Connecting the Agriculture Sector

An ever increasing demand for food, driven by a growing population, constraints in land and climate/environmental change, means the Agriculture sector needs to increase automation and improve utilisation of data.  To do this enhancements in the global connectivity infrastructure are high on the list of priorities.

The potential uplift to Global Gross Domestic Product by 2030, using the different technologies shown is estimated by McKinsey at $500bn – a fair chunk of change against which to assess investment in communications and technology.

Like all new investment, it will need to be considered carefully. Anticipated communications’ improvements over the next decade will assist as new technology is adopted.

Assessing when to “push the button” on new investment can be difficult as with each pending improvement, the potential cost/benefit ratio improves.  Hence there can be a reluctance to invest early.  We frequently see businesses holding off from new investment, for a variety of reasons – and falling behind as a result.  It is important to be “in the game” to retain the strength to compete and challenge. 

Proper assessment is nonetheless vital.  Frequently the biggest wastage is on the largest projects – there can be a tendency to think that a bit of extra cost here or there will not impact the overall position. Of course, if all parties involved adopt the same thinking, this soon turns into a significant cost overrun.  

For the most part these are big projects, necessitating collaboration between multiple stakeholder to fully reap the rewards (pun fully intended!).  As ever this means engaging with other beneficiaries, be that technology developers, connectivity providers or the state (who will gain in the long term through higher taxes).

Collaboration, is a core tenet here at Polestar, and one we see as increasingly important given current global uncertainties in order to permit the continuing roll-out of new technologies required to compete whilst at the same time managing risk to individual parties.  Thinking about the benefit you can bring to a counterparty outside the purely financial, and not necessarily in the immediate short term is a good way to start.

As for any investment , a strong proposal and appropriately managed levels of risk will make funding easier to source. With both technology and agriculture continuing to operate strongly through the current Covid-impacted period and with other sectors less robust in this respect, funding availability is strong. In such an environment especially, if you are looking to secure funds for investment, it is worthwhile assessing your potential funding needs and optimal solutions and preferences over the longer term.  As always, the team here at Polestar is happy to discuss things and see if we can help point you in the right direction. 

Agriculture, one of the world’s oldest industries, finds itself at a technological crossroads. To handle increasing demand and several disruptive trends successfully, the industry will need to overcome the challenges to deploying advanced connectivity. This will require significant investment in infrastructure and a realignment of traditional roles. It is a huge but critical undertaking, with more than $500 billion in value at stake. The success and sustainability of one of the planet’s oldest industries may well depend on this technology transformation, and those that embrace it at the outset may be best positioned to thrive in agriculture’s connectivity-driven future.

By Richard Hall on 30/10/2020