Connected Farmers Boost Origination Efficiency

Harald Schlueter

Technology is transforming the agribusiness ecosystem, with new tools shaping all aspects of the industry. It begins with origination, trading, and food processing, and extends to companies, machinery, and equipment makers.

Digital tools will reshape nearly every component of modern agribusiness. Technologies will optimize seed selection, fertilization, crop protection, and irrigation. Automation systems will create more efficient farming by automating certain processes. Streamlined operations will reduce waste at each step in the food supply chain.

For companies that embrace these technological changes, there is a bright future. Farming can meet growing demand for food from an increasing world population.

Relationship management is crucial

Let’s examine one example of how digital tools are changing the origination process in farming.

For companies that originate commodities, establishing relationships is critical. To remain profitable, companies need to maintain trusting relationships with farmers and cooperatives.

The business model may vary. In some cases, companies engage in contracts driven by demand plans. Other contracts are supply-driven, with companies trying to maximize agreed-upon volumes.

For agribusiness companies, pricing and procurement strategies must be optimized. Those pressures mean agribusinesses need to have real-time, constant analysis of price and market data.

These same companies need to create other strategies for hedging investments and managing risk, and these strategies must be managed efficiently.

Farming portals are necessary to manage complexity

It’s also important to integrate procedures along the supply chain to transport and store commodities. These procedures include efficient handling of commodities contracts. To be effective, functions should ensure flexible load assignments to contracts. Storage programs must be available, and quality management needs to be integrated along the supply chain.

Relationship management for farmers is a necessary component of effective origination, and farming portals are one way to aid in these relationships. They can support the dynamic computing requirements needed to manage real-world processes and empower a wide range of functions.

Load assignments, flexible pricing, regular reassignments, and complex settlements are managed in one location. These tools are accessible by company staff and farmers, enabling everyone to look at the same data. These portals can also manage user-defined business rules. Such customization allows high-volume processing and business-by-exception management.

For farmers and companies alike, these portals provide full transparency, enabling control of all business aspects throughout the full contract duration. With the ability to see and assess real-time data, risk management becomes integrated. Commodity risk hedging decisions are better informed.

Operational impacts

Consider the operational power that shared information provides in this example: Together, a demand plan can be established and contracts drawn up. As sensors record and send data to a central database, shippers receive updated information. Contractors receive loads assignments and are dispatched. Other sensors record loads, adjust storage inventories, and prompt connected software. The system creates and sends invoices and issues payments.

Tied back to relationships

These technologies do more than just provide efficiencies. They also give everyone the information they need to make informed decisions, making services simpler to understand and provide.

This, in turn, helps forge critical relationships with farmers and collectives. Farmers are far more likely to be loyal to companies that engage them in decisions and value their input, which improves retention.

Using smart devices, farmers get information directly and quickly, and they can interact with contract management systems, make updates and adjustments, and confirm payments.

Powerful tools

The above example highlights how new technology transforms farming. Connected parties can share data and services like never before.

Standardized data services are crucial, too. Common data standards in the industry would allow for faster integration. When new partnerships emerge, consistent standards speeds up the engagement. The use of benchmarking and agronomy services would also allow for clearer identification of best practices.

In the future, digital farmers need easy access to information. Digitizing tools let farmers collaborate and share expert knowledge.

Emerging markets

Technology will have a profound change on farming in developing countries. Connecting to a large knowledge base lets farmers in these countries learn faster, boosting both efficiency and crop yields.

A global approach to agriculture is prudent, given the growing demand for food worldwide. Helping all farms improves the industry and quality of life for all.

Conclusion

Farming is changing, and these changes will only increase. There is great opportunity for agribusiness to develop smart systems. Tools such as farming portals have a wide-ranging impact on quality, and operations will improve at every stage of production.

Origination means better work through the system. Companies and farmers need to work from shared data to improve yield and profits. Shared insights mean better decision-making. Better data means faster response to changing market conditions.

Learn more about digital transformation in the agribusiness industry.

Harald Schlueter

About Harald Schlueter

Harald is a solution manager for Commodity Management in the Industry Cloud organization at SAP. Harald defines the solution strategy from a business perspective and ensures adoption of innovative technologies. For many years, he has been working closely with co-innovation customers and product development to build and continuously enhance the SAP Commodity Management solution across commodities and industries. Currently, he cooperates with global leaders in commodity trading and agribusiness origination.