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Why AgriTech? Why Now?

Despite the fact that the world before and after Covid-19 cannot be the same, it is clear that one of the main changes is government focus and directions. During the lockdown, countries who produce their food and have stable healthcare system were in stable situation compared to others.

Majority of the government strategies are being revisited with clear shift to Agriculture and Health, this also open a door for entrepreneurs around the world to think how to utilize technology and utilize creative ideas to build new eco-system that will ensure sustainability and contribute to people’s well-being.

It is hard to believe that more than 800 million worldwide regularly go to bed hungry. The COVID-19 pandemic could now double that number, putting an additional 130 million people at risk of suffering acute hunger by the end of 2020. Important also to highlight the UN role to eradicate hunger worldwide within the next decade through the second sustainable goal “SDG’s” (End Hunger, achieve food security and improve nutrition and promote sustainable agriculture).

Numbers are confirming more than 570 million farms worldwide, more than 90% of the farms are run by small individual farmers or family-operated which generates 80% of the world’s food. It is important indicator shedding light on the importance of small/medium farmers.

Agriculture merely contributes 3 percent to the global GDP, it is third of the contribution a few decades ago, However, more than 25 percent of GDP is derived from agriculture in many least developed countries.

The data available from the World Bank is really fascinating and showing a lot of insights, you can interpret it globally or customize it per country.

https://data.worldbank.org/indicator/NV.AGR.TOTL.ZS

Herewith insightful figures are representing the contribution of agriculture in GDP for both UAE and Egypt.

This is showing clear indicator that agriculture contribution to GDP is declining dramatically, which proof that agriculture must change to accommodate tomorrow’s needs. To achieve this, we must turn our environmentally damaging industrial landscape into a food production and distribution system that is more just, more environmentally friendly and more sustainable. This also trigger innovative models and next generation technologies to increase productivity and efficiency. We must also use resources more efficiently and waste less food “Deutsche Bank”.

It is obvious that there are many challenges facing this sector causing the farmer migration to other sectors, the below can considered the main ones:

  • Unproductive Value Chain where Farmers are disconnected from buyers, suppliers and financers.
  • Lack of trusted information where farmers are hardly can find the trusted information. In addition to the costly tailor-made solution and consultancy.
  • Market Uncertainty where farmers are trapped with Yield Uncertainty (crop dependent on natural factors such as weather), Price Uncertainty (uncontrolled prices), Tenurial Uncertainty (the relation between owner and tenant) and Uncertainty with regard to Input prices and crop quality

Thinking loudly, farms productivity is the key for most of the challenges and technology is always linked with productivity, accordingly the new term AgriTech got its popularity. AgriTech put simply is the use of technology and technological innovation to improve the efficiency, output of agriculture and to improve all elements of the farming and growing process.

AgriTech promises to help farmers increase crop yields, improve animal health, reduce waste, lower carbon footprints, and improve scalability by easing the burden of labor-intensive tasks. It’s also creating entirely new business models and enabling innovation by introducing new techniques that were previously impractical or even impossible. The global AgriTech market is projected to reach USD 13.50 billion by 2023, and grow at a CAGR of more than 18% until at least 2025.

Indian AgriTech start-ups received $248 million of funding in the first half of 2019, with investment growing 300% since 2018. The country has more than 450 active startups in the space and is one of the largest hubs for AgriTech globally. Africa also has a huge potential market for AgriTech. According to a report by the Technical Centre for Agricultural and Rural Cooperation, 90% of Africa’s AgriTech market is untapped, currently valued at $143 million, the African AgriTech space represents a $2.2 billion business opportunity. The below innovation map cited by “StartUs Insights”, it is showing the most promising areas for AgriTech:

Current innovations have focused mainly on improving existing systems, either by automating processes, utilize water with less waste, or increasing yield, while custom-made solutions also introduced to empower distance farming and smart farming include drones, sensors, intelligent software analysis empowered by machine learning algorithms to proactively manage the agriculture. Technology indeed can also help to build the trust within the Eco-system where farmer is connected to the world with easy access to information and with trusted partners to achieve success.

Back to the new world after Covid-19, the below conditions will accelerate the AgriTech and force the technology to transform such sector.

  • Labor shortage:

As borders close and lockdown is applied in most of big cities, farmers, who typically rely on seasonal workers coming from abroad to work, have to contend with an even great labor shortage than before, accordingly the industry is paying additional attention to robotics and automation. Additionally, farmers are minimizing the interactions with suppliers and other workers. This will also allow startups to use the opportunity to accelerate agriculture from distance where farmers will have minimal interaction with people and relay more on mobile applications and live images or videos from stellate to support the decision making process.

  • Supply Chain Challenges:

With shopping malls, restaurants, universities, and corporate offices closed, many farmers are left without a buyer, meaning a lot of food is going to waste before it’s even left the farm. This will create another opportunity for startups to disrupt the value chain and let the end user find a way to order directly from farmers in order to secure his food. We saw a big need in different communities for home grocery delivery because of shortages in the stores and individuals’ fears that they would not be able to get sufficient food in their home. inventory to consumers for pickup and delivery as a way to reconcile this supply and demand issue.

  • E-Adoption:

Technology before was always considered a rocket since for traditional farmers. Nowadays with the social media and the video calls available in each cell phone, technology became the main tool of communication and finding the information. This create another opportunity for startup to provide live dashboards to farmers and provide E-consultation by connecting farmers with experts around the world.

  • The necessity is the mother of innovation

With the global pandemic, everyone is seeking solutions using technology, less interaction, safer delivery, healthy food, trusted suppliers the cheaper products and the efficient experience. This is another opportunity for startups to focus on efficiency and creativity.

  • Creating jobs, better GDP:

Thinking out loud, sharing economy, crowdFarming, outsourcing, and farming as service are the ways to utilize resources and maintain getting more with less payment. Imagine uberizing the agriculture equipment. Imagine one farm managed by traditional farmers in Egypt but it is financed by five different small investors around the world. Imagine the one investor in UAE is farming three farms from distance in Bosnia where more jobs are created around the world with distance management.

  • Connectivity:

The advanced connectivity of a global agriculture network provides a vast number of benefits up and down the supply chain: Farmers can use their data to apply the right products, at the right rates, and at the right time; distributors can use data to source inputs and position themselves for maximum advantage in the market; manufacturers can improve their means of production and better target their customer base. The Internet of Things (IoT) has seen a huge acceleration in recent years, with smart devices becoming more prevalent, and increasingly able to share with one another. According to research agency Gartner, a projected 20.5 billion connected devices will be in use by 2020 – outnumbering humans by 4-to-1.

  • Leadership support:

The National food security strategy in UAE is stating a clear objective with 30% increase in Yield improvement from new technology-enabled production in order Enhance sustainable technology-enabled domestic food supply across the value chain. This create a clear opportunity for startups to align with the new direction. Accordingly, one billion dirhams announced by Abu Dhabi government as incentive package to support the development of the domestic Agri-Tech industry in UAE.

  • Significant disruption in the VC market:

“We are seeing significant disruption in the VC market. Term sheets are being pulled. Deals are being repriced. VCs are reassessing their investment strategy and capital reserves needed for their existing portfolio companies, particularly for those startups that were in the midst of a fundraise that blew up and now will require bridge funding,” Nolan Paul of Yamaha Motor Ventures told AFN. This will also guide entrepreneurs to maneuver toward the critical sectors such as healthcare and agriculture.

Can we Imagine new eco-system with lean agriculture value chain that utilize today’s technology to introduce new business ideas/terms such as Uberization, CrowdFarming and farming as service?

Can we imagine tomorrow’s farmer using one platform to perform the below tasks:

  • Buy all his agriculture needs including seeds, organic fertilizers and technical equipment.
  • Sell his corps directly to retail and wholesalers.
  • Deliver any of his products or material from anyplace to anyplace around the world.
  • Communicate freely with neighbors and learn from another farmers experience.
  • Ask for advise or consultancy through a phone call or video conference.
  • Connect farmers with financers and investors who can share the risk with farmers and go beyond the traditional farming.
  • Easy payment solution enabled by Fintech and can ensure transparency between all partners.
  • A complete rating system that can allow farmers to rate suppliers and buyers to rate farmers and both rate the transportation company delivering their products.
  • Platform that can talk the local language and customized to address people’s needs.

I am positive to say that 2020 will be the year of AgriTech.

 

 

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Ahmed Shaban

Business Consultant (COO + Marketing)

Ahmed is a Government Experience strategist with extensive history of delivering successful programs focused on government transformation in the UAE and beyond. With +16 years of professional experience in Government Service development, Service delivery, Customer Experience Strategy, Research & Consultancy, in both government and private sector corporations, where he led different related initiatives in different UAE government enabled by emerging technology. Ahmed is also believing in giving back to community, accordingly he is part of the adjunct faculty of Higher College of Technology in UAE, focusing on building knowledge for the new generation. Ahmed is holding his PhD from IBS-UTM (International Business School - Universiti Teknologi Malaysia) and Bachelor’s Degree in Electronics and Communications Engineering from Cairo University of Egypt.