Demand-Driven Agriculture: Where Profitability Meets Sustainability
Twenty billion pounds of produce is lost on farms every year, writes Prospera Technologies CTO Raviv Itzhaky at PrecisionAg. This isn’t only wasteful but also dangerous. Unpredictable supply and demand of food can have devastating consequences. Overproduction can lead to price slumps and “dumping” tonnes of food that would be perfectly good to eat. A bad harvest due to droughts, bad weather, or pests can also lead to equally catastrophic outcomes.
There will always be unexpected risks and unexpected challenges that might affect production. However, predictive technology and analytics can help growers plan and predict many of these outcomes, and therefore mitigate some of these risks before they spiral out of control.
Technology can help businesses in different ways. On the one hand, new devices in the field give food growers unprecedented data and insights they can act upon. On the other hand, this data and real-time knowledge can be shared and communicated further down the supply chain with increased speed and efficiency. Food factories or retail chains can manage production or plan their shelves accordingly, with a better idea of what the availability for a specific product will be in the near future.
However, the ultimate goal of ‘zero-waste’ and perfect planning can only be achieved through demand-driven agriculture. This means producing exactly what is needed. This doesn’t only mean there’s no waste of produce but also means not wasting resources such as water and energy, which are scarce and expensive in many regions. Food production in the U.S. uses 15.7% of the total energy budget, 50% of all land, and 80% of all freshwater consumed.
America wastes roughly 40% of its food. What’s more, a lot of the estimated 125 to 160 billion pounds of food that goes to waste every year is edible. Food waste is caused by multiple factors, from overproduction to poor planning and overbuying. There is a hefty price tag behind this waste, too. The annual bill for food waste in the U.S. alone is approximately a staggering $218 billion.
Food loss takes place for multiple reasons. Often farmers plant more than consumers demand to hedge against unexpected pests or bad weather. In other occasions, when the market value of a product is lower than the cost of transportation and labor, farmers might leave the crop unharvested, also known as “dumping”. How many of these externalities is technology able to preempt and predict? Can financial forecasting and bilateral communications between farmers and retailers stop over-production? Will technology advances enable us to perfectly grow food ‘on-demand’ so there is no waste of energy, resources, or labor for food that will never be consumed?
The role that technology plays in solving the demand and supply conundrum is huge. In many ways, some of the most successful software companies and platforms over the past decade have capitalized on connecting supply and demand. Think of Airbnb, Uber, or even eBay. You could argue that an empty guest room or an unwanted gift are just as much of a waste as an unsold ripe tomato. Or a driver with an empty seat can easily take another passenger on his commute with software that magically finds that neighbor that would benefit from the ride and would be willing to share the cost.
Continue reading at PrecisionAg.
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