How Is Big Data Enabling Outcome-Based Services In Farming?

Cedrik Kern

One thing that farmers around the world have known through the ages is that efficiency is the heart of any farm enterprise. Running a tight ship is what makes the difference between a failing and a thriving farm.

Precision agriculture has made this idea even more important. We now have sensors, imagery, and many technological advancements. These new offerings have created digital transformation in agriculture. But why is it now important for Big Data to help enable outcome-based agriculture services? Big Data will greatly change how farm operations happen over the next decades.

Population: 10 billion

Our world’s population is growing, and it will continue to grow as advancement in life sciences improve lifespans. This growth will cause rising consumer demand. It will be especially strong in developing economies, which are expected to see increased demand for meats and high-calorie foods. Meat production will nearly double, rising over 200 million tons to 470 million tons annually. Grain imports for these countries for the same period of time are expected to more than double.

This growth also impacts already scarce resources, such as water, fossil fuels, and arable land. Crop production per acre will double by 2050 as the world population approaches 10 billion people.

Increasing agricultural production is vital to meeting future demand, and precision farming improves the output of existing farm land. It does this by using a wide range of sensors and data. This technology ensures that farm activities are conducted in a optimal fashion. It also decreases the required inputs and costs while improving yield and quality. This is especially important as available arable land decreases.

Precision farmers as entrepreneurs and attainable technology

At the same time as demand is rising, the farm-to-fork movement is driving interest in the farmer and higher-quality food. Under this movement, the entire process from seed production and field inputs through processing and shipment to the consumer’s table is under scrutiny. The focus on environmental stewardship across the entire food chain is driving demand for food traceability. Traditional agriculture firms treat farmers as upstream customers. These changes need the farmer to act as an entrepreneur. Hard market conditions and new farm products and solutions create a complex, dynamic environment.

While these changes happen, new technologies are more attainable as adoption costs fall. This opens up new commodity marketplaces and sales channels for producers. This process involves bringing the digital farmer closer to the digital consumer. These technologies require the farmer to become an entrepreneur and turn a profit while working with volatile natural and market environments. The consumer demands healthy, flavorful, affordable food raised in a sustainable fashion with fair market practices. This shift requires the agricultural industry to reimagine their business models and processes.

Outcome-based services

To achieve these goals, farmers must optimize outcomes. Precision agriculture operations realize that Big Data helps them improve yields and outcomes for themselves as well as their customers. Digital agribusinesses are bundling smart digital farming insights and improvements. They’re doing this by providing products and services that deliver precise, integrated agricultural solutions. They are optimizing outcomes based on each farmer’s individual needs. Big Data is a valuable asset in this process, as it creates new opportunities and revenue streams.

This process is shifting the agribusiness value chain from a product-based model to a service-based model. By providing services instead of end products, companies provide optimal precision and superior outcomes instead of applying a broad-spectrum, higher-overhead approach to an entire crop. Fertilizer companies will provide a smart fertilization service instead of selling bags of 13-13-13 at the local feed store. This allows both the farmer and the company to optimize operations. The company manufactures fertilizer based on soil sample data and actual need rather than rough estimates. The farmer builds their soil with nutrient levels that are enhanced over multiple growing cycles, creating a more environmentally friendly approach to agriculture.

This extended use of Big Data also allows for better data capture and analysis. Lab work and recommendations will be based on the exact conditions of the area tested. Land preparation is handled as a service provided at the optimal time for soil tillage, based on accurate digital weather projections and the latest weather conditions. Pest management is handled as a service instead of a product, with consultancy based on area trends in pests and disease outbreaks. Modeling can provide predictive risk of disease or pest outbreaks, providing the right solution at the right time in the right amount.

Though these services will initially be centered on the farmer, other changes will take place as the supply chain digitizes. Increased use of drones and transportation will focus on optimal fuel and manpower use as service machines require transport. Though crops may take just as long to grow, artificial intelligence based on Big Data will predict spikes and troughs in demand, freeing up storage and production space as needed. Across the industry, the entire infrastructure is becoming more flexible and agile to accommodate the transparent information flow along the end-to-end value chain.

This shift drives the need for specialized third-party agronomy consulting services. It also drives the need for strong relationship networks and cooperation across the industry. As agribusiness goes digital, it’s important to invest in digital transformation for your business or be left behind. Early adopters are seeing higher revenues, better profitability, and higher business valuation.

To learn more about digital transformation for agribusiness, click here.

Cedrik Kern

About Cedrik Kern

Cedrik Kern is Solution Owner of Digital Farming at SAP. He drives the development of the SAP platform for digital farming as a key innovation for agribusiness. Cedrik is part of the SAP solution management team for Agribusiness and Commodity Management. This team is responsible for defining our global strategy for agribusiness and commodity management. As an expert for agribusiness and commodity markets, he influences the SAP solution portfolio and has architected co-innovation solutions with global leaders in the commodity trading and consumer products industry. He is a regular speaker at events and conferences presenting SAP’s solution portfolio and innovations for this space.