When I was involved in the metalcasting industry, I often felt like a voice in the wilderness in urging foundries to stop commoditizing the engineered cast iron and steel components they were manufacturing by selling them by the pound. I don’t know how much good it did. That’s just the way foundries and their customers had negotiated prices for decades, probably centuries.
Trying to change the mindset of an entire industry is no small task as we in agriculture know. But one company believes it can change how the world looks at “commodity” crops.
Last month, CNBC published it Top 50 Disruptors List. The New Food Economy describes it as “a guide to the new generation of not-yet-public companies vying to change the way the world does business.” An ag company that few people have ever heard of topped the list: Indigo Agriculture.
A May 30 article in The New Food Economy explains what Indigo does and how it has evolved. “Indigo began as a microbiology firm hawking microbially treated seeds, which research suggests can improve yield with fewer chemical inputs. But the Flagship scientists quickly realized that agriculture was ripe for a data coup, and Indigo’s scope became much bigger. Since then, Indigo has launched ventures that sprawl across the supply chain and the globe. As of right now, it manufactures seed treatments, incubates dozens of precision ag technologies, brokers billions of dollars of commodities, and is investing in storage, logistics and more. The idea is now not just to sell a profitable alternative within the existing system, but to disrupt agriculture as we know it.”
It goes on to say that under the current system of growing and selling crops is controlled by the corporations that control ag’s infrastructure. “Under this system, crops themselves remain generic and undifferentiated — a bushel of soy is a bushel of soy. The value, supposedly, added mostly by the middlemen.”
Charlie Mitchell, who authored the report, says Indigo’s intention is about “overthrowing the notion of commodities entirely, finding new ways to monetize the untapped value of what each farm does well. And it will all be powered by Big Data.”
According to Mitchell, Indigo’s central thesis is that commodity crops are not all created equal. “One farmer’s corn may contain more starch than most; another’s may require less water or fewer pesticides to grow. The company wants to find ways to compensate farmers for those attributes, so that they’re no longer forced to sell into an ocean of anonymized grain.
“As soon as a crop gets mixed into a grain elevator, it acquires one price and one price only — and key information disappears into the globalized commodity ether. But finding ways to track what is singular about each crop will allow buyers to be much pickier, helping producers to monetize their assets in new ways. Though today’s agribusiness giants prize standardization above all else, Indigo sees unrealized value in specificity.”
It would appear that Indigo is taking its cue from changing consumer demands. We’re already seeing customers wanting more information about where their food comes from (farm to fork, buy local, etc.) as well as the trend toward organically grown crops and other food products.
I think helping farmers profit from these evolving market changes has been the missing link in the movement. “Indigo is betting that the transparency and traceability its data enables will drive the future of agribusiness, which is why it’s developing and investing in new technologies that can evaluate, track, monitor, and protect crops while they’re in storage and waiting to find a buyer,” says Mitchell.
“Indigo offers its buyers the chance to contract for a specific type of product with a specific delivery date, promising to take care of the rest. The result combines the convenience of the commodity system with the benefits of contracting with an individual farmer for a specialized product.”
For more detail on what Indigo is doing, you can read the entire article yourself by clicking on the above link.
A few years ago, I wrote in this space about how precision farming technology would revolutionize this industry. In retrospect, I think adopting precision technologies is probably only the first step on the new direction ag is heading.
But, then again, farmers are a lot like foundrymen; it’s going to take more than talking to convince them that there’s a better way. As Mitchell concludes, “There’s really only one way to win farmers over to a new system: convincing them it will make their lives easier. Like all of us, farmers prefer to deal with a one-stop shop. So, if it wants to become a Big Ag contender, Indigo must first make itself indispensable to farmers from seed to factory.”