Reinventing Agriculture Supply Chain Through Technology
(At Supply Chain Labs Fund, we are keen to invest in agritech startups that are disrupting and optimising agriculture supply chains. )
By 2050 we need to have enough food and food distribution to feed nearly 10 billion people. Otherwise, we will face social unrest in places where food is not adequately and efficiently distributed.
Innovation can increase agricultural production, lower food wastage, and improve food quality and safety. Technology can play a significant role in making supply chains more effective and efficient to deliver food quickly and safely with minimal wastage to consumers across the globe. It also ensures that farmers get better yield rates than they get currently.
Unfortunately, ‘supply chains are very concentrated and that makes them very fragile to disruptions’ as highlighted by Julian Lampietti, Manager for Agriculture & Food Global Practice, World Bank Group in a podcast. A few roadblocks that need to be fixed in the agriculture supply chain are:
- Lack of traceability through different stages of the supply chain
- Communication gaps and fragmented information
- Poor and unhygienic inventory management
- Insufficient aggregate and e-commerce platforms
- Food wastage during harvest, processing, transport, retail, and consumer levels
In the wake of this scenario, technology brings the immense potential to develop solutions that can strengthen the food supply chain.
Let’s take a look at technologies that are transforming the agriculture supply chain.
Internet of Things (IoT) Sensors:
IoT sensors have several applications across the entire food supply chain. For example,
- Monitor food safety during harvest and transit to eliminate the risk of contamination and food borne illness outbreaks.
- Track real-time temperature and humidity of perishable foods to reduce quality loss.
- Send alerts on future inventory shortages to help manufacturers and retailers take the guesswork out of inventory and warehouse management.
- Enable consumers to use their smartphones to scan QR codes on packaging to get information on the food they are consuming.
It is projected that the market size of the global blockchain in the agriculture and food supply chain will grow at a CAGR of 48.1% to reach USD 948 million by 2025. The primary growth driver is increasing demand in the sector to trace and track the journey of food from farm to table.
Blockchain creates a digital food supply chain by helping all stakeholders to generate and share data securely. It also allows them to process verified transactions through smart contracts and decentralized ledgers. It can bring much-needed transparency, accountability, audibility, and ownership to the supply chain.
Robotics and Artificial Intelligence (AI)-Enabled Logistic Solutions
Robotics and AI-based systems in agriculture logistics improve the speed and accuracy of operations. Right from packing, picking, and sorting to contactless and last-mile deliveries, AI is making a notable difference in logistics.
Some use cases of AI in food logistics are:
- Robotics and autonomous systems to reduce manual error rates in warehousing and overcome the manpower shortage problem
- Drones to make deliveries to remote, difficult, or dangerous locations
- Route optimization software for faster delivery, identify the best routes to avoid traffic and minimize the ideal time of delivery partners
- Wearable devices for quick data availability for product placement and movement in warehouses
- Ai-based quality assessment solutions
- Computer vision + satellite imaging + AI based crop mapping solutions
Supply Chain Control Towers
Supply Chain control tower is a cloud-based solution that continuously captures various data points in real time. It empowers food supply chain participants to communicate and collaborate effectively for better control of processes. It can help sense demand fluctuations, logistics bottlenecks, and other risks before they occur.
Supply chain control towers are still an emerging concept in the agriculture sector. However, it is expected to be as a game-changer to manage demand-supply fluctuations and reduce food wastage.
Digital B2B and B2C Marketplaces
The agriculture ecosystem needs to have robust backward and forward market linkages to arrest costs and aid in both value capture and value creation in the supply chain. However, farmers and consumers still rely on intermediaries in the conventional supply chain model.
Aggregate and e-commerce platforms can digitize both B2B and B2C supply chains. They can enable farmers (especially smallholder farmers) to reduce intermediaries or even sell directly to end customers and fetch fair prices for their produce. They can also leverage these platforms to buy high-quality agri inputs for better crop outputs. Digital platforms will also induce transparency, standardization, and regulation in the sector.
Predictive analytics can be instrumental in helping growers, traders, and other participants in the food chain to make data-driven decisions. They can optimize resource efficiency and sustainability by identifying gaps in resource allocation in advance.
This technology can also predict trends and patterns in demand, consumption, weather changes, etc. So, it can help to maintain safe stock levels, dispose of excess yield/food responsibly, and set the right price for the products.
Food Waste Management Technology
It is estimated that 14% of food is lost between harvest and retail even before it reaches consumers. Amidst the food security, hunger, poverty, and climate change crises, it is imperative to cut down this wastage during the supply chain. This is because the one-quarter saving of spoiled food can feed 870 million undernourished people. Food waste management technology can tackle this problem in clever ways.
For example, sensors can detect the freshness of food at every stage of the supply chain and help move the food with higher chances of spoilage faster through the chain.
Then, there is bio-coating technology which uses biodegradable, plant-based material to form a protective layer on the perishable products and extend their shelf-life. There are also several mobile apps and market apps which deliver ‘ugly’ or ‘imperfect’ but fresh produce to consumers who are not fussy about such food.
Summary: The supply chain in the agriculture sector is quite complex and fragmented. Technology can not only connect the missing linkages but also strengthen the weak ones. It can also optimize synergies among all stakeholders. Hence, agri-tech startups working on supply chain innovations should get ample encouragement and assistance on all fronts to eliminate the inefficiencies in the system.
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Prajakt Raut — Managing Partner Supply Chain Labs — A Venture Capital Fund investing in startups disrupting supply chain.