Agriculture is changing, and it’s changing quickly. The world’s oldest industry is seeing a new wave of production techniques, technology, demand shifts, and major supply chain transformations. From the farmer to the processor, key actors in the food system are having to reinvent their practices to meet the environmental, social and economic challenges of the future.
A food system encompasses all players involved in the entire food value chain, including production, aggregation, processing, distribution, consumption and disposal of food products. With climate change and population growth continuing to change the world as we know it, actors at each link in this value chain are leveraging technology, data, and innovative new thinking to usher in a new era of sustainability to our food system.
In order to understand what’s driving the innovation we’re seeing across the supply chain, let’s begin at the farm, where food is grown, and finish with the end consumer to highlight some of the major trends and transformation we’re witnessing from farm to plate.
The Farm
Farming is a critical part of any civilization, but it looks different today than it has in the past. Up until the early-20th century, farmers, who made up about 30% of the total population, grew food with the sole focus to meet the needs of themselves and their families, also known as subsistence farming. Today, however, farmers make up just 1% of the American population. This group of individuals, co-ops, and families use some of the most advanced technology to produce food with incredible efficiency on a massive scale.
The various agricultural products and production strategies vary substantially by region and state, but there are a few key technological innovations that farms are implementing that are quickly changing our food and fiber production systems.
The first major change is in the world of satellite imagery and remote sensing. Today, you are able to utilizate imagery in real-time, as well as on-the-ground data to monitor and understand the health of your crops from across the world. Farmers can use this data to adjust their water delivery, fertilizer inputs, seeding or harvest dates, and more, all from their smartphone or computer.
This sort of agronomic precision allows producers to be more efficient in their use of water, pesticides, and fertilizer inputs. It also enables producers to adjust their production system based on ever changing environmental conditions. As climate change creates increased variability in the production systems, having access to up-to-date information enables farmers to adapt quicker, as well as become more resilient to long-term impacts.
In addition to these data improvements, innovation in mechanical on-the-ground agtech is enabling farmers to more easily integrate these data products with machines that seed, harvest, and irrigate crops. A GPS-enabled tractor or combine, for instance, is able to map soil moisture conditions to seed application rates.
By using this mapping technology, farmers are able to place more seed in areas that are less likely to germinate the seed or have previously had lower plant density, therefore optimizing the planting process. This results in cost savings during seeding and yields improvements at harvest. Of course, savings need to outweigh the costs of agricultural technology, but over time, these capital investments might be the difference between realizing profitable returns and struggling to make ends meet.
The Storage
Whether it’s grain, meat, potatoes, or nuts, on-farm storage is key to the agricultural supply chain. On-farm storage allows farmers to lower production costs, minimize crop losses, and build price resilience. This need is derived from two things: seasonal variation in demands that don’t align with the timing of supply, and low commodity prices that can cost the farm an entire year’s earnings.
On-farm storage is critical to profitability for many producers. The ability to store crops allows farmers to regain some control in the price of their product in the market. While most commodity producers are price-takers, if they can safely store the product, it allows them to sell into the market when prices are favorable. If prices are low, they can store their product to be processed or shipped when prices are higher.
Crops are stored in a variety of ways. Wheat, corn, and soy, for example, are often stored in grain bins or silos. Other crops, like potatoes, are stored in climate controlled bunkers. This process, while a necessary part of the current food system, is often overlooked. It is, however, one of the riskiest parts of the supply chain as the farmer has accrued all the production costs of the fully finished crop without any realized gains.
That’s where modern agricultural technology comes in. Farmers and purveyors are using similar remote sensing technologies that are used in the farm field for improved storage monitoring, protecting the harvest crop asset from mold, pests, or other threats. As climate change threatens to change relative humidities, increase flooding, and more, having access to precise and real-time crop monitoring data while it’s being stored could be the difference between staying in business or going under.
The Processor
Nearly every food product we consume is processed. This includes more than just cereal or frozen foods; even produce has to be washed, sorted, graded, and packaged. This component of the supply chain is often the bottleneck of the industry and continues to see increased consolidation of processors, meaning the mid-size plants are being bought up by a few large companies.
These large companies, think Tyson or Cargill, often close down smaller processing plants and leave only the largest factories in operation. This means that producers have to ship their product further and may fetch lower prices or have less control over when they can send their product. This can impact not only the profit margins of producers, but also the ability of the sector to be resilient to disruption.
These consolidation and capacity issues were made evident by the COVID-19 pandemic, which brought food product processing to the forefront of people’s attention. Major plants from around the country closed, leaving empty grocery store shelves and producers without a place to send their product.
Food processing, however, is seeing major changes as the U.S. Department of Agriculture and the food industry push to build a better food system. Food processors in every category are using technology to help prevent negative impacts from labor shortages and supply chain disruptions from things like climate change.
Food processing for various food products often involves sorting or grading products that have various characteristic flaws, think a bruised avocado or low fat marbling in beef. As these plants are sorting products, more and more of them are using artificial intelligence, blockchain technology, and advanced imaging processes to identify, sort, and label products.
The increased transparency that comes from blockchain technology can lead to better production practices and product performance. The increases in sorting capability lead to less waste, helping to ensure the food system is more efficient, using less resources to feed the growing population. Lastly, processors are packaging products with more sustainable packaging, in order to minimize the greenhouse gas impact of food production. All of these innovations, and more, are working in concert to ensure a sustainable and climate smart food system.
The Plate
Once processed, food products make their way through various distributors to restaurants and grocery stores around the country, and eventually, the plate. This process, from the farmer to the plate, historically spanned just a few short miles. However, more often than not in today’s world, it involves multiple countries and thousands of miles of travel.
There is a strong shift in consumer demand towards more locally grown products and a reinvigoration of American food supply chains given the challenges presented by the Covid-19 pandemic. These challenges, like climate change, are forcing technology and innovation to work to better the agricultural industry.
Today, being a conscientious consumer isn’t the only way to be part of the future of food. With FarmTogether, you can invest in the farmers who are making a difference. The farms of the future will need to support a growing population amid a changing climate and scarce natural resources, and by investing in sustainable agriculture, you can help ensure a healthy planet and food security for all.
Learn more at FarmTogether.com
FarmTogether’s mission is to bring creative and transformative capital to farming while opening up a vital asset class to all investors. By driving abundant and creative capital to farmers, we’re giving investors the opportunity to drive agriculture toward sustainability on a massive scale.
