The world of farming has changed significantly since the first farms were born in Mesopotamia centuries ago, but trading and supply of agriculture has not kept pace. As farmers focused on production, grain traders focused on maximizing profitability through matching supply and demand in world markets. Technology was built in the form of CTRM systems to help traders analyse markets, complete transactions, and manage risk and compliance.
Then, with the last few years witnessing the birth of SaaS and cloud technologies, more discerning consumers, and unprecedented weather events, farmers accessed new technology and tools to maximize their profits without relying purely on large grain trading companies to sell their produce.
This disrupted the value chain completely and all players – from farmers to trading houses and purchasing departments – found themselves at the mercy of entirely new market forces. However, the CTRM technology the industry relied on remained monolithic and expensive, forcing players to work with outdated spreadsheets and incremental CTRM or ERP “innovations”.
The forces that impact Agriculture
To understand how to compete in this era, it is important to start with a clear background on the three forces reshaping competition.1. Farmers gain insight through new technology
In the past, agriculture trading companies would buy farmers’ crops during a harvest season and store the crops to sell for profit when markets appreciated. Farmers relied on traders because they did not have the inside knowledge traders had. With the advent of readily available and inexpensive real-time data, farmers now have access to insight they never had before and have gained leverage over traders.2. Changing consumer preferences require advanced food tracking
Rising concerns about food safety have changed the way consumers purchase food and governments regulate food labeling. Today’s savvy consumers want proof of the history of the food they consume. Where was it grown? Were pesticides used? Is it non-GMO? Consumers want to know the providence of food from farm to fork, and this means producers, traders and purchasing managers need to trace the origin from farm to fork.3. Climate change erodes arable land
Perhaps the greatest challenge for farmers today is climate change and its impact on available farmland and fresh water. As global temperatures rise, and weather patterns change, the amount of land and water for farming is declining. Farmers cannot create more land, so they need to find innovative ways to increase crop yield while conserving water and other resources.
In this new era, the farmer is king. Now that farmers can leverage market insight without relying on traders, agriculture trading companies need to work harder to win farmers over.
Smart agriculture trading companies are growing farmer loyalty by providing different value-add services to farmers, such as:
- Data-powered Farming: Using real-time data with advanced analytics, trading companies can publish best agriculture practices and advice to farmers in their network, providing insight across regions, crops, and farms.
- Connected Portals: Traders can provide real-time communication to provide instant responses to queries and enable faster contract negotiations, eliminating cumbersome paperwork and making the entire process easier so farmers like working with them more.
- Artificial Intelligence: New technology, such as IoT sensors and blockchain, enables farmers to trace every event from planting to harvesting to distribution in a blockchain and provide complete transparency to all interested parties.
- Precision Farming: Analyzing historical data with real-time data from IoT sensors, weather feeds, etc., farmers can determine the right time to plant and harvest and the optimal mix of fertilizer, water, etc. to maximize yield.
The CTRM becomes untenable
Through all this change, CTRMs have stayed inflexible and disconnected, forcing commodity companies to work out of step with the digital productivity of other industries. This has meant lower productivity, slower decision making, and overall suboptimal markets for all parties from farmers to traders, logistics companies, food manufacturers and end consumers.
Arrival of Digital Commodity Management transforms forward-looking commodity companies
At the recent global Future Farming summit in the Netherlands, the conference noted that “The [farming] industry is faced with the challenge to develop technology that is practical in use, delivers instant value for the farmer and is compatible with the vast and ever-growing amount of hardware and software currently present in the market.”
With one boot firmly planted in the mud and one hand holding a mobile phone, the farmer is indeed at the epicenter of a digital agriculture revolution.
Eka has made digital technology accessible to farmers in the form of easy-to-use “apps” on the front end, powered by best-in-breed digital technologies like AI, IoT, Machine Learning and Blockchain on the back end.
These apps on our new Digital Commodity Management (CM) platform empower agriculture companies to take the first step towards digital transformation. More than 50 apps grouped into four buckets – sourcing, trading and risk, supply chain, and procurement – help Agri Businesses navigate changing markets through four disruptive workflows:
- Intelligent Sourcing: Farmers add the power of real time data, machine learning analysis and historical learning to improve their crop yields. Examples of our Intelligent Sourcing apps include:
- Partner Connect: Apps connecting trader, farmer and supplier systems allow everyone to operate at digital efficiency and collaborate with the power of data embedded in their app toolkit. Our key apps focused on “working as one” include:
- Farmer Connect: Farmers “work as one” with traders through app-enabled workflows helping to match prices to buy/sell crops, coordinate manual processes like crop delivery and contracts, automate payments, and stay connected through the season.
- Supplier Connect: Traders partner with B2B grain purchasers, coordinating tasks from RFP responses to shipping logistics to paperwork.
- Customer Connect: Food and beverage procurement buys grains in line with their quotas, coordinates purchase of grains, stays compliant with legal requirements, and tracks crop origin, inputs, etc. through one app connecting the value chain.
- Intelligent TRM Apps: Trade and Risk apps embed the back-end power and intelligence of a CTRM system with digital workflows that allow traders and risk managers to react quickly to market changes, run in-depth analyses enabled by machine learning, and collaborate effectively with their counterparts. Examples of digital effectiveness embedded with TRM include:
- Alerts powered by algorithms that run 24 X 7 to track market/position changes
- Chat screens in apps that allow simulations run by AI to be generated and shared instantly
- Mobile access that allows players to stay on top of real-time market movements
- Connected Supply Chain: The supply chains that connect farmers to traders and logistics of grain movement/bulk handling at sites and delivery, are now automated through apps that track everything from quality to grain movement globally. Examples include Commodity Site Manager, which helps traders gain complete visibility into the storage network by capturing stock movement in real time, from site to delivery.
The back end for these workflows is powered by one data stream and in-depth decision engines and connected through intelligent workflows. All of this is built from the ground up in a digitally native platform that does not depend on age-old CTRM technologies.
In the past nine months, 20+ Agri Enterprises, including Farmer Business Network, Indigo, Cargill Palm, Tereos, and Foremost Farms, have adopted our App platform and are already starting to see revolutionary productivity gains helping them compete more effectively. We are at the dawn of the Digital age in agriculture, from intelligent TRMs replacing CTRMs, to Farmer/Supplier/Customer Connect enabling digital collaboration to intelligent sourcing driving improved farm yields and connected supply chains bringing transparency.
Agriculture markets are evolving, and you need to evolve with them. Let us help you begin your digital transformation today, starting as small as one app in any part of the value chain implemented as quickly as a few weeks.