Collaboration and innovation: two essential capabilities for the future

Collaboration and innovation: two essential capabilities for the future

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Peter

With the world’s population set to rise to 9.7 billion by 2050, global agricultural production will have to grow by 70 per cent to meet future food demand, and by nearly 100 per cent in fast-growing economies, according to a recent report by PwC. To learn how the fresh produce sector should respond, PBUK speaks with Peter Hoijtink, European sector leader for agrifood at PwC Strategy&.

“The future is pretty insecure if you look at all the changes that the agrifood industry is facing; it’s in a state of flux,” warns Hoijtink.

“The companies who will still be here in five to 10 years will be those who are able to adapt themselves and start building the capabilities they need for the future.

“And those who deal with it in an efficient or effective way will require a couple of capabilities to succeed.”

Hoijtink says agribusinesses should think about these capabilities as a combination of tools, processes, people and structures, which, chosen together with the right products and the right way of approaching their customers, will stand them in good stead for what may come.

In particular, he claims fresh fruit and vegetable-related business will definitely need to be able to work within an ecosystem and to be innovative, especially in terms of production technology.

The more specific capabilities required, however, will depend on how the future actually pans out.

Working within ecosystems

But no matter how the agrifood industry evolves, Hoijtink points out that it will certainly require new ways of collaborating – despite many businesses continuing to think independently (because that’s how they’re accustomed to operating).

“If companies don’t become much closer themselves, they will be forced to,” he claims. “On both ends of the chain consolidation is already happening. I think the world is working in ecosystems in terms of collaborating, sharing data and spreading costs.”

Hoijtink says that not only means teaming up with other producers or others within your field, but also teaming up with your customers.

“Think of it as a real value chain,” he says. “Find partners, and remember that sometimes those people who want to work with you and where the innovation comes from isn’t always obvious.”

Indeed, ecosystems are often where there is innovation to be found, according to Hoijtink.

“There’s more innovation and more start-ups,” he says. “It’s where the large players play their role by providing knowledge and support. Bringing together different parties is quite important.”

Hoijtink sees two potential options for fresh fruit and vegetable businesses to work within eco-systems; either via co-operatives or through strategic alliances.

“One of the oldest company structures is the co-operative because of its combined strength in buying and selling,” Hoijtink notes. “But co-operatives are also about sharing better technology and tools among members.”

With that in mind, Hoijtink believes co-operatives represent a good solution for the future. “There is experience with co-operatives everywhere; it’s a good model that’s tried and tested. It will require more consolidation, of course, but that’s one option [for the future].”

Another option to work more closely together is through strategic alliances or joint ventures.

“The basic message is team up in one way or another,” Hoijtink advises. “In this world of agrifood, if you’re doing it on your own it can only be done better by the big boys.

“Cashflow has always been an issue among producers and farmers – not only in the fruit and veg business but in the milk industry and other sectors.

“Something is going wrong, and, in my view, it’s mainly because these producers are still too fragmented and too small and that’s because many are pretty stubborn. They all want to be independent and to be their own business.”

Being innovative

Innovation is another key skill that will be vital for success in the future, according to Hoijtink.

The application of better solutions that meet new requirements will be crucial not only in terms of new products, the way companies do business and how they deliver or transport their goods, but predominantly with regards to production technology.

“Whatever the future scenario, there is one overarching capability that is needed,” he predicts. “And that is agricultural technology – to overcome climate change in order to improve yields and production, whether sustainably or for volume.”

Hoijtink says agribusinesses will need real technological capabilities when it comes to software, hardware, data analytics and the use of drones because those elements would offer opportunities to quickly increase yields, and improve production methods.

“There are three most promising ag-tech developments,” he explains. “Firstly, data-driven farming; secondly, the rise of smart agricultural robots; and thirdly, the intensification of food transparency.”

Essentially, data-driven farming is precision farming enabled by satellites and ground-based, in-machine or remote sensors that deliver detailed information. Combining that field-level data with predictive modelling (e.g. weather) will give growers or farmers important insight to make decisions on when to irrigate and fertilise.

“Growers will know the risks much more so they will be able to better forecast crops, which means they can insure their crops in a better way.”

Hoijtink says ‘the Internet of Things’ (IoT) will play a role in data-driven farming too, in terms of growers linking their farms and equipment to the Internet.

“That will be the next big step for ag-tech in the coming years and we are already seeing the signs of farms being managed via cloud computing,” he notes.

At the same time, smart agricultural robots are already being seen on some farms, although most are still in the early-adopter phase. But if several prototypes become more sophisticated, Hoijtink believes farming could witness a robotic revolution.

“Drones, agri-robots, vineyard robots are all happening now and these robotics offer enormous possibilities,” Hoijtink points out.

“In the future, we’re talking about very small, flying devices or small robots that will seed fields and apply the right amount of fertiliser. It may sound farfetched but it will happen.

“In five to 10 years’ time, you’ll see robots everywhere. With robots, growers will able to do other jobs and make their farms more efficient. It will have an enormous impact on the industry.”

The third element of ag-tech that Hoijtink believes will be key is field-to-fork transparency across the value chain delivered by customised blockchain technology.

“For example, PwC and arc-net have come up with the first safe and authentic solution to prevent the food fraud problem and create value,” states Hoijtink, adding that it’s currently used in the meat industry and is now being tested for other protein sectors.

“Utilising blockchain technology to identify, capture and analyse data we can track the entire value chain all the way back to the birth of the cow via a universal unique identifier (UUID). So every piece of meat in a supermarket is 100% transparent all the way back to the farmer, which is unique.”

Peter Hoijtink was one of the expert speakers taking part in the seminar programme at The Amsterdam Produce Show and Conference 2017.

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