What really drives profitability on pastoral farms – the right story

What really drives pastoral farm profitability?

This is the second article in a series reflecting on the building blocks of profitability on pastoral farms in New Zealand. My particular interest is in sheep and beef farming, occupying 70% of New Zealand’s pastoral land.

This article focusses on the farm system – a fascinating animal-pasture game of matching the ever-changing pasture growth with a livestock business.

I am lucky to have spent time with farmers who are far ahead in thinking: my role has been to understand this thinking and how it can be incorporated into a system. Theirs is a whole story because it includes the battle to get the time to think when everything else is happening – farm succession, regional council consents and farming with your brother…

Helping a farmer involves either supporting them to find the right story and or helping them make the right choices with the story they have chosen. The first is strategy and second is tactics, and this article is about strategy (my next article is about tactics).

Let’s pause for a moment to discuss the animal-pasture game and the size of the prize. In quantifying the value of precise knowledge in pasture management on dairy farms Beukes et al (2019) estimated $385/ha can be gained with improving knowledge of pasture biomass (average 15% error) – also referred to as pasture cover, and a further $155/ha could be achieved with perfect knowledge of paddock biomass, at a price of $6.33/kg of milk solids – a 27% increase in profit.

The study found a 26% increase in pasture production between poor and perfect knowledge. Can we translate this to NZ sheep and beef farms? We can assume an average sheep and beef farmer is dairy’s poor category[1] so the move to perfect knowledge would increase pasture productivity of 6.5tDM/ha by 1.7tDM/ha. A farmer should be able to convert this into revenue that would double the profit of average hill country sheep and beef farms. And, that is what we see the top farmers are doing in almost every benchmarking scheme I have seen or been part of.

The dairy sector knows exactly how they would use perfect knowledge – using a feed wedge and the Spring Rotation Planner (developed by DairyNZ) to manage grazing rotations. Sheep and beef farms are more complicated with many more mobs all with different metabolic demands running on different landforms with different pasture composition, quality and soil fertility.

So, can a sheep and beef farm double its profit through more perfect knowledge? I think this is theoretically possible and entirely worth the effort. I see three preconditions:

  1. Pasture cover measurements – easy and accurate
  2. The farm makes good seasonal decisions – when required, with good measurement
  3. The farm system is well design – and can adapt to its climatic variability.

Let’s work through these:

1. Pasture cover measurements – easy and accurate

There are great farmers dedicated to measuring their pasture covers paddock by paddock limited only by the accuracy of their technique and state of the technology. But that dedication is beyond the mettle of the remaining 92% of farmers.

Accurate measures of pasture cover on New Zealand sheep and beef farms is extremely important if we want to win the game and double profit. One example is the decisions made in the autumn season. New Zealand farms minimise expensive supplements by accumulating pasture cover to use in winter, while leaving enough to set stock (open the gates) at the start of lambing and calving.

Too little pasture cover pushed forward, and lambs and calves are born underweight on bare pasture – keeping the pasture bare slows regrowth as pastures exhaust their root reserves, reducing annual pasture production by 20%. But the worst effect is that it prolongs the period where mothers cannot wrap their mouths round enough pasture, they roam, and lambs follow an udder that is not full. If a dry summer follows, the farmer starts with poor condition animals.

Too much pasture cover and pastures quickly enter the reproductive phase with too much pasture length: this will mostly be lost to decay and up to 30% of the annual pasture production will not consumed. If the grazing rotations have not been well planned, then the dead and decaying pasture will not be isolated but will instead be through most of grazing area, slowing lamb growth rates.

Getting this right should not be mysterious, it requires good measurement, good information to base predictions and good computation (thinking). Not having an easy and accurate pasture cover measurement and no quantifiable probabilities of future pasture growth rate creates the mystery.

2. The farm makes good seasonal decisions – when required with good measurement

Farms are biological systems and decisions are based on keeping things both alive and thriving. A farmer must manage pasture to keep it vegetative while enabling it to restore root reserves. The complexity comes with maintaining a whole livestock business that supports the management required of pastures.

If a farmer does this without measuring things, they will be on the spectrum between lousy and good.

  • The good intuitive decision-maker really interests me. In my rather informal study, I have found they look closely at things: for example, they drive over their pastures regularly, perhaps mentally calculating what is coming up in their mental grazing plan. They also have a good memory, particularly for how the farm’s situation compares to previous years and in those situations what they did (or should have done).
  • The other three quarters of farmers also interest me. Often the other things going on in their story are just too distracting and may be a higher priority.

3. The farm system is well designed – can adapt to its climatic variability

I’m going to discuss this topic in more detail.

Designing for variability is all about understanding the strategy of the game. This is best illustrated to me by farmers who always find variability traumatic. The farm seems to operate well less than half the time. In good years there is a big catch-up to be made and the farm is not setup to capture the onrush of pasture. In poor years stock are not sold in good condition and markets are poor. The solution is usually to invest in thinking – why is the farm so brittle?

The highest value from investing in strategy is in farms with diversity in landforms and variability in climate and who have not yet optimised their systems. This is perhaps half our sheep and beef farming area.

The first step in analysing any farm system is to create a good electronic map of the farm, using this to map out the different landforms. New Zealand has seen many attempts at mapping products but most are designed by people who are not closely engaged with sheep and beef farmers in formulating strategy, so there is no concept of things such as area, effective developable area, effective area excluding scrub, and area in puggable soils.

The next step is matching each area (as above) with its seasonal pasture growth profile. Almost no farmer knows the seasonal growth profile for each landform. Given the size of the prize in winning this game we may be underinvesting.

The next few steps depend on the farmers. They involve looking at changes to the way the livestock policies work, or even replacing these with different stock that the farmer may have no experience with. A moderately complicated sheep and beef farm may have three enterprises, some having several mobs such as ewes, hoggets, sale lambs – so understanding what can feasibly run on a farm is complex.

How do you go into the unknown?

Fortunately for New Zealand farmers in the early 80’s a doctoral student called David McCall went about creating a computer model called Stockpol. Stockpol evolved into the Farmax farm modelling software which supports precisely these questions. Dave’s brilliance was in designing it at the right level of biological complexity to answer most optimisation questions.

But Farmax is only as good as it’s professional user, who may be anywhere on the talent-spectrum from costing a farmer through the resulting bad decisions, through to stories that are transformational.

Good farm modellers have the knowledge to both reduce the number of assumptions made and know where to look for opportunities. The assumption-gap is widest in the knowledge of local pasture growth on each landform. Closing this gap is a worthy cause.

A strategy creates direction, and an example of this would be:

  • Strategy: Reduce the variability in ewe productivity by managing condition score 
  • Direction: “At weaning we will prioritise getting ewes to 3 condition score and adjust the number of finishing lambs accordingly”

I love it when farmers have bold strategies that are based on solid logic. Such strategies spell out what needs to be measured. These farmers talk in metrics that line up with the decisions they expect to make. I have visited many farmers who are measuring things without knowing what they will do with the results. I like farmers who have these side hobbies, but if they are measuring just because they are guessing at what might be useful, this article is encouraging them to invest in strategy first.

The farmers story is bigger than their farms profitability.

Farmers may discount a direction because they have no affinity to it and know they will muck it up: some farmers do not like trading (buying then selling) stock for example. This discount may push it well down the list despite its apparent profitability – I am always amazed but I respect a farmer who is living the dream.

So, how can technology help New Zealand sheep and beef farmers to formulate the strategy needed to double farm profitability? Here are a few things that would excite me:

  1. Hill country pasture cover measurement
  2. Calibration of pasture cover measurements
  3. Pasture database library
  4. Improved pasture modelling
  5. Weighing ewes
  6. Condition scoring ewes

Hill country pasture cover measurement

As rising plates and other devices are not useable on hill country. You just cannot buy enough remote sensing devices to get accurate measurements for each paddock. Farmers are limited to visual assessment with a sward stick. This takes considerable confidence, is not accurate on diverse landscapes and takes at least a day to do well. If satellite measurement technologies can prove accurate this is the prime candidate.

Pasture cover measurement calibration

No matter how good the RBG satellite image is it will not pick up much of the dead material. This may need some in-paddock calibration. The prime candidate for this is a mobile phone and artificial intelligence to give accurate measures of biomass and the proportion in dead material.

Pasture database library

There were hundreds of pasture growth rate trials during the old MAF and DSIR days and there continues to be more. But it is a grovel to get these data, most is still in hardcopy. It’s good to hear of progress being made to build such a resource.

Improved pasture modelling

The Pasture Growth Forecaster and Farmax simply needs more investment in handling the dynamics of dead and reproductive material across more locations and sward types. Some work is being done here with lucerne but more needs to be done with the gradient from ryegrass/clover to Browntop, Yorkshire fog, kikuyu pastures.

Weighing ewes

New Zealand companies lead the world in yarding, handling, and weighing technologies. The holy grail on the animal side is real-time measurement of liveweight change in a sample of a mob. I do not think this needs to be calibrated to actual grams of liveweight gain but if shepherds could know when animals are going down when they should be going up. There are some exciting satellite based technologies being trialled.

Condition scoring ewes

Condition score is directly related to ovulation rate (and weaning percentage) while human eye assessment of a ewes lightest has been shown to be poorly related. The solution is grasping ewes in the small of the back and feeling how much fat is there – so plenty of room for operator error and very time consuming. Lifting a 2.5 CS ewe to 3 CS is one of the highest return investments on farm – a technology that drafted accurately as sheep flew through the yards would be an exciting development.

What’s next?

This article covered strategy in the pasture-animal game. My third article will take you to the frontline. We have learned what moves a knight can make; it will be time to make the right moves within a farm’s season.

References

Beukes PC, McCarthy S, Wims CM, Gregorini P, Romera AJ. 2019. Regular estimates of herbage mass can improve profitability of pasture-based dairy systems. Animal Production Science 59: 359–367

[1] Sheep and beef farmers are limited by accuracy of pasture cover measurements on diverse landforms and in-paddock variability (soils, slope, stock camps).

Old cash register

Platforms – how to monetise a successful agri platform

How to monetise an agribusiness platform

 Over the past two blogs I’ve explained what a platform is, why they’re important for agribusinesses to understand, and how to begin designing a platform for your business.

However, you may have noticed a gap in our platform conversation. What is the business model? How do you profit off this? Once we’ve created this space for interaction and value-exchange – how do we get to share in this value?

At first glance, this seems like an easy question. Just charge the users of your platform! You’ve built the space – so it’s only fair for them to pay for it.

Unfortunately, it’s often not as easy as this. As I’ve explained – the value of a platform comes from the interaction between participants. The more producers and consumers on your platform offering a value exchange – the more valuable your platform is to them, and the more new participants will want to join.

If you decide to charge users to join your platform – you may instantly reduce the amount of participation on your platform. Which means the value of your platform will decrease – and this can lead to a spiral towards zero.

For an example of this – think of TradeMe or e-bay (popular trading platforms). TradeMe requires people listing items to sell, and people seeking to buy items. One without the other is a low-value proposition – you wouldn’t want to browse an empty platform, would you?

But if you charge users to join your platform from the outset, then this is exactly the dilemma you face. Creating a user fee limits the participation on your platform, which reduces the value of your platform.

Alternatively, you might consider building a platform for free – and then charging users once you have critical mass. Again – this approach rarely works in practice. People are not happy to pay for value they’re used to receiving for free, and usually vote with their feet.

You can now see why the authors of The Platform Revolution wrote, “Monetization, in fact, is one of the most difficult – and fascinating – issues that any platform company must address.”

The issue is the relationship between charge and participation. If you charge to access your platform, people will avoid your platform. If you charge for usage, this will likely reduce the frequency of participation. If you charge the producers – they will reduce the value they create, and if you charge the consumers, they will limit consumption.

The challenge is not insurmountable, but it does require careful thought. Your business model around your platform needs just as much strategic thought, trial, and design as the platform itself.

As you think about monetising your agri-business platform, there’s a few guiding principles helpful to keep in mind.

 

Keep thinking value

Remember – at the core of this platform is the creation of value. Any platform invites participants to join the platform, and then can explore ways to charge for the excess value that is created.

Before you know the excess value, it’s critical to understand the core value consumers and producers receive from their engagement with a platform. Broadly speaking, this can fall into four categories (as explained superbly by the authors of The Platform Revolution):

  1. Access to value created on the platform. The heartbeat behind any platform is providing value to consumers. This may be access to learning, data, expertise, services, goods – the list is near endless.
  2. Access to a market. The producers find any platform valuable as it allows them to access a market at scale. This may be access to farmers, farm-service providers, other businesses – whoever is seeking to use the value on the platform.
  3. Access to interaction facilitations. Platforms provide value to consumers and producers by allowing high-quality interaction for them. Instead of having to email back and forth, negotiate prices, engage in Zoom meetings and go through intermediaries – a platform allows direct exchange in a low-friction environment.
  4. Access to quality curation. Great platforms provide unique value by building curation systems that connect the right producers and consumers, at the right time. This reduces wasted time in searching the best fit, and allows for high-quality matches that meet customer needs, and producer offers.

 

When your platform does this well, you are creating excess value that a traditional pipeline business model cannot offer. That’s great! Most well-designed platforms actually create more value than they can capture, which is why free participants are happy to engage with the platform.

A solid monetisation strategy depends on thinking about each aspect of the above value your platform offers, and where you are creating excess value that can be monetised – without reducing the growth of your platform.

Monetise exchange, not use

One of the simplest – and most effective – ways to monetise a platform is to charge a transaction fee. This is sensible as the transaction between producer and consumer is the culmination of each of the sources of value.

Once the producer and consumer have agreed to participate in the exchange, your platform has delivered the promised value. If your platform facilitates the exchange of money, taking an agreed transaction fee is a solid monetisation strategy – especially if your platform caters to a high frequency of exchanges.

If you try to charge participants to use your platform, they are unlikely to explore the value possibilities your platform offers. They are taking a risk on your platform – choosing to pay before knowing what value they can receive. This strategy often limits growth and has been a death-knell to many platform start-ups.

If you take the advice of monetising the exchange, however, you are allowing participants to browse and explore your platform for free. They can experience the value of your platform, and it is only after the platform has delivered an excess of value that they are required to pay.

This approach de-risks the payment for both producer and consumer and makes your monetisation dependent on the performance of your platform. This is the approach used by many of the popular platforms in the world (Amazon, Uber, Airbnb) – and is worth considering.

 

Monetise access to producers if your platform is a community

An alternative strategy to carefully consider is monetise access to your platform to producers. This approach can work – but only if your platform has a wide-range of users who have joined to produce and share together. For example: this strategy would be suicide to a platform like Uber or Airbnb, which requires producers for the very success of the platform.

But think about LinkedIn, or any other platform where users both produce and consume value. On LinkedIn, users read posts and articles that are produced and shared by other users. You don’t go on LinkedIn to try and interact with specific sellers of services – you go to there to learn and connect with others.

However, LinkedIn represents a valuable market for another group – recruiters. As people don’t join the platform to meet with recruiters, LinkedIn have been able to charge recruiters and company an access fee to target individuals for potential jobs, which likewise encourages users to keep their profiles up to date.

Remember – this strategy only works if it has a positive effect on the network and encouraging growth and interaction. Applying this strategy to an auction or trading platform would not work – and would lead to a strong decrease in producer engagement.

 

Don’t monetise what used to be free

This is the golden rule of monetisation for platforms. Don’t charge any participant for value they are used to being free. People don’t like being told they now have to pay for a service they’ve enjoyed gratis. It’s an easy strategy – and one that usually doesn’t work.

Instead, strive to create new additional value that makes sense to charge for. Offer specialised curation, unique access, priority service – anything that allows the free model of your platform to continue growing – and direct participants towards the extra-value.

 

In summary

As you can see, monetisation is a huge challenge – but also a huge opportunity for strategic thinkers and for creating new revenue streams for your business. I recommend you plan your monetisation into the initial designs of your platform – rather than waiting until you have critical mass.

Although this plan may change, it is helpful to have a roadmap for monetisation as you design your platform, and allows you to prioritise build decisions, keep value-focused and seek to grow your platform in a sustainable and value-adding manner.

If you’d like to discuss more about the value of platforms, or chat about an idea for introducing a platform model into your business (remember – it’s not easy, but can be incredibly valuable!) – don’t hesitate to reach out!

I’m always happy to chat more about agribusiness, agritech, and improvements to business models and processes, and to share more about the work Rezare has done in this space. Just get in touch.

Get In Touch

International livestock data standard released

The ICAR Animal Data Exchange working group has released a set of JSON and API standards for livestock data exchange. The International Committee for Animal Recording is an international non-governmental organisation (NGO) that helps members and stakeholders share guidelines, best practices and standards in animal recording and production.

The culmination of around two years of work, the ADE-1 specification builds on previous work by the animal data exchange working group, including a previous XML standard. The new JSON and REST API specifications build on work done in this space by DataLinker in New Zealand and JoinData in The Netherlands.

I’m pleased and gratified to be one of the working group members, and to help lead the technical effort that has defined the new specifications, along with technical working group colleagues in Belgium, Finland, Ireland, Germany, New Zealand, The Netherlands, and the United States. I’m grateful for the support of DairyNZ, Beef+Lamb NZ, and the Red Meat Profit Partnership, through DataLinker, that has allowed us to participate, and for the recent involvement of a number of Australian organisations through MLA Integrity Systems Company. Your specifications and improvements are being submitted for inclusion in version 1.1!

There has been strong international support, with several animal recording and technology companies telling us they will use the specification (and indeed, some have already started implementation). Two recent webinars hosted by ICAR were attended by around 120 developers and product managers from a range of organisations.

The ADE-1 specification is released under the Apache 2.0 open source licence, and can be found in GitHub at https://github.com/adewg/ICAR

The working group is turning its attention to new messages and extensions for the next, 1.1 release. If you have suggestions or ideas, submit a suggestion to the issue register in GitHub, or get involved!

 

Will Covid-19 result in a shift in attitudes towards digital and data-driven tech?

Covid-19 and the lockdown restrictions have placed a lot of strain on us as a society and also required the adoption of new working practices and technologies.

 

Over the past three or four weeks, I’ve been interested by the number of times someone has said to me something along the lines of: “Well we are all going to have to get used to using tech like Zoom now aren’t we?”.

 

To paraphrase those conversations, what I’m hearing is that many people have started using digital communications technology much more than ever before, and in some case, for the first time.

 

Is this a sea change I ask myself? And if so, what might that mean for digital technology in agriculture?

 

At the top of this post is a video of a presentation I gave at the NFU conference in February 2019 – just over a year ago. How things have changed since then!

 

What is interesting is that I gave that presentation in the context of what I felt was some industry scepticism as to the value or need for all this much vaunted digi tech in ag. Now, having watched it again in the context of Covid-19, I find myself wondering if there has been (or we are in the midst of) a cultural shift in attitudes towards digital tech in ag, and in particular the role of data, and data sharing to help us address the productivity challenge we have in the UK.

 

If you’ve got 12 minutes to spare, have a watch and then ask yourself:

  1. How would I have felt about what was said in this presentation if I was hearing it a year ago?
  2. How do I feel about it now?

My hunch, is that your attitude will have shifted. Maybe not a lot. Or maybe a great deal.

 

As ever, interested to hear you thoughts. Feel free to post a comment at the bottom of this post.

Share your thoughts

Shopper looking at fruit

Platforms – what are the critical elements and how do I design one?

How do I design a platform?

Since writing the last blog  – the world has changed.

 

New Zealand is in level 3 of our lockdown, and thousands of businesses are adjusting to the new normal. Perhaps now, more than ever, the value of the platform is obvious.

A business modelled on the traditional pipeline is now seeking to understand how to continue their value-chain when key players are no longer mobile.

 

The platform models, however, are far more adaptive to change. Producers and consumers can continue to interact over platforms, and can quickly learn new best practices from one another. Platform owners can see – in real-time – changes to value creation and exchange, and share this knowledge with others.

And – given their inherent scalability – platform businesses can use opportunities such as this to grow to help share and add value to both producers and consumers.

So, if you’re still not clear on what a platform is – and why they’re important – you really should read the previous blog post here.

 

In this post, however, I want to share the critical elements any platform needs – and offer some guidance as to how you might begin thinking “platform-ly” about your business.

(Before we begin, I want to point out – although these fundamentals may seem basic, designing and delivering a successful platform is a very challenging undertaking. It requires a deep understanding of both producers and consumers in your industry, and a new recognition of value that the market is not offering in an efficient way. If you want to know more about how to begin understanding the minds and lives of your users – Rezare Systems specialises in user-experience research and training for the global agritech industry. Let’s chat.)

Refresher

As a quick refresher: a platform is a space (usually virtual) where users can interact and exchange information and a product. This could be exchanging a good for currency (like TradeMe or eBay) or content for engagement (like YouTube). Platforms are able to scale and expand rapidly, can unlock new sources of value and can adapt rapidly to changing situations.

It can be tempting at this stage to rush off and start sketching how your business can become a platform. Instead, I’d encourage you to consider the core question: what is the critical element at the heart of any platform?

Critical elements

The heart of any platform is interaction. It’s the exchange of value between the producers and consumers. It’s not the UI, it’s not the speed or scale of the platform – but it’s all about the interaction.

This explains why Craigslist – a platform that perpetually looks like it was designed at least 20 years ago – has flourished as a platform in the US. It does interaction well.

Any platform interaction involves three key components – participants, a unit of value and a filter. Let me explain:

  1. Participants: Any platform interaction needs at least two participants. The producer is the one who creates value (a Facebook post, an Airbnb listing, a new website plug-in, a tractor lease), and a consumer is someone who consumes value. Easy, right?

    But what makes a true platform unique is the ability for a producer to become a consumer (and vice-versa). A great platform allows both sides to swap roles, as needed. I can post content (produce) and watch content (consume). I can list a house on Airbnb (produce) and book a house on Airbnb (consume).

    For a smaller example – I can share information about my livestock, feed for sale, or crops, and can also access other farms; datasets.

    It is this ease of role-switch that allows a platform to grow rapidly. When a new participant joins the platform, they have the ability to grow both sides of the interaction.

  2. The unit of value is the next element of a platform: It’s important you’re clear on this one – as the unit of value is not the good or service itself, but the information about the good or service. This unit of value is what allows the user to decide if they want to go ahead to exchange their currency (whether money, time, information) to receive the final good or service.

    To put it simply – on a platform like eBay or TradeMe – the unit of value is not the second-hand electric guitar you’re hoping to buy. The unit of value is the listing of the second-hand electric guitar – that helps you decide if you want to proceed with the transaction.

    Value units are information, not physical products or real-life services. The value unit for Uber is the listing of available cars and drivers – not the actual driver and car itself.

    For your platform – the value unit is the information being offered by the producer to engage with the user. It’s the information that allows the user to decide whether to continue on with the transaction.

    How you choose to allow producers to communicate this unit of value is critical to your platform – and this doesn’t necessarily mean flashy images and designer fonts (again, see Craigslist). Or, think of the classified section of the newspaper.

    This cramped design allows the users to quickly scan hundreds of listings to identify which unit of value is the most relevant to them. It may not be pretty – but it has worked in the past.

    However, great platforms require a third feature to allow interactions – a filter.

  3. The filter is the way the platform delivers specific value units to specific customers. When a filter works well, users will only see units of value that are relevant and value-adding to them.

    A classified section of a newspaper uses a weak filter – organising value units by headings (e.g., Residential, Commercial, Situations Vacant). Readers can quickly scan the headings to decide which columns to scan – and then work their way down to find what they’re looking for. This is a weak filtering device.
    The advances in technology over the past two decades have allowed filters to mature through the use of software-based algorithms. Search bars allow users to search for relevant units of value to explore. Platforms learn users’ preferences and history, and then suggest new units of value to consider.

    Filters now can use a combination of location services (to filter units of value to those near you), social connections (to filter units of value based on what others like you engage with), seasonal needs (to filter units of value based on typical needs) and more to connect users with producers in the most valuable way possible.

Design steps

The critical elements of the platform are clear. You need to design for participants on both sides (producers and consumers), allowing flexibility for participants to change sides. There must be a way for units of value to be communicated, and an effective filter to ensure the users see the value they want (or need).

Once this has happened – the user can advance the exchange, allowing goods and services to swap for currency. The producer gets their value, the user gets their value – and the platform owner takes their slice of the pie.

So, when you are designing your platform – or at least, beginning to sketch out a platform possibility – here’s what you need to do:

  1. Determine your core interaction. What is the value exchange that will attract users to your platform in the first place? What need do users have, and what is the solution that a range of producers might be offering?

    Platforms live and die on this core interaction. If it does not represent real value to a user – no user will join your platform. If there’s no producers offering a solution – no producers will join your platform.

    So be razor clear – what is the value exchange you hope to facilitate through your platform?

  2. Define the participants. Based on your core interaction – who will the key participants be? Again – be clear with this. Don’t just say – “Farmers”. What type of farmer will need this value? When do they need this value? How valuable is this to them? Do they know they need this?

    This is similar for the producers. Who are the producers – and why would they be willing to provide value for the end user? How easy is it for a producer to also be a consumer?

  3. Define the unit of value. This is tricky – and usually takes a team and time! What is the critical information your core interaction requires? What is it that your users need to see to determine the value to them? What is it that your producers are able to offer to communicate their value? How can this be done in a quick yet effective way? You may need to do some customer empathy work to discover this.
  4. Determine your filter needs. This is the final stage of design for a platform, and one that requires careful thought. What information will you ask your users to provide, to give them the best interactions? What data can you utilise to aid effective and valuable interactions?

 

This is not a five-minute exercise, but requires careful thought, communication with the team and early-stage validation testing with possible users and producers. Designing a platform well – and prototyping this design at the concept stage – is a critical step to avoid wasted investment in a platform that users don’t want, or producers do not find valuable.

Rezare Systems has a strong history in helping businesses – both big and small – think through their offering, build quick wireframes to test, and prototyping this with real-users. If you’d like to chat more about your value offering and how this might fit as a platform – please reach out.

In the next post we’ll talk about how to make profit from your platform – which is not as easy as it sounds! Till then, get sketching and get designing!

Useful, inspiring? Questions? Let us know.

 

People in front of a laptop

Designing agritech together

The background

This workshop was originally intended to be delivered interactively at the MobileTECH.Ag conference. Despite switching to digital, we had great participation and a surprisingly interactive experience. We hope you enjoyed it. Thanks to Jeremy Suisted and Andrew Cooke for presenting.

Next steps

If you enjoyed this video and want to share some of your feedback with us, or were inspired to learn more or try this in your agricultural business, please let us know.

If you have questions or would like to learn more, including a short free consultation about your idea or challenge, please get in touch.

Start a free initial discussion

Chess player considering strategy

Is this the year you take your agribusiness digital?

Is this the year you take your agribusiness digital?

The world is changing, and as society as a whole reflects on the changes we will need to make, its also a time for business leaders to reflect their goals and strategy.

Here’s a question for your business planning during the quiet days at the start of the year:

Are you ready to take your agribusiness digital?

You’re thinking that your business is already digital. You have an ERP and a CRM, a web site and a mobile app. Your IT team has already virtualised your core business systems. What else is there?

You already use technology in your business. You may even use it well, though many agribusinesses are saddled with 10 to 15-year-old software and significant “technical debt” that acts as a drag on business agility. Taking your agribusiness digital however, implies something more significant: transformation.

Gartner defines digital transformation as the creation of new business designs that blur the boundary between the digital and physical worlds. More than just digitisation in support of business processes, it is making use of technology to change your:

  1. Customer engagement model;
  2. Connection with the ecosystem of your partners; and/or
  3. Core business model.

Most agriculture and food businesses, rural supply, and advisory businesses have grown over many years, starting life and establishing business models well before the connectivity, data flows and analysis of today were envisaged. Would your business look the same if it were started today?

1.      Customer Engagement

With the internet and mobility connecting most people on the planet (and likely your customers), how could your business leverage technology to substantially change how you engage with your customers, streamlining their experiences and introducing greater perceived value?

A short story of two pizza companies

Dominos’ Pizza (DXP) and Papa John’s Pizzas (PZZA) both had a market cap of around US $600M at the start of 2010. Both companies still sell pizzas with take-out and delivery options. Dominos invested early and continuously in technology innovation for customer engagement, radically changing the way that pizza is ordered, and delivery is tracked. The value proposition for customers was a different, improved, and easier experience in ordering pizza. A benefit for Dominos was an increase in average order value and a massive switch from phone to internet orders. Arguably, Dominos has set the customer engagement bar that other pizza franchises have followed, and in the process grown its market cap to over US $12B, while Papa John’s followed incrementally, and has grown to US $3B.

2. Connected Ecosystems

What transformative opportunities could your business leverage by effectively connecting its digital information with suppliers and supply-chain partners? Common data standards, APIs, principled and secure sharing of data open the way for you and your partners to gain new insights and radically change business logistics.

Seven of the top 12 largest companies in the world by market capitalisation: Alibaba, Alphabet (Google), Amazon, Apple, Facebook, Microsoft, and Tencent – are ecosystem players, sharing data and common services with their supply chains and partners. At least one of those companies may have been too connected on occasion! We recommend principled and secure sharing.

Benefits of an open platform

Newspaper “The Guardian” developed its open platform in 2009 and has been evolving it ever since. The platform provides APIs for developers and for partners. Many sites and mobile services use the Guardian API to deliver timely news, and the Guardian benefits with referrals, ad placements, and the ability to understand how and when people consume its content. Partner integrations allow the Guardian to crowd-source additional data for its services (such as location tagging), and to position its brand beside influential partners.

3. Changing Business Models

Many of our agricultural and service businesses, or their forerunners, started life 80 or 100 years ago. The fundamentals remain, but models of communication and distribution, use of information and analysis have all changed dramatically. Our business models – how we create and monetise value – have changed more incrementally.

Digital transformation offers agricultural sector businesses the opportunity to reframe their business models for the new and evolving business environment.  Ford has started to redefine itself as “a mobility company and not just as a car or truck manufacturer”. GE is seeking to make analytics the new “core to the company”. Certainly, if you were starting a personal transport company today in the face of Uber and Lyft, it would not look like an existing taxi company.

How might your business leverage technology and connectedness to create value in different ways?

 

Considering your digital agribusiness options?

Start a free initial discussion

Consider using one of our digital agriculture strategists, Andrew Cooke or Julian Gairdner to facilitate a workshop our help with your thinking.

Revised. Originally posted in January 2019.

What really drives profitability in pastoral agriculture?

Unique, profitable, and complex

New Zealand pastoral agriculture is uniquely based around grazing pasture in the paddock while it is growing. In most countries agriculture is relentlessly dependent on diesel, machinery and chemicals to establish forage crops, spray weeds, harvest them, transport them, wrap them in plastic for storage, then fed them out often in capital intensive feeding systems.

If one side of the coin is fossil fuel hungry, high cost, monocultural farming then New Zealand is on the other side of that coin. Our farmers are skilled shepherds who ensure pastures are abundant and nutritious through their understanding of the ecology of perennial pastures as livestock follow a natural grazing pattern that meets their changing requirements with room to feel freedom and contentment.

We often define farmers who are in the top 5% in profitability. We can also define a group of farmers that have grazing systems that are well designed and are implemented with precision. There is no group of pastoral farmers who have sub-optimal grazing systems, make mediocre grazing decisions and who then find themselves in the top 5% for farm profit – that combination don’t exist.

I have been fascinated by this fact. It has taken me on a unique journey through 35 years of farm consultancy, farm system analysis and development of models to help grazing decisions. When computers became common-place in the late 1980’s I started using spreadsheets to perform tasks that I had performed long-hand with a calculator. I developed the view that if I did a task regularly it was worth developing a spreadsheet and as my interest developed, develop a simple software application.

The true potential of software is in handling complexity and in the mid-1990’s I managed AgResearch’s Decision Support Group and we built industry platforms that are now standard in New Zealand agriculture. These perform tasks that were previously impossible such as managing nutrients (Overseer), modelling farms (Farmax), and evaluating genetic potential (SIL).

In 2004 we left AgResearch and formed Rezare Systems. We loved working with the inspired people New Zealand agriculture seems to be good at producing. They have a spirit about them that I think comes from being part of a biological system. We needed to develop a way of working that could keep pace with them and shares their inspiration. To achieve this we work hard to grasp how software development technologies can be relevant to their biological systems and core staff who have a good grounding in what drives profitability on a farm.

Growing and managing plants that thrive in the environment

This is the first of three blog posts for readers who are interested both in the technologies and the business of farming:

  • Growing and managing plants that thrive in the environment (this post)
  • Designing a feed demand that fit with changes in feed supply
  • Making timely meaningful decisions

The fourth pillar is the importance of people, and I’ll incorporate this topic in each of the posts.

In my experience sheep and beef farmers are stock people who understand their farms through observing the behaviour and performance of their stock. When I get down on my knees and start looking at their pastures few can name more than five pasture species, and none can name all 20 that probably make up their sward. When I studied for my degree in agriculture our agronomy lecturer, Parry Matthews showed how the presence and absence of species and their condition was a lens through which we can understand the environment, soil fertility, past management practices and future growth potential. Indeed, the pastures on a farm are perfectly adapted to the farmer – it is the result of everything that is being done, both the good and the bad.

In most farm systems the pasture species that can support a highly profitable farm system are present on-farm, in the sward or on a neighbour’s farm. To encourage these to be more productive involves understanding their ecology and therefore how we must manage them. In a pastoral system management can only control two factors: soil nutrients and the frequency and intensity of grazing. We could add to this control of competing plants but if you cannot get the first two right then competing plants become a bigger problem than they need be.

I spent some years working in the drier regions of the South Island. It seemed obvious to me that lucerne was a plant that thrived in high pH, well-drained soils. After a drought it would rise like a phoenix from the burned landscape providing abundant high-quality feed well before any other plant had woken up. And, amazingly the drier the environment the longer it lived – a lifespan of 15 years being commonplace. Did farmers see this? Many farmers were planting grass/clover swards. Many were choosing drought tolerant ryegrass. But on the spectrum of drought tolerance across all pasture plants grass and lucerne do not even overlap.

Example of system change – Marlborough

I started working with Doug and Fraser Avery on a project called the Starborough-Flaxbourne Project initiated by Don Ross of the Landcare Trust. Doug was emerging from a period where he had been beaten by drought and unable to see the opportunities directly under his control (his words).

The project was initially focussed on establishing saltbush on eroded sunny facing slopes. It seemed too easy to say “there is the problem, those eroded sunny facing hill slopes – lets fix it by growing saltbush there”. My biggest contribution was in questioning this focus. On the team was New Zealand’s expert on grazing shrubs. He was passionate about saltbush, but he had no understanding or interest in the farm system. He couldn’t tell me how much it would cost to establish and how much forage it would supply.

It also seemed that for grazing to suit the physiology of saltbush on New Zealand farms, it couldn’t be eaten when you needed it and you had to graze it when you had ample feed elsewhere. When we started to develop estimates of the cost of establishment and the forage produced it seemed to me an illogical investment in the farms most unproductive soils and in my rough estimation I concluded the more you planted the broker you got.

In comparison lucerne produced five times as much forage, at the right time, of higher quality and for a tenth of the establishment cost. I simply asked Doug and Fraser how much area could they possibly grow in lucerne – why not base the farm system round this plant. In reviewing livestock grazing habits they concluded lucerne could be grown in the same paddocks that included uncultivatable hill slopes. This increased the potential area from about 8% to 20%. Given the cultivable 20% produces threes time the pasture on hill slopes, it would provide around half of the feed supply.

They worked with Professor Derrick Moot from Lincoln University to understand the plants ecology and how they could base a grazing system around it. Derrick has an incredible knowledge of the lucerne plant and, what is most important a real desire to understand how it fits into the grazing system. I co-authored a paper that describes this system (Avery et al, 2008[1]) so I won’t go into further detail here.

Systems in the North Island

In the North Island where I now reside hill country pastures are based around browntop which thrives and can out-compete all other species if it is poorly managed, particularly if soils are low in phosphate, more acidic and particularly if this acidity causes a high level of aluminium. Browntop has a deep rooted aggressive rooting system that if allowed will completely take over the root zone tying up available moisture and nutrients.

Management is about controlling the aggressive nature of browntop so that more productive ryegrass and clover can thrive through grazing frequency and intensity. To do this well a farm needs paddock sizes that match the size of mobs – ideally, a mob should enter a paddock well before the pasture starts producing reproductive stems and take no more than four days to graze the pasture down to the required pasture height – called the post graze residual, which keeps the sward in a vegetative state.

Under the right management browntop is kept at less than 50% of the sward and ryegrass and clover can thrive. At this point a good financial return is achieved from increasing soil fertility (particularly phosphate) and soil pH. The difference between a sward that is well controlled and one dominated by browntop is an increase in feed production of 30-40%, proportionally more of this extra production being grown in the shoulders of the season when it is most valuable – autumn, winter and early spring. This is equivalent to a 400ha farm purchasing a further 140ha but at a tenth of the cost.

In summary, if a farm system is based on plants that thrive in your environment and management is based on the plants ecology then it allows nature to work with you. If it isn’t nature will beat you at every turn.

Technology and ecology

How has technology helped farmers understand plants that thrive on farm and their management requirements? I would conclude this is not where digital technology has helped. What does help is being able to see what other farmers are doing then trialling these in a meaningful way. It is then no coincidence that farmers who are out-going, ask plenty of questions, participate in farmer groups and are keen to experiment are more successful in changing their systems. Clearly, there is a whole mindset involved in change and Doug Avery’s[2] book The Resilient Farmer describes this better than anything I can write.

People and ecology

When I read Doug’s book it seemed clear to me the Avery’s had been growing lucerne successfully for many decades mainly for making winter supplements and feeding lambs. It wasn’t until Doug and Fraser (with the help of Professor Derrick Moot) really studied the plants ecology and how it could provide half of all livestock grazing that the farm’s profitability soared. So, who in the farm business needs to understand the ecology of the plants it is based on? Is it enough to send the shepherd on a pasture management course?

Understanding the ecology of the plants that a business is based on is a lifetime endeavour for the farm owner and everyone who makes decisions about grazing.

It may seem curious that as a technologist I have started this article series by concluding the first step in optimising a farm system does not involve digital technology. However, in my 35 years as a farm systems analyst I have never seen a highly successful business based on plants that don’t thrive in the farm environment – so, it cannot be ignored.

In the next article I’ll discuss ‘Designing a feed demand that fits with a changing feed supply’. In this step we start to enter the world of digital agriculture. There are good programs that can assist but there is so much more that can be achieved – and I’ll discuss where technologies are being developed.

[1] Avery D., Avery F., Ogle G.I., Wills B.J., Moot D.J. 2008 Adapting farm systems to a drier future. NZ Grasslands Association Proceedings 70: 13-18.

[2] The Resilient Farmer 2017, Penguin Books, 288pp, ISBN-13 97801437707787

Farmers talking with laptop

Four reasons why co-creating with your customers drives business performance

We’ve noticed that the past decades have seen a significant and positive shift in philosophy with product design and development. It used to be that entrepreneurs and designers would be reminding themselves of Henry Ford’s quip – “ If I had asked people what they wanted, they would have said faster horses.” If in doubt, the product development team knew best – and through their own creative brilliance, they could deliver the best solutions.

Then came the focus on technology, with the oft-cited Skunk Works example. Engineers and product teams craved big budgets and siloed spaces, where they could deliver fast-paced and radical innovations to unleash on the market.

None of those philosophies are wrong – but we think they are both incomplete. And we’re encouraged to see more and more organisations and entrepreneurs recognising the power of bringing customers into the product design and development process from the earliest stages.

We see the impact of customer centred design at Rezare each week. So we’re encouraged to see the wave of articles giving the fantastic advice – go and develop with your customers. It’s good advice! When this advice is partnered with strong technological capabilities and agile processes – good things happen.

Many of the articles just conclude with an encouragement for you to go and talk to your customers. Go to their world. Meet them. Understand them.

But two key questions are often neglected:

  1. Why should we go and talk to our customers?
  2. How should we go about it?

In this blog, we’ll cover the first question – why is it important to go and talk to our customers?

At Rezare Systems, we’ve discovered four key reasons why designing meaningful interaction with your customers can drive fantastic product development.

  1. Your customers are the ones who will use the product.

    We know this sounds obvious – but it is deceptively easy to get so focused on your product, you forget about the people who are going to use it. The result? A focus on technology and design, and a product that may have all the latest features – but is incredibly difficult for your customers to use.

    And – the vast majority of the time – your product development team are focused on solving somebody else’s problem. Agritech firms are designing products to be used by farmers – and many the engineers aren’t farmers in their spare time. Left unchecked, this results in many assumptions – rather than a best-fit solution.

    Designing meaningful interaction with your customers as you develop brings them to the heart of your process, and reminds every member of your team that they are the ones who will use the product. This means their voice and their needs must be listened to and integrated into your product design.

  2. Designing with your customers increases your speed of development (and reduces wasted development time).

    If you work in product development – you know the importance of speed. It is essential the product gets to market as quickly as possible, without compromising your value proposition. The longer the product stays in development, the more expenses rise, and the greater stress this can place on cash-flow.

    One of the greatest threats to the development process is dead-end development. Each sunk labour-hour into developing features that don’t make it to launch is a costly endeavour, adding wasted time and resource to the development journey.

    When you bring your customer to the heart of your development processes, you don’t’ spend time building things that aren’t valuable. Instead, you only focus your development on features that you know are valuable and meet a real customer impact. How? Because your customer is with you, every step of the way.

  3. Co-design identifies little moments that lead to big success.

    At Rezare Systems we like to explore hinge moments. These are the seemingly-small discoveries about the users’ problem and process, that result in big success when integrated into the product.
    Most products live and die on small moments of value – which we only discover when we’re interacting with our customers along the journey.

    Case in point – one online marketplace was seeking to redesign their interface. They involved customers for the journey, and discovered a meaningful insight – customers like to buy products when they can receive instant answers to their questions or offers from the buyer. In short – they want velocity to their communication.

    So, the marketplace decided to add a small little feature. Each listed item had a little indicator that would also show if the seller was online. This would mean that any questions or offers would be responded to faster.

    The result with this little tweak? 4% more contact by users, 10% more contacts using the chat function, and an increase in revenue for the company.

    Discovering these hinge moments can be critical to the success of your product, and trying to find them without your customer’s input is like spitting in the dark.

  4. Designing with your customers builds trust and loyalty

    Bringing customers into the product design process sounds scary. What if their – or our – ideas are bad? What if we can’t solve their problems? What if we discover that our current solutions aren’t great solutions?

    All of these things can happen. However, research from the Delft University of Technology in Holland highlighted that co-design with your users results in higher loyalty between your customers and your company – regardless of the result of the journey.

    In short – users enjoy being involved in designing the products they are going to be using. They appreciate their wisdom and experience being drawn on, and often they enjoy seeing the inner-workings of your company.

    We’ve found forming these relationships with a range of users often results in ongoing insights – as they provide feedback on problems and products long after any formal communication. They talk to their friends about their experience, and often look forward to the next engagement

We believe the above four reasons are compelling enough for you to consider moving to co-design with your users. 

But – how do you do that?

Our next blog post will provide you with six key actions for designing powerful conversations that deliver meaning and value for your product design process – and a great experience for your users. In the meantime, if you have any questions about designing with the customer in mind, and how this might help with your idea, product or service – get in touch with us here.