At Arable we tend to see the ag supply chain through risk, which here means the perception that transitioning will result in higher costs or lower yields. Perception is critical here, because the scientific literature
says that there is no agronomic reason for a yield hit in even the first year of production. There have been a few proposals
for bridging this gap, such as “certified transitional” that could enable growers to capture some price premium. Another route is insurance: CropPro
is an interesting company that is actually developing insurance products for this market, including organic transitional insurance to cover yield losses, or insurance with a lower premium for soils with the higher organic matter
associated with organic or reduced-tillage production.Crop marketing
One of the challenges with growing a specialty crop, which is by definition not an exchange-traded commodity like corn or soy, is the relative scarcity of buyers and sellers makes them hard to find each other. In this sense, organic soy is far more like cilantro than conventional soy, as a buyer who finds a seller will tend to work with the same grower for years. A side effect of this fragmented market is lack of transparency about prices. How does anyone know what the “real” price of organic soy is? Opaque, fragmented markets tend to scare most people off, in essence raising marketing costs and uncertainty around contract prices. Mercaris
are an innovative solution to this problem, by developing a market intelligence report and trading platform for organic and non-gmo commodities, which reduces marketing costs and benchmarks market prices for participants.Accelerating learning
The flip side of there being no agronomic reason for yield losses in organic transition is that farmer experience and learning really does play a role
in yield losses. Organic or pesticide free impose constraints on what can be done, even as Integrated Pest Management advocates
use of a broader set of tools to protect crops. The more complex piece comes with monitoring the biology that is happening in the field and dealing proactively with issues around fertility, plant protection, and irrigation. Keeping up with the IPM checklist
is a full-time job! At Arable
we see opportunities to make data collection easier, and use these data to enable forecasts to get out ahead of all those checklists and disease calculators to respond before there is economic damage.
This is an exciting tech landscape because it recognizes that few of the barriers to organic are agronomic, but are centered around paperwork, marketing, operations, insurance: all those mundane but essential pieces that are prominent in any small business. We have come to see a central place for digital agriculture in this mix, because all of these efforts succeed with easier collection and use of field data.