By: Brook Cunningham, Managing Director, Lazard
The agribusiness industry is undergoing a period of transformational change.
Technology, data analytics and digital connectivity are being harnessed in unprecedented ways to increase the efficiency and sustainability of global food production, which will transform the farm and strategic landscape over time.
However, there is an asymmetry of priorities, cultures, and other fundamentals between the key constituents of the agriculture ecosystem. This is hindering the implementation of new technologies at a scale needed to materially accelerate the pace of progress.
- Consumers are demanding changes in the food supply chain to deliver enhanced food quality, authenticity, and sustainability. However, many do not appreciate the complexity and cost of effecting such changes in mass scale, nor is it clear they are willing to bear their share of the cost of such transformation.
- Farmers need integrated outcome-based solutions of products, services and data-driven tools to increase the efficiency and profitability of their operations, while reducing complexity and risk. Yet the sheer quantity of new Ag Tech remains overwhelming, and farmers remain skeptical about the unproven value proposition of many products and the risks associated with sharing their data.
- Many large agribusiness corporations need infusions of innovation. However, this requires transformation of long-standing and often sleepy corporate cultures while concurrently delivering near-term financial returns, which can be inconsistent with investing in riskier projects with more long-term benefits.
- Many new Ag Tech innovators need the capital, experience, infrastructure and relationships of the agribusiness corporations to deliver new technologies to the market in mass scale. However, many still fail to tell their story in the language of risk-adjusted financial returns that strategic investors require.
Consumers, farmers, agribusiness corporations, and Ag Tech innovators are traveling in the same general direction pertaining to the advancement of agriculture. However, they are on separate and often winding paths, which is slowing the journey.
Jumpstarting the transformation of our global food system requires us to find common ground through:
- Greater understanding of the priorities and pressures of each constituency;
- Greater willingness by all to bear reasonable risks and costs;
- Creative solutions to bridge the gaps in expectations.
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