How Farmers Use Big Data Networks to Keep Food Prices Lower

Supply chain shocks dominate the headlines — and nowhere is the impact of disruption and inflation more apparent than in food prices.

Indeed, food prices outpaced inflation into the end of 2022. In just one recent data point, November food prices showed a 10.6% increase compared to last year, while overall inflation hit 7.1%, according to the Bureau of Labor Statistics.

Grey Montgomery, head of ag product and operations at data and analytics firm DTN, told Karen Webster that better data, digitally rendered in real time, on everything from weather to crop yields, can bring agronomy more fully into the 21st century, with positive ripple effects from farm to table.

Food prices are a function of yield and input usage at the farm level. Having the right data on hand, he said, can help manage inputs — pesticide and fertilizer use, for example — and maximize a farmer’s yield, which creates more supply, which lowers prices.

Science of Farming

At the center of it all is agronomy. Agronomy is the science of soil management and crop production; agronomists are the scientists. And in what might be thought of as a chain of providers and advisers that help farmers’ (also known in the industry as growers) production, agronomists work with “ag retailers,” who serve as trusted advisers to the farmers.

The retailers sell products — from seeds and soil to equipment — to the growers. If the links in the chain are managed well, said Montgomery, “all of this winds up having a positive impact on the overall expense structure of the food supply chain.”

The input and services from the agronomists and ag retailers are sorely needed, as Montgomery illustrated. Among the key hallmarks of farming itself — and ultimately of consumer pricing — is that the majority of farmers are decidedly analog. They still use paper and maybe Excel or QuickBooks to manage day-to-day operations.

That’s changing a bit, he said, as most farmers, on average, are in their 60s, and younger generations taking over the family operations are decidedly more tech savvy. We’re seeing the rise of more marketplace models in the industry matching buyers and sellers, but it will be some time before farmers make a full-fledged pivot to managing operations digitally.

“You’ll see a modernization that has not happened as much in agriculture as it has in other industries,” he said.

As for the advisory relationships themselves, the typical agronomist “has a ton of choices,” he said, as apps that track everything from weather to pesticides are the proverbial dime a dozen.

“But many of these solutions are delivered at a ‘point-by-point’ level and solve for very specific tasks.”

What’s needed, Montgomery explained, is a one-stop shop that provides an end-to-end stream of ag-related intelligence data that leads to optimal decision making. That real-time data is especially critical in an age where, for example, fertilizer prices more than doubled over the span of a few months, drastically cutting into farmers’ margins, and ultimately goosing prices in the supermarkets.

As Montgomery observed, “The term ‘one-stop shop’ may be overused elsewhere, but it’s definitely not a reality in this space.”

Mobile App for Agriculture

To that end, this year DTN introduced the DTN Agronomy solution using real-time analytics and a new mobile app, integrated into DTN’s wider agribusiness offerings. The app helps agronomists gain insight into grower operations, along with “in-field scouting workflows and messaging,” weather-related and historical data and market analysis — in turn allowing them to help ag retailers, and by extension farmers themselves, become more efficient. DTN’s models, he said, are predictive to within a 95% degree of confidence.

“We can ultimately allow the agronomist to collect a little bit of data and a bit of observation in one place that goes into the vast DTN library … and offer a quick recommendation of what’s happening, at scale, rather than going back to compare what’s been gathered from several different apps.”

The richer data flows also will help satisfy needs and desires all the way to the end of the supply chain, Montgomery said. Consumers are demanding more traceability.

“The potential over the long term is to connect consumers where they can scan a bar code and see what actually was used to produce what’s in that can” of food they’ve plucked off the shelf, he said. DTN is part of the Climate Smart project funded by the USDA to build a platform tasked with tracking “climate-smart” commodities.

“This will occupy a great chunk of my time in the future,” Montgomery said.

Looking ahead into 2023 and beyond, inflation will continue be a challenge for all stakeholders to navigate, he said. By and large, commodity prices are not showing any of the pressures that would lead to a decline in prices, although the specter of recession overhangs everyone.

Asked by Webster whether payments would become a functionality embedded in DTN’s offerings, Montgomery said that that’s on the roadmap, as his company mulls more direct-to-farmer offerings, but “right now we’re focused on solving for the digital ‘practices’ side of farming, and getting adoption there.”

“The farmers that use Big Data to their benefit,” he said, are the ones who will outperform.