How John Deere and Agri OEMs can disrupt Agriculture? Look at Apple, Google and BlackBerry?
Hundreds of billions of dollars are ripe for disruption in the agriculture industry and the agri OEMs are most well positioned to create a marketplace model, leverage the BAM social networks, analytics, location and mobility with the IOT to disrupt what is one of the most, if not the most critical industry in any economy! Adding to this market opportunity is population explosion, land pressures, climate change, commodity pricing, capital access and need for the ecosystem to connect. This is a scale for VCs, PE and the entire BFSI to participate. The OEMs like Apple did with iTunes and Appstore have the greatest opportunity to create the APIs that connect the ecosystem, now.
A quick background.
U.S. Agricultural Exports versus the U.S. Trade Deficit
By K. McDonald on October 25th, 2010
“Graph of International Trade Balances”. Can Agriculture Save America’s Balance Sheet?
Bill Gates Calls for Support of World’s Poorest Farmers – Bill & Melinda Gates Foundation
Bill & Melinda Gates Foundation announces $120 million in new agriculture grants. “Melinda and I believe that helping the poorest small-holder farmers grow more crops and get them to market is the world’s single most powerful lever for reducing hunger and poverty,” Gates said.
Extending the productivity of thousands
Three out of four poor people in developing countries – 883 million people – lived in rural areas in 2002, according to the World Bank’s World Development Report 2008. Most depended on agriculture for their livelihood, directly or indirectly. Smallholder farmers are vital agents for developing countries’ agricultural and national development. In India, small land holdings, with 2 hectares or less, constituted about 85% of the country’s total operational holdings in 2002. These smallholders owned only 42% of the total cultivated land, but they contributed greatly to national grain production.
Agriculture is the single largest productive sector in the Indian economy. It accounts for about a quarter of GDP and employs two-thirds of the total workforce. Indian agriculture is characterized by smallholders: about 80% of holdings are less than 2 hectares. At the other end of the scale, 25% of the farmers produce 60% of the agricultural output.
Using predictive weather analytics to feed future generations
What can Agri OEMs like John Deere in the United States, Mahindra & Mahindra in India, Deutz Fahr in Europe and JCB in the UK and others learn from the tech industry lesson of the mobile industry. Their ecosystem is about to be disrupted and agriculture represents one of the greatest opportunities for the 21st century, starting now. The model. Treat the tractor as a mobile platform and and the profit pool shifts radically.
The list is endless.
John Deere tractors are getting smarter all the time
How precise is agriculture getting?
On our equipment — large combines, large tractors, large sprayers — we have proprietary GPS that enables what we call auto-steer. We don’t even want the operator to touch the steering wheel. Going up and down a field a mile each way, if the farmer has a 60-foot boom on the back, 30 feet on each side, there’ll be only a two-inch overlap. Prior to this, a farmer would have overlapped by at least six feet.
Deere is becoming more of an infotech business. Does that change the way you manage it?
Most people don’t realize that one of our 8000 Series tractors has more computing power on it than the first space shuttle. We have reorganized so we can have a group that does what we’ve traditionally done well, which is the hardware and the embedded software that goes with it, and another group, where I’ve brought in people from places like Microsoft(MSFT, Fortune 500) to help us with the application side of this.
So what can be learnt from the mobile industry? The opportunity is very similar and the time to disrupt the agri industry is now. Hundreds of millions of small farmers can really benefit, the consumer, the insurance industry, the commodity traders, the retailers and finally creating a sustainable model to feed the 7 Billion plus population and growing.
The slides below tell the entire business plan to implement.
“Take it to the Farmer” is very timely and I hope it will successfully draw attention to the plight of 400 million of the World’s farms that are less than two hectares. I hope at the end of these two days we will reaffirm our commitment to placing the smallholder farmer at the centre of the development process. I also hope we will use this occasion to finally bring closure to the perennial debate on the viability of small farm agriculture”
Smallholders, Fragmentation and Decentralized valuechains across industries, where the opportunity for new business models driven by social capitalism will create Inclusive, Sustainable and Replicable businesses.
This model of creating a iTunes, Appstore marketplace model connecting the entire agri ecosystem from the farmer to the agri input suppliers to expert advisory to insurance companies to commodity markets to retail chains and finally to the consumers.
What is the potential impact?
1. Increasing agricultural Productivity
2. Access to Markets for agricultural products and derivatives
3. Access to critical products and services for communities
4. Creating sustainable rural and agricultural communities and economies around diversity of agronomic and environmental conditions
5. Creating Community Business Hubs as a Marketplace platform with Rural Entrepreneur to drive discovery, collaboration and fulfillment as Community Services
6. Creating of Rural Entrepreneurs & Equitable gender development (women groups)
7. Integrating the entire local value chains
8. Enabling greater Natural Resource Management
9. Catalyzing Accessibility, Availability and Affordability of Basic and Critical Services through the business model as a Social Network Marketplace to what are Adjacencies (Products and Services that are needed and get created only because of a business model
10. Creating value for Local Government, enable Governance & Inclusion
11. Replicating Valuechains
So whether it is energy security, food security, climate change or need for greater de-risking of the commodities market, the business model for disruption is now and there is no greater model than the mobile and tech industry.
To sum it up. From the Sam Allen of John Deere interview.
“Deere is becoming more of an infotech business. Does that change the way you manage it?
Most people don’t realize that one of our 8000 Series tractors has more computing power on it than the first space shuttle. We have reorganized so we can have a group that does what we’ve traditionally done well, which is the hardware and the embedded software that goes with it, and another group, where I’ve brought in people from places like Microsoft(MSFT, Fortune 500) to help us with the application side of this.”
This is a business plan.
PS: These thoughts are personal and are plans that have been documented over time on business models 101.