The Mixing Bowl Livestock Tech Landscape 2018
Background: In late 2017 The Mixing Bowl and Innovation Center for U.S. Dairy looked at the current Information Technology landscape of “DairyTech” within the larger landscape of “Livestock Tech.” Beyond developing the landscape map with over 100 companies, we held dozens of interviews to identify the opportunities and challenges in realizing the digital dairy. The full report can be found here.
Where’s the Beef?
Against the backdrop of another red-hot year of AgriFood Tech activity with $10.1 billion invested across 994 deals in 2017 according to AgFunder, relatively little fanfare has been made about the quietly growing Livestock Tech vertical, and, in particular, DairyTech. With a domestic market value of over $30 billion annually and 9 million dairy cows just in the US, the market opportunity is clearly sizable. At the same time, average cow income has been in decline after reaching record level highs in 2014. Unsurprisingly, the need for dairy operators to be more precise, agile, and responsive to changes on their farms and in the markets has never been more important. Yet with profit margins under pressure for many dairy producers, the appetite for technologies that don’t bring a clear, near-term return on investment (“ROI”) is limited. A notable exception to immediate ROI is investment in the data collection infrastructure, like farm-wide connectivity, that enable sensors and devices to feed data into analytics systems.
Crawl, Then Walk, Then Run
To realize the promise of data analytics, machine learning and all the sophisticated decision support technologies, Livestock Tech companies must first address the data capture and data cleaning hurdles. One important takeaway from discussions with prominent animal health professionals is that the research shows cows can physiologically tell us what and how they are feeling, but we just don’t holistically collect the data today to provide insights to producers to accurately replace a visual inspection. Elements of the “connected cow” are materially further along than other agriculture commodities, and even than most “connected humans”, but there is still much work to do.
To make the incremental leaps to more data-driven, digital dairies, some basic building blocks are often still missing for producers:
- Financial data is not adequately connected to production activity data.
- There is reluctance to give up trusted notebooks or there is inconsistent entering of field or barn-level data into digital devices. You can’t improve what you don’t measure.
- Inadequate network connectivity or lack of applications that cache content offline until connectivity is re-established is an issue.
- Lack of open data standards compound the difficulty in adopting new technologies.
In surveying dairy producers from midsize to large dairy operations across the country, it became clear that the current methods of record keeping such as the notebook, or decades of memory, are only part of the basic building block challenge. Legacy computerized record keeping, architected decades ago, has also failed to evolve with modern technology. Yet in the broader economy, next generation technology has made software and apps more agile, flexible, and accessible (not to mention cheaper). In effect, the underlying data that is so valuable to the development of the Livestock Tech ecosystem usually remains too difficult to access thus falling short in providing producers with the deep insights they hunger for.
In assembling the building blocks needed to catalyse technology adoption on the farm, at scale, both established and disruptive initiatives depend on four complimentary elements to deliver on their value propositions. In the context of dairy operations this includes the technologies highlighted in the landscape map above, implementation and support services (think Geek Squad for Agriculture), technology standards, and regulatory considerations. The strength and maturity of each play a key role in the success of new technologies and are discussed in the full report.
What Can Innovators And Investors Take-Away?
Bearing in mind that many of the same adoption barriers to technology exist in livestock as they do in other commodities, there are some unique structural considerations that make it an attractive target market for investors and technologists.The dairy industry is well positioned to exploit investment trends in the broader AgTech landscape. In fact, we found well over 100 companies doing some exciting things in Livestock Tech and all are vying for a piece of this valuable market. To quickly summarize the adoption influencers from the report:
- Adoption of technology already exists on the dairy;
- Massive data repositories have yet to be unlocked because basic digitization and record keeping is inaccessible;
- Economic pressure driving the need for greater accuracy and cost reduction; and
- Gaining real-time situational awareness can help eliminate lost revenue opportunities.
Because financial data is still not adequately connected to production activity or data, there are critical links still missing that are needed to unlock the value of technology. This will require deeper integration, collaboration, as well as strategic acquisitions across the different categories of livestock technology.
Our outlook on the market is decisively positive given the underlying technology trends in machine learning, artificial intelligence (“the other AI”), mobility, and cloud-computing power. That said, the ecosystem is still young and in many ways at a critical point when the decisions about standards and basic digitization could become a near-term enabler or inhibitor.