Betting the farm

Posted on by Bart Doorneweert

Entrepreneurship in the agricultural sector is lost. Over the course of a couple of generations, many farmers have decomposed into contractors, taking whatever offer the market will give them. Combine that with safe-side advice on business development from agricultural optimisation engineers, and what we have is today’s water treading strategy, producing ever-polluting and larger product volumes against declining margins.

The conventional response by farmers is to look to the sector and government policy for support. But with the level of interaction there, the support that results is naturally too generic to create real change. Yes, the pricing system in agriculture is in-transparent, and yes overproduction needs to be mitigated, etc. But the real problem isn’t a matter of rewiring systems, and unclogging some pipes. The real problem is that entrepreneurship in agriculture is broken.

There are few farmers out there who consider the product they produce as a meaningful experience they can bring to a customer, something that is actually valued, instead of something which is constantly bargained with. We only know “The Sector”, and it drives itself through technocratic developments that compete with the experiential equivalent of Soylent in the long run. That is an unwinnable competition.

 “The art of conversation is the art of hearing as well as of being heard.”

– William Hazlitt

One of the most confronting causes of this entrepreneurial immobility is that there is no conversation in the agricultural value chain. Even the slightest step to having a conversation about something more than price, quantity, or quality grade, is too much. “We already know what the other person is going to say” is generally the response. And so the farm is placed in a single bet to survive the tread in the current system that is governed by a handful of business models, which are at least 50 years old.

Look! A 50 year-old business model

It seems like an insignificant event, a conversation. Particularly when you look out over the sheer scale of sector and the mountains you feel that need to be lifted to change it. But I have seen what difference it made when a new entrant to farming had to question everything before understanding the system. It ended up in quite a few profitable market insights; blind spots to the great majority, but findable in plain sight for anyone who would stop to look, ask, and enter a conversation.

Such conversations have an impact. Especially when things like ICT are coming out of agriculture’s left field and start to amplify those conversations, they will change a system.

Conversations and ICT together make a combination that can fix entrepreneurship. Solutions can be as simple as connecting with chefs by using Twitter to sell your catch from sea. Or it could be new entrants, and creators at the periphery of the agricultural system, who will make existing dysfunctional value chains obsolete.

The change is fundamental. You can now make things and connect with a profitable market yourself, or borrow stuff from other industries and put them to use to compete in your own. The rules are what the farmer- entrepreneur makes of them.

The farm of the future is going to be bet in multiple ways, not just the one. I think that agriculture will benefit from that. It’s all waiting for the start of the right kind of conversation that builds an experience.

Beyond Certification. Business model innovation for sustainability in food and agriculture

Posted on by Bart Doorneweert

“Sustainability certification, is that legit?” somebody recently asked me. “I don’t know”, I said.

Innovation for sustainability in food and agriculture is stuck. We had the hope over the last few years that sustainability certification of agricultural products might compel the market to deliver on sustainability by laying down the rules by which it should play. Although the scientific basis for the sustainability criteria that products should meet is sound, certification hasn’t proven itself to be the right vehicle for criteria adoption. The focus is all on the standard, and not on the business model.

The question of what lies beyond certification for effectuating sustainable development in agri-food markets is thus very much upcoming. It is being discussed more as brands and traders are becoming increasingly confident about acting in markets for sustainable produce.

Though there is no definition of “beyond certification”, there are some examples in the market to date that in my opinion illustrate facets of a “beyond certification” innovation agenda. They all concern business model innovations, which provide a more fruitful ground for adoption of sustainable production standards. Some broad brush illustrations:

Sustainability as part of integrated brand communication. In this case the brand becomes the standard, and vice versa. The brand’s narrative leads in voicing the responsibility that is taken for the products it markets. Rather that explicitly communicating the technicalities of sustainability impact, the narrative will more likely cover topics like the origin and quality of the product, or the history/artisanship of the producer. Examples of concepts that already apply this are for instance Nespresso (a Nestle coffee brand) and Innocent (a fruit smoothies brand). Both certify or verify their product ingredients through a third party certifier, but this is not directly communicated to the consumer. The only communication regards the overall brand experience of a top quality and responsible product.

Joint platforms of brands/retailers and producers for a differentiated market proposition. In this example producers and the marketing brand would jointly invest in creating a business model to which they both contribute brand value. A successful example of this is for instance the Naked Wines online wine retail platform. Naked Wines brings together wine aficionados and independent wine makers. The platform provides pre-finance for winemakers’ harvest and produce, in exchange for exclusive sales and marketing of their wines through the platform. So far Naked Wines has appeal with a subscriber base of 200.000 people worldwide.

Rewards to achievement of sustainability performance. This example relates to finding smart combinations between sustainability impact, and economic reward systems. The case of Guayaki Maté tea and reforestation, shows how shade-grown maté under the forest canopy improves quality, and is able to capture added value in the market. This value is captured both through improved tea quality, as well as through the convincing claim that can be made to consumers that increasing their consumption of maté will expand the rainforest.

Conclusion
Complements need to sought between certification and new combinations of value creation that make it commercially compelling to adopt more ambitious sustainability standards. This will come from creating new market-based value systems at the farm level, or at the marketing level, or more likely both at the same time. If we truly aim to fulfill our sustainability ambitions, then we will need to delve deeper into the value creating process to find these synergies that will proliferate a higher standard of production and living.