Agriculture faces an almost impossible task: How must it meet the food demands of a global population that is projected to reach 9,7 billion by 2050 with natural resources that have already diminished and will continue to decline? In addition, the pandemic highlighted weaknesses in a food system in which 33% of all food produced was already being wasted, where shelves were empty while surplus food was being destroyed on farms and in the value chain.
Fortunately our world is all about disruptive technologies transforming the way we do business, and agriculture is no different. A report released in 2021 by the World Bank, entitled What’s Cooking: Digital Transformation of the Agrifood System, explores how digital innovation in the agricultural value chain is helping to minimize inefficiencies in the food system; boost food safety; improve resource efficiency; and help consumers track the environmental footprint and nutritional value of what they’re eating.
Digital innovations are driving effective farming
Herman de Kock, Nedbank Commercial Banking’s Executive Head: Sales and Service Planning and Management, agrees and says that digital innovation is driving change in the South African agricultural industry. ‘Digital adoption in South Africa has increased partly in response to our unique challenges. These include precision farming, which emphasises efficiency and doing more with less, water-efficient irrigation systems in response to water scarcity in South Africa, and alternative energy systems to cope with erratic electricity generation and inadequate grid provision. South Africa has also been responsible for several world-class innovations that are now shaping the new face of agriculture globally. An example of this is the South African aerial data analytics specialist, Aerobotics, which is empowering the global fruit and nut industry to protect and improve production; predict yields; and prevent water wastage and ensure every tree receives the water it needs to thrive.’
Another new technology that is taking the sector by storm is Veriphy, a cloud-based platform which makes use of drone imagery and artificial intelligence to identify and count livestock and provide detailed reporting and presents more advanced behavioural analytics when required. Among other uses, this technology is used by financial institutions to verify assets to secure financing and insurance.
More control beyond the farm gate
Digital innovations are also putting more control in the hands of the producer beyond the farm gate. Traceability has become a vital component of the food chain due to the global need to strengthen food safety systems, minimize food waste and optimize operational efficiencies, as well as consumers’ increased demand for transparency. De Kock says that two South African companies are proving to be game changers in this regard. ‘SDX Africa’s AgriTrust blockchain-powered Web3 ecosystem empowers each actor in the value chain to control and manage their own data, ensuring privacy and security. By leveraging messaging channels on the blockchain, the actors can easily share information with each other, contributing to a more efficient and transparent supply chain. This solution enhances the supply chain’s traceability and accountability while promoting fair and ethical practices.
He adds that the newly launched transparent track-and-trace data agritech company, neXgro SA, is a virtual platform that enables producers to retain control over their product throughout the entire food production value ecosystem, charge better prices, and trade directly with trusted role players in the value ecosystem. ‘Through its integrated supply chain, neXgro has established strategic partnerships to improve storage and logistical efficiencies, protect consumers’ food safety interests, and provide impartial agronomic services and advice.’
The evolution of the traditional trading model
Agricultural e-commerce, or online trading of agricultural products and inputs, also offers the producer more control. Traditional agricultural value chains involve multiple intermediaries – each of which adds margins – between farmers and consumers. As a result, farmers typically receive a small proportion of the price the end consumer pay, who ultimately pays a higher price because of the margins added throughout the value chain.
By providing a simplified approach to trading, where buyer and seller are directly linked, e-commerce presents a platform for farmers to sell their produce to an array of buyers, increasing farmers’ access to new markets, reducing distribution inefficiencies and adding transparency to the value chain. It also results in higher income for the farmers, reduces wastage and carbon emissions, and customers receive fresher produce.
There is already a well-established agricultural e-commerce ecosystem in South Africa, with platforms specialising in fresh produce, commodities, livestock, agricultural inputs and exports. A noteworthy example is Nile.ag, which connects fresh produce buyers and sellers in the Southern African Development Community countries, integrating regional food systems to make nutritious food more accessible to consumers across the African continent.
De Kock adds that Nedbank’s own Avo B2B platform is gaining traction in the agriculture space. ‘It is well received because it helps industry role players with working capital optimisation. In a post-Covid-19 environment where most farmers are cash strapped, the possibility of lending solutions that aim to support production input costs, is a very welcome development for our sector.’
Nedbank will host a panel discussion on the Nation in Conversation stage at Nampo Harvest Day to explore how the digital ecosystem is changing the way the agricultural sector operates and deep dive into the innovations that are helping to shape the future of the industry. Taking place at 11:00 on Thursday, 18 May, the panel will be facilitated by Herman de Kock and will unpack many of the exciting innovations mentioned in this article. For further information or to book for the event, visit the Nedbank stand at Nampo Harvest Day from 16 to19 May 2023 in Bothaville, Free State.