THE ANSWER AND THE IMPEDIMENT
BY NEIL TOWNSEND • GRAPHIC BY PIXABAY
While crop yields have reached previously unheard of levels, the coronavirus pandemic has elevated the importance of food security. For the farmers who ably grow the crops that feed the world, the central concern is income security. It is often the marketing of their products that is troublesome. Farmers increasingly need to be connected to find avenues to market the bounty. Access to information is a key component in making effective marketing decisions. A perennial critique of western Canadian agriculture is a significant information disequilibrium exists between farmers and line companies. How can the gap be bridged?
Major American technology companies believe the farm economy needs disruption. Farmers Business Network and Indigo, two recent entrants backed by multibillion-dollar investments, have sought to disrupt traditional grain and oilseed supply chains. Their promise is to enhance farmer profitability by providing better information and a direct connection to end-use markets. Canadian innovators have also entered the marketplace, including Combyne by FarmLead, Farmbucks, CXN360 by Ag Exchange Group and GrainFox by FarmLink.
The assumption is that farmers will use their own data as well as accessing broader market data to individually tailor and enhance their marketing decisions. Riding a wave of new accumulator-based technologies, these data-reliant services essentially provide personalized marketing advice across apps and web-based platforms.
However, data is both the answer and the impediment to a better marketing future. A critical ingredient of modelling is the assumption an answer can be formulated from the past. Posting prices seems like a reasonable starting point: input a data-series of all the publicly posted prices, and problem solved. Unfortunately, this is not the case. In Western Canada, there has typically been a gap between posted bids and the transactional values. It is unique in the opaque nature of its pricing. Local technological disruptors understand this fact.
Farmers may record their own transactional prices, which they may be willing to share. Line companies and other grain buyers also accumulate this information. It is valuable data they are so far not inclined to share.
A significant part of the solution for farmers is to overcome the fear of data and of the embarrassment of missing out. What if you sold at a lower price than your neighbour or you sold before a big rally?
Farming careers are long and one can miss the market on occasion. This is exactly why a tool is needed to remove emotion from the making of marketing decisions. Farmers and other industry participants need to look forward and not backwards.
Amalgamated data is a time saver, and to build an effective marketing tool, developers do not need all the data. Machine learning augmented by artificial intelligence can draw conclusions from less data than did previous modelling methods. To move forward, a starting point for reliable time series data is needed. This roadblock must be overcome to enable the use of effective and articulate web-based marketing tools that enhance marketing opportunities for farmers.
Neil Townsend is chief market analyst with FarmLink Marketing Solutions.