According to the World Bank, the food and agriculture sector accounts for 10% of the global gross domestic product, which makes the sector worth almost $5 trillion. If we look at the food as output of farms, it is either sold immediately as raw food, agricultural commodity, or it is being processed and then sold as an intermediate or final product.
Approximately 70% of all food we consume is processed food, making it a major segment of the industry. But, one thing is in common for both types of food being delivered to the market - it all starts from farmers.
Farmers - the base of food sourcing
All food processing companies source commodities either directly from farmers or through intermediates. Larger international companies tend to build their own food sourcing chain with a goal to build a reliable network of farmers as their food production partners where they can influence the produce quality and its specific attributes, require clear standards compliance and eliminate third-party intermediates that add their margins on the purchasing price.
The challenge in having your own food sourcing network lies in managing a usually larger number of farmers who are often geographically dispersed through several countries and even continents, whose size varies from smaller ones to big farmers and whose skills vary from advanced knowledge of latest best practices to old fashioned production methods used decades ago.
Knowledge sharing economy
Food sourcing companies are aware of the importance of taking care of their network of farmers. Having a few percent of top farmers isn't enough for securing long-term business stability, they need to make all their farmers "top farmers" not only to ensure the required produce quality, but to have sustainable, resource efficient and satisfied farmers in their food sourcing network as well.
Just imagine the scenario if those farmers were to fall in productivity. What would be the effect on the food sourcing companies that rely on them. This is the reason why they need to empower farmers with best practice knowledge, identify key productivity drivers of the top 5% of farmers in their network and push that knowledge to the other 95% of farmers too. Sharing is caring and it leads to ensuring a safe future for everyone.
The black hole effect
Although there are a lot of food processing companies that are making a significant effort in taking care of their farmer network, there still exists a black hole in the food sourcing process. After a food sourcing company contracts farmers with desired quantities that meet the companies' sales targets, it has none or minimum overview of what exactly happens on farmers' fields during the production process until the time of delivery.
Because of the black hole effect, if farmers don't perform well and don't deliver the desired quantity and quality, the food sourcing company is pulled into the hole and problems occur - how to deliver the planned quantity with adequate quality attributes, what if we deliver this quantity but at lower quality, how will it affect our customer satisfaction, etc. Usually it ends up in the sourcing company paying the higher price for late order of produce at desired quality level. And that's okay if they can afford it.
Bringing real-time field data from farmers
At Agrivi we are focused on changing the way food is produced today guided by our vision to make a positive impact on over a billion people. We believe that the gap in the food sourcing chain can be solved by empowering both food sourcing companies and their farmer network with an integrated farm network management platform that focuses on three key areas:
• Providing farmers with powerful farm management software to control every aspect of their production that helps them ensure productive, profitable and sustainable farming.
• Providing food sourcing companies with real-time overview of contracted production progress that enables them to get an accurate insight into the planned quantity delivery level and ensures complete produce traceability.
• Collaboration between the food sourcing company and farmer network through best practice knowledge sharing, quality standards enforcement and integrated communication mechanisms.
Supporting farmers worldwide
Some cloud solutions are finally able to reach farmers of all scales globally. Cloud solutions are usually delivered as Software-as-a-Service (SaaS), removing the need for large capital investments into equipment and expensive licences and charging customers on a fair usage and size principle - larger customers pay more, smaller pay less. To make it even better, having multilingual cloud solutions can be adopted by farmers worldwide easily.
But how to handle cases when farmers in the network are micro farmers from developing markets and they don't possess devices like computers and smartphones? How to secure food traceability in those cases? The answer is yes, it is possible. We see cases where food sourcing companies have field agents equipped with tablets and smartphones that visit micro farmers in rural areas, consult them with best practices and track all their activities to ensure complete produce traceability and detailed real-time insight into every aspect of their production.
Having all that in mind, we can't be more positive about the future of the food industry. The only thing needed is will - will to improve, will to make change.
