“We are in an AgTech revolution,” says a Winfield VP. 
Although farming isn’t known for being cutting-edge, over $25B was invested in agriculture technology in 2015.  Many of the companies attracting investments are promoting the “Future of Farming”, aiming to digitize the value chain using cloud computing, the internet of things, and an army of sensors. Seeding these investments is the growing concern that modern farming techniques won’t be enough to feed the world’s population, projected to reach 9.7B mouths by 2050.  With an agricultural revolution upon us, retailers such as Winfield must adapt to new market conditions.
Focusing specifically on US row crops, there are three primary players in today’s value chain: (1) seed and chemical companies, (2) retailers and (3) growers. Traditionally, retailers have played the role of distributors, delivering seed and crop-protection to local growers.  Recently, however, retailers have been pressed to offer data-driven insights to their farmer-customers. This has largely been driven by two trends: consolidation and digitization.
Since 2000, a wave of supply-chain consolidation has swept the midwest.  Farms have been getting bigger. Between 2001 and 2011, “very large farms” (2000+ acres) grew in number by 29%.  As their customers have consolidated, upstream companies have followed suit. Growers increasingly rely on technology to manage fields they can’t see from their front window.
Farm digitization has been underway over the past twenty years. Planters and combines purchased today are self-driving and come equipped with advanced GPS systems and yield monitors. Over 70% of cornbelt farmers now use automatic steering.  Seed and chemical companies have also taken advantage of technology, improving warehousing and installing track and trace systems.  It seems that digitization of the farm will come in two phases, and most of the improvements to-date have been “Phase 1”. Within Phase 1, Retailers have been struggling.
The outcome of Phase 1 will be the exhaustive application of data analytics, cloud computing, and IoT for the purpose of improving planning and execution within each component of the supply chain.
Phase 2 will focus on Procurement 4.0, collaboratively forecasting, planning, and on-demand sourcing up and down the supply chain.
Phase 1 has taken place primarily outside of the retail business. Farmers have taken advantage of new OEM and software technologies.  Seed companies have built out a “connected” seed production system, and have focused on cutting down seed-loss throughout shipment. Every Monsanto seed truck is equipped with temperature, pressure, and geolocation sensors – data which is accessible in real-time on each manager’s iPad. 
Winfield’s digital investment has been in the development of two tools, AnswerPlot and R7, which are on the earlier end of the “Phase 1” spectrum. AnswerPlot is a benchmarking tool to track hybrid performance under various conditions, making data available to Winfield agronomists who can then add insights to build value with growers. R7 is a tool that marries AnswerPlot data with satellite imagery and soil data. Winfield halted investment in R7 in 2016. 
Many third party software platforms have questioned whether they should go direct-to-grower or sell through distributors. For retailers, whether selling their own software or a third-party, the catch-22 is that agtech solutions claim benefits through more efficient use of inputs.  Retailers are being pushed to promote a product that results in fewer sales for their core seed and crop-protection business.
The first signs of Phase 2 have come from a startup called Farmers Business Network, which aims to bring transparency to input pricing and performance, arguing that in today’s system the retailer who sells these products is a biased and imperfect advisor. 
In the next 10 years, retailers will fight to hold on to their position in the supply chain by adding insight-based services that require a local advisor. With consolidation projected to continue, it’s unclear whether farmers will value an agronomist relationship, hire their own data scientists, or trust a software platform.
Perhaps Winfield should press towards Phase 2. As a nationwide distributor, they’re uniquely positioned to foster transparent demand forecasting across growers and seed companies. Winfield’s current business is full of complex logistics and long lead-times, placing orders pre-season, selling and delivering to growers in time-and-weather-sensitive windows, and processing returns.Their business model would greatly benefit from the improvement of planning and sourcing, and it may help them maintain a position between growers and seed companies.
Retailers, in an ever competitive landscape, have yet to prove whether they can transition from distributor to partner. The question that will be debated in the next decade is whether they can make themselves essential to Phase 2 in the digitization of the supply chain. If not, can we expect an “Amazon” for seed and crop protections, and data-driven insights from a cloud-platform rather than a local agronomist?
Word Count: (798) | Digitization
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