April 23, 2020
Digital Ag – The Platform/ Ecosystem Challenge
Strategy&
Digital Ag – The Platform/ Ecosystem Challenge Summary
• New solutions and offerings within the field of Digital Ag/ Agri-tech entered the market and have been growing fast
• It's becoming clear that it's not enough to offer agri-solutions that focus only on traditional offerings/ value chain, i.e.
support in planning the season, planting, protecting, harvesting and selling the crop
• Farmers are demanding more, and new business models are emerging
• Differentiation is needed, including offerings around data capture & analytics, marketplaces, farm management,
financial services and education and training
• Multiple offerings are in the market, but only few platforms will survive.
• There are lessons to be learned on how to successfully grow a platform, both from B2C platforms, as well as from
newly emerging players
• Established players need to act now:
– Review your strategy, match your capabilities to offerings (potential partnerships, acquisitions)
– Consider the E2E farmer journey – identify and follow the value shift
– Deploy new technologies, establish new business models
– Learn from the best in other/ adjacent industries
– Think beyond and further down the whole agri-food value chain
2
Digital Ag – The Platform / Ecosystem
Challenge
Strategy&
• A race has started to establish
platforms and ecosystems in
agri
• All agri players upstream in
the agri-food value chain are
offering some kind of
platform/ digital ecosystem to
farmers: input companies,
machine and equipment
companies, technology
companies
• In addition, new entrants such
as independent platforms and
IT/ Cloud providers enter the
agri markets
Illustrative
Farmers are targeted by multiple stakeholders with multiple offeringsFarmers will make a choice – and only few platforms will survive
Source: Strategy&
Backbone Capabilities:
Artificial Intelligence,
Predictive Analytics,
Cloud computing, Big
Data, Research &
Information Platforms
Independent platformsOnline Market Place
Farm platform
Technology Companies
Digital Farming Software
Tractor Data
Management
Farm Management
Distributors
Data capture / analysis
Recommendations
Farm management
Machine & Equipment
data capture and
analysis
Field Analysis
Fleet Management
Predictive Analytics
combined with Farmers data
Crop management
Benchmarking
Yield & Potential Analysis
Agronomic advise
Yield & Potential Analysis
IT/ Cloud providers
CLOUD
Possible new entrants:
Amazon Web Services and
Google Insights
Digital Platforms merged with
AI, Predictive Analytics and
Field & Equipment analysis
Agriculture
Research Platform
Input companies
Machine & Equipment
Farmer
Product offering Partnership
Digital Ag – The Platform / Ecosystem
Challenge
3
Strategy& Source: Strategy&
Approach to market
Emerging players/ Independent platforms
• Direct farmer access, value focused
• No historical farmer access/ engagement
• Approaching the market from a ‘green field perspective’ (no pre-conditions/ limitations/ analyzing and addressing the pain points for farmers along the value chain)
• Business created around data and insights. Clear focus on value potential of data
IT/ Cloud providers
• Very limited; if via adjacent B2C solutions (e.g. MS Office, Google consumer services, etc.)
• Historically with no/ limited stake in agri
• Well known by farmers from consumer product side, and/ or IT/ data side for larger farmers
• Very well equipped in managing/ handling data, however with very limited access to specific field/ agri data
Input(Chemical/ Seed)
• Direct sales to large scale farmers; multitude of technical/ agronomists in the field, interacting with farmers/ opinion makers; agronomical focus
• Approaching the market from the crop/ optimizing harvest perspective (offerings and solutions centered around that)
• Offering rather fragmented solutions
• Traditionally product/ services based companies; little savviness in data usage
Machine and equipment
• Mainly via distributor/ service; technical focus. Partly serving large farmers directly
• Offerings and solutions around machine/ equipment, both hardware sales as well as after-service solutions
• Provided access to technology early on (GPS, data from the equipment); generating data; types of local platform in the machine
Distributors
• Long-standing history with small/ mid-sized farmers, trusted relationships
• Offering the ‘traditional’ distributor services: physical market place, agronomic advice, financing, storage, logistics
• Purchase history, partly agronomic service/ field specific history
Use of data
Historical farmer access
Technology companies
• Via adjacent agri value chain players, mainly machine and equipment
• Similar to machine and equipment companies; often interlinking own solutions with machine and equipment manufacturers
• Offering technical solutions, interfaces to machine and equip-ment manufacturers. Strong connection to M&E companies
In the past, data has been collected without clear use cases. For new players, data will be core to their business modelsEstablished players have been relying on their traditional model for a long time
New playersDigital Ag – The Platform / Ecosystem
Challenge
4
Strategy&
In the new agribusiness world, technology enables new offerings and added-value servicesThe power going forward lies in the combination and joint application of different technologies
Not Exhaustive
• Digital technologies enable the
coverage of the whole value
chain, from field to fork
• Technology is proven, and has
been in the market for many
years
• The power going forward lies in
the combination and joint
application of different
technologies, e.g. Robots/ AI/
IOT
Drones Virtual reality 3D printing Augmented reality
VR and AR allows having a pool of remote workers ready to work the fields.3
Agri-drones have revolutioni-sed farming in 6 ways:
1. Soil and field analysis
2. Planting
3. Health assessment4
4. Crop spraying
5. Crop monitoring
6. Irrigation
Brands such as McDonalds use VR for stakeholders to visit its farms without actually being there5
From 3D printed sprinklers to 3D printed machine parts, this technology is seen in many areas of the agribusiness world6
Robots Blockchain Artificial intelligence
"Robotics is changing the nature of farming.8"
- ForFarmers8
91% of consumers think it is important to know where their food comes from. Blockchain guarantees supply chain transparency9
15% – 31% increase in productivity due to precise irrigation fertilisation using IBM Watson10
Iot
27% – 75% reduction in water usage due to sensors7
1) The Economist Technology Quarterly 2016 – The Future of Agriculture. 2) PwC, India-Africa partnership in agriculture – Current and future prospects. 3) How we might use Virtual
Reality in Agriculture, Medium, 2017. 4) MIT Technology Review – Six Ways Drones are Revolutionizing Agriculture, 2016. 5) The Guardian – McDonald’s takes virtual tours of actual
supplier farms, 2016. 6) 3Dprint – 3D printing agricultural uses. 7) Financial Times – Precision farming will feed the world the green way, 2017.8) Forbes – AgTech: A Great Investment
For The Future. 9) Agriculture.com Blockchain technology will improve farmers’ ability to market and sell crops, 2018. 10) IBM Stories – IBM Watson – E&J Galio Winery.
Digital Ag – The Platform / Ecosystem
Challenge
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Strategy& Source: Strategy&
Illustrative
Agri Value Chain – Traditional and DigitalTechnology enables new offerings and added-value services
• It’s not enough to stay with
traditional offerings/ value
chain, i.e. from support in
planning the season, planting,
protecting, harvesting and
selling the crop
• Farmers are demanding more
• Differentiation is needed,
including offerings around
– Data capture and analytics
– Marketplaces
– Farm management
– Financial services
– Education and training
• New value pools are created/
traditional value pools are
shifting
• Opportunities for offerings for
new business models
Digital Ag – The Platform / Ecosystem
Challenge
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Digital offerings
Traditional offerings
Strategy&
Illustrative
The combination of traditional and digital offerings, enabled by technology, will provide new, added-value business modelsExample: combination of offerings to provide ‘outcome-based’ business models
Source: Strategy&
• Creation of a new value pool
(outcome based)
• Additional value is created
(beyond current offerings)
• Value pool is moving
downstream
• New/ innovative pricing
models are feasible
• Risk is manageable
Digital Ag – The Platform / Ecosystem
Challenge
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Digital offerings
Traditional offerings
Outcome
based
offering
Guidance on
what to plant, where
and when, based on
field specifics
Input delivery: 3rd party
services, timing based on data
insights
Harvesting:
3rd party services,
timing based on
data insights
Harvest
sold at initial
contracting
Field specific recommendations
based on genuine data sets
Future
selling of
harvest
Risk reduction /
management based on
insurance coverage
Overall steering /
execution of offering by
central farming cockpit
Specific
insights and
training
Strategy&
Lessons learned from B2C: Ecosystem winners excel across all life stages of an exponential growth pathEcosystem development typically follows three stages
Source: Strategy&
• A large number of initial
ecosystem players won’t make
it to the end
• The ability to shift gears with a
distinct play in each growth
phase separates the winners
from the losers
• Ultimate goal is to ‘lock-in
users’ into a specific platform/
ecosystemRise Dominate
• Cheap capital from strategic investors
• Bold move on early acquisitions
• Best talent and “mysterious” brand / vision
• Selective partnering to close capability
gaps
• Subsidized prices to push user base build-up
• Superior, global product availability
• Vibrant developer community to boost supply and
ecosystem experience
• User lock-in/ continuous product
improvement
• Multi-app/ product approach to balance
risk
• Direct end user channel to control value
flows
• Effective patent strategy & regulatory
resilience
E.g. “Stay stealth with laser-focus”
E.g. “Lock-in users, absorb competition”
Time
Survive Rise Dominate
Pen
etr
ati
on
/ M
ark
et
sh
are # of companies
Su
ccess
facto
rs
Survival
Digital Ag – The Platform / Ecosystem
Challenge
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Strategy&
E.g. “Stay stealth with laser-focus”
E.g. “Lock-in users, absorb competition”
Company C
Company D
Company E, F
Company G, H
Company I, J
Company K
Company A
Company B
Others
Agri Ecosystems/ Platforms – Where do companies stand?In comparison to B2C, the ecosystem race in Agri is still in the beginning
Source: Strategy& analysis; Evaluation based on – among others - current platform offerings/ partnerships, estimated customer base and subscriptions, new business
models/ offerings, selected market interviews; please note that the ranking is indicative and not to scale
• Broad customer (farmer) base, and subscription to the specific platform
• Integrated offerings: broad offerings, integration of 3rd parties, still ‘out of one hand’
• Easy to handle for farmer (intuitive), integration of existing data (open API)
• Innovative business models (while price/ value relation fits)
Indicative - Not to scale
Time
Pen
etr
ati
on
/ M
ark
et
sh
are
Selected
success
factors
• In comparison to B2C, the
ecosystem race in Agri is still
beginning
• Some companies had a good
start, building a platform for
advancing in the future
• However, the race is still too
close to call, and additional
offerings, buildup of capabilities
can change the picture quickly
• IT/ cloud providers are not
decided on how to position
themselves yet
Survive Rise Dominate
Digital Ag – The Platform / Ecosystem
Challenge
9
Strategy&
Focus of current agri ecosystems
Extension of future agri ecosystems
Inputs
Distribution/
Retail
Consumer
Trading/
Distribution
Processing
Production
Seeds Chemicals Fertilizer Machine Land/ Water/ Energy
Labor
Agriculture
Food Manufacturing and Processing
Meal kits and fresh produce
Wholesale/ Retail
Restaurants/ Hospitality
Online delivery
Consumer
Domestic Use and TransportCommodity Trading and Transport
Ag
ri
eco
syste
ms
Fo
od
eco
syste
ms
Future outlook: Will emerging platforms enable disruption also downstream, covering the whole ‚Field to Fork‘ chain?Which players will drive disruption alongside the whole agri-food value chain?
Harvested goods
characteristics –
optimize processing
Traceability
Nutritional requests;
healthy food
Timing of harvest;
supply chain integration
with processors
Forecast (quality/
quantity),
• Current Agri Ecosystems are focused on the upper part of the Agri-Food value chain
• There are additional opportunities for deployment of digital/ value-add offerings down the value chain
• Other players down the agri-food value chain, such as CG/ Food companies, are also establishing ecosystems, such as Nestle, etc.
• These ecosystems are starting from ‘the other end’ – targeting mainly interaction with/ added-value for consumers
• Evolving agri ecosystems need to consider the whole agri-food value chain, and become broader than they are today
Digital Ag – The Platform / Ecosystem
Challenge
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Strategy&
Key takeaways
1. Potential for value generation is huge
2. Established companies are still characterized by their traditional thinking/ heritage. Think like ‘start-ups’
3. Disruption is coming from two sides
– New players, already in the market
– IT/ Cloud providers, not yet present
4. Learn from successful B2C ecosystems on how to establish a dominant platform
5. Target a broad customer (farmer) base, and subscribe to the specific platform
6. Understand the E2E customer journey of the farmers, as well as pain points currently not served
7. Complete your offerings and capabilities, by partnerships/ M&A. Don’t hesitate to invest heavily/ take the big step
8. Establish new business models, follow the shift of value pool. But there needs to be a clear value proposition for the farmer (price/ value relation)
9. Constantly differentiate yourselves from the rest; however, expand gradually and build around your core
10. Don’t stop at the current ecosystem reach: think beyond and further down the whole agri-food value chain
Digital Ag – The Platform / Ecosystem
Challenge
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