In February of this year, something amazing happened. Bitcoin, a completely virtual and digital form of currency, exceeded the value of physical gold. Such a watershed moment should come as no surprise to anyone. Instead, it should serve as just another giant flashing neon sign telling us our old analog and physical world is fading like a pair of dim taillights on the horizon.
The life disruptions caused by the COVID-19 pandemic have only served as the booster shot to transform our virtual reality into the new reality.
In Dollars And Cents
During a fourth-quarter earnings call, Nutrien’s CEO Chuck Magro put the value of today’s “digital acre” into perspective. “What we’re finding is customers who are digitally active, we have a 30% improvement in share of wallet,” he said. “And actually, the revenue we get from customers that are digitally active with us is actually double that of nondigital customers. And our churn rate is 60% less. So these are all very good indicators that the program is value-adding for our customers—for both them and for us.”
Turning dirt into digital ones and zeros is not an easy task and not always the magic bullet to agricultural nirvana. But such a transformation is allowing traditional market agricultural companies such as Nutrien to participate in the disruption taking place around them instead of watching the disruption from the sidelines.
Consequences Of Stagnation
Staying old-school will become very uncomfortable and downright unbearable very quickly. We’re likely talking a matter of months, not years. That will be true whether you are a producer, ag retailer, grain merchandiser or pretty much anyone in the business of food. And for those doubters, here’s proof that it’s really happening. In just the two years from 2018 to 2020, the percentage of farmers purchasing inputs online doubled; it grew from 8% to 15%, according to an updated Farm Journal survey.
This is not just about “shopping the net” for the best prices on seed and chemicals. It is certainly a part of it, but it goes much deeper. When all the things that support production agriculture such as financing, insurance and commodity contracts switch primarily to a digital delivery mechanism, things will really start to accelerate, and companies investing in digital will separate themselves from the rest of the pack. It will be like the book The Tale of Two Cities. Only this time, the story is virtual and will play out itself across the agricultural landscape. The moral of this story is simple—the digital divide between the haves and the have-nots is set to grow exponentially.
Right now, the road to such growth is likely a bumpy one for many. It is chock-full of potholes, speed bumps, detours, road closures and a flat-out dizzying array of road hazards. The current reality is that serious issues surrounding “data” still exist at both ends of the production spectrum—whether you’re a producer or a business that serves producers.
Digital Dirty Secrets
In recent research by The Sustainability Consortium, 71% of producers interviewed said that their ag advisers or consultants have never suggested increasing farm data collection or sharing such data. On top of that body blow comes the stomach kick—62% of growers surveyed did not use any farm-level data software.
I’ve mentioned these numbers previously, and honestly, there is so much to unpack here that it is hard to know where to start. First, such numbers are embarrassing. Second, if I were a producer and had an adviser who was not pushing me to collect more and better data given what is happening in the marketplace and the industry as a whole, I’d look for a “trusted adviser” who does.
The state of affairs at most agricultural retailers and agribusinesses is not much better. Recently, I talked with an Upper Midwest ag retailer who understood, like Nutrien’s CEO, that a digitally engaged customer is much more valuable than customers who are not embracing digital. The reality, however, was only 10% of the total acres this ag retailer served was enrolled in the retailer’s “precision agronomy” programs. For this co-op, precision agronomy has matured to mean more than just token grid soil sampling. It means real producer-level engagement fosters better and more robust field-level data collection. The logic here is enough layers of digital data have to actually exist in order for a “digital acre” to be born.
The other common problem is once data are actually born, those data are likely to have a pretty rough childhood as they bounce around from one disconnected system to another. In the case of the ag retailer mentioned previously, there were no fewer that 13 different software systems and platforms, and very few of them were connected.
Plus, the dirty little secret in the precision ag community is most of the farmer field-collected data run through PC-based software with origins that trace to pre-21st century. That means most farmer-produced data is stuck on an island—sort of like Tom Hanks in the movie Castaway who only had a connection to a volleyball named Wilson.
Don’t Miss The Rescue Ship
Data is the currency of this millennium. Where data are concerned, we have to grow up as an industry. We have to start connecting the dots. And we don’t have much time. It is time to rescue Tom and Wilson. If not, then millions and millions of acres will end up being castaways.
