Thursday, July 25, 2024

Top 5 This Week

The Agriculture and Food Production: The Opportunities for Consulting Firms

“The farmer is the only man in our economy who buys everything at retail, sells everything at wholesale, and pays the freight both ways.” – President John F. Kennedy

Introduction

In the 3rd decade of the 21st century, the opportunity for the consulting industry in all aspects of agriculture and food production is rising, as the world faces in era of food abundance but  soaring food waste but also food scarcity and more malnutrition and starvation. Climate change now adds to the urgency, because the barriers to better plant yields comes from very high temperatures, more draughts and water shortages, and steady loss of arable land. Agriculture and food production face a historic transformation, based on digital and software applications, a protein revolution affecting products like meat, dairy, energy, and cosmetics, and the science revolution that impacts seeds, animal DNA, soil nutrition, and all aspects of weather, nutrition and health.

By its nature, land is stationary, and not all land is arable. The supply side of traditional food production can now be transformed by better soil nutrition, animal husbandry and plant health, but the gap between best practices and traditional measures is widening. Precision agriculture, a new paradigm that combines novel tools of digitization, state-of-the-art supply chain innovations, and organizational forms of collaboration, also integrates science-based genetics for seeds and animals, leading to higher yields and better nutrition outcomes.  Both production costs and revenue streams change traditional business models, the bargaining power of various stakeholders, and the new dependencies for sourcing inputs.

The opportunity for the agriculture consulting sector is straightforward, because the entire global sector is fragmented, lacks coordination and knowledge diffusion and a need for lower cost knowledge transfer across the food value chain. The result is an environment of knowledge asymmetry, and an opportunity for consultants to become thought leaders in a challenging world of wicked problems.

Wicked Challenges

The agricultural and food production system is evolving, but the knowledge gap between best practice and conventional approaches crates a knowledge transfer opportunity. As seen in other sectors – manufacturer and service sectors, and vertical markets like government services, retailing, healthcare, and defense – consultants play a special role in knowledge transfer. Consultants have the experience and capacity to cultivate novel ideas, concepts, methods as outsiders, applied knowledge developed in one sector adapt them to close the performance gap.

In this way, consultants play a middleman role to leading executives and decision makers who face strategic challenges and require a willingness to experiment with ideas and concepts that create a competitive advantage, and a knowledge pipeline that enhances and experiments with new idea creation. The fact that more firms across the agriculture value chain are shifting their strategies from a domestic market only to an international and global perspective create knowledge transfer opportunities to improve the performance gap. o.  There is also a growing trend where big commercial groups acquire or lease farmland to grow crops and raise animals.

Historically, Canada led the charge, selling first grade durum wheat to China and the Soviet Union in the 1950s, to the chagrin of the US state Department. Canada had the first global tractor company, Massey-Ferguson. Today the top two tractor and farm implements companies are John Deere and Kubota American and European food processors, and food retail stores like Tesco in Britain, Carrefour in France and Seven-Eleven have international operations. And the world’s leading agricultural commodity firms starting in Europe and Japan had multinational operations long before the word ‘multinational’ meant a term of endearment or cynicism. The spread of fast-food outlets is ubiquitous across all aspects of food groups, from hamburger and chicken to sushi and plant-based food.

New knowledge opportunities include food security, food waste, the need for improved logistics for food commodities and food ingredients, from spices and special items like vanilla to pulses for plant-based food processors. Technology and new delivery systems are one positive reaction but leave open the need for new approaches as they address what might be called ‘wicked challenges’, with no simple answers available to governments, firms, decision makers and customers.

The term ‘wicked’ applies to a set of decisions that contrast with convention problem-solving decision tools. Wicked problems have various antecedents, are difficult to define, and when conventional solutions are applied to them, the consequences can be undesirable. Put differently, they are dynamically-complex, ill-structured, problems that have highly uncertain causes and outcomes.

Individuals and firms address countless daily issues meeting the norms of conventional problems, where continuities, not discontinuities, determine decision preferences and choices. Such problems differ from wicked problems, as shown in Exhibit 1, and highlight contrasts between conventional problems and wicked problems. Wicked problems have characteristics that most firms do not want to address, in part because they require fundamentally different assumptions, thought processes, and methods of solution. Scale and industry concentration are preferred outcomes, not collaboration and shared responsibilities.

In the corporate world, problem-solving and strategy-making reflect the playful images of Machiavelli, deciding how managerial behaviour can shift corporate risk to the public sector (‘heads I win, tails you lose’). Many conventional strategy models reflect a desire for order, continuities, sequential attention, but agriculture and food production face organizational disruption, intelligence failures arising uncertainty of future outcomes in agricultural and food production. Alas, low individual and organizational trust often inhibits innovation, often with a praise and blame game intruding on better outcomes.

Exhibit 1

Wicked Challenges in the Agricultural and Food Production System

Wicked problems now face the food production system, exacerbated by climate change and unexpected weather problems – floods, droughts, tsunamis, hurricanes, and unusual temperature changes. New challenges include governance practices like ingredients disclosure, product labeling, and environmental, social, and governance (ESG) performance measures. Increasingly there is a new convergence of traditional farming and the advantages of industrial production, with concepts like vertical farming, in-city farms, better methods for crop rotation, and superior methods for water irrigation. The agricultural consulting industry is ideally places to close the performance gap and apply their tools for superior outcomes.

Charles McMillan, Professor of Strategic Management at Schulich School of Business in Toronto, is the author of numerous academic and management articles and 12 books, including Precision Agriculture the Global Agriculture and Food Production System (Cambridge Scholars, 2023)