This is the 2nd in a five post series. We’re talking about Agriculture as fertile ground for Alien Invasion.
Agriculture is at once one of the oldest professions and one of the newest.
Agriculture in the first world is a small employer dominating political and cultural attention. When harvests and times are good – cultures and politics draw little attention. Harvest shortfalls, bad climate events or disasters, pestilence, or logistics problems reverse that situation and draw much attention.
The industry itself will see disruption. The changes are profound for cultures and human civilization. The words ‘subsistence farming’ and ‘living in the countryside’ have visceral, economic, and demographic import. Disruptions will affect lands as varied as Brazil (‘slash and burning in Amazon’), China (‘city work migrants’), Australia (‘persistent drought’), and North America (‘farm bill subsidies’, ‘feeding the planet’).
This series of posts focuses on agricultural equipment enterprise. Global enterprises dominate sales including North American brands, Japanese, Chinese, German, Italian. In particular, the series covers ‘field equipment’ for grains, corn, oilseeds, and a few others. Although this revenue segment is only $100B in annual revenues, the importance is clear as it feeds the planet with long lived equipment.
The equipment sold is ‘capital’ in nature. The brands associated with it run back almost 200 years. Viewed as mechanical in nature for almost 150 years the last 30 years has seen the rise of electronics (in parallel with other transportation/vehicles) yielding techniques ‘precision agriculture’, ‘smart farming’, and ‘agricultural robots’. Electronics will change agriculture just as 20th Century chemical manufacturing changed fertilizer and farm chemical uses.
The late 20th/21st Century electronic technologies enabling disruptive change are:
1) Compute power and communications connections
2) Software (“AI”) technologies of vision, positioning, and controls-automation
3) Electro-mechanical actuators, motors, and distributed power
4) Data collection and analysis of geographic-based and activity/process metrics
This all is relatively expensive. The justification for spending in the G7/EU countries is simple:
A) Demographics and perceptions are making farm labor more expensive and less available
B) Capital is available to agricultural growers
C) Environmental and climate change challenges are key concerns
D) Political networks are still dependent on a portion of farm-based interests
E) Education has changed the managing and working populations
The marketplace conditions for an Alien Invasion are met:
· Concentrated customers: employs less than 1% of national populations
· Global Markets: geographically dispersed over huge continental areas
· Governments are key players: always highly regulated and under attack by many interest groups
· Food trade is geopolitical: dominated by global economics and international trade
· Identifiable domestic markets with limited barriers to entry: marketplace participants vary from individuals to the largest enterprises on the planet
· Capital can be key: dependent on annual financing cycles from a highly concentrated set of lenders
· Megatrend: oh yes, it will be clobbered by oncoming climate change
In the 1970s the futurist Earl Joseph talked of going from oat field to Cheerios in one set of steps. Progress hasn’t quite gotten there yet. We’ll see where things are in the next release.
If you’re interested in more examples of EkaLore’s Alien Invaders – www.ekalore.com/alien-invaders
If you’d like to talk with us, set up a short call with a Senior Analyst – www.ekalore.com/contact
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