lean operations” are not likely the terms that come to mind. That will no longer be true.

About this article

By Rob Dongoski

EY Agribusiness Leader

Focused on strategy, digital transformation and M&A for EY clients in the agribusiness and food sectors.