Arable Labs: Agricultural supply chains have broken during the pandemic, resulting in a lot of food waste. What happened?
Al Tank: First, stay-at-home orders led the food service market to collapse. What was roughly 50% of all demand in the marketplace disappeared. Six to eight weeks in, depending on where you were in the country, food service demand for things like bacon, eggs and milk were off somewhere in the vicinity of 60-80%. That market didn't exist anymore.
And so all of that product–which for the most part had been dedicated to that one supply chain, meaning that you were unable to move it from food service into retail, for example, or from food service into at-home consumption or the export market–was literally left with no place to go.
If one thinks about economics, this is classic inelastic demand. We're having to euthanize animals–not because there isn’t a need, not because there's no demand and there aren’t a lot of hungry people here and abroad. The fact is that there's no orderly way to move through a facility that requires labor to get that product into a form that can be consumed.
AL: Did you think that the supply chain was this delicate? Did you see this vulnerability coming?
AT: What we really didn't see coming was the level of dependence that we've seen on labor – that when the labor wasn't available, the supply chain faltered. More importantly, the segmentation that has occurred in supply chains of every stripe, meaning they're dedicated to food service or to retail or to some other aspect, when that pull-through demand failed to exist, they literally collapsed overnight. I think a lot of people recognized the tenuous nature of our systems, but I don't think very many people fully appreciated the speed, velocity and intensity that failure would manifest itself.
AL: What do you think are the long-term changes that are necessary to make it more resilient?
AT: With the benefit of 20/20 hindsight, it's going to be incumbent upon everyone to think about how we redesign them, how we harden and rebuild them. We're going to be thinking about data differently than we ever have before.
In the case of labor, I think we're going to see a lot of mechanization. We’re going to see robotics in agriculture in ways we've never seen before, and we're going to see technology and capital deployed. That means that certain jobs are going to be eliminated, because that's the direction people are going to go to eliminate some of the weaknesses in these systems.
Beyond that, we're going to be looking at risk totally differently. I think we’re going to see, at least in the first step, lots of diversification. Rather than relying on one specific channel everything has to go through, we're going to start to broaden these channels out so that we're less efficient, but more resilient than we are today.
AL: How can this happen in a way that benefits farmers?
AT: Food and agriculture is the single largest industry in the world and most people are so far removed from it that they don't really recognize its importance. It's important not only for high quality, safe food at an affordable price, but for the entire stability of our society.
As you take a look at a supply chain, you're going to rebalance where risk is – who is taking that risk and how do they get compensated for that? Who owns the data? Who benefits from the data? And how do you use that data from that production system or supply chain? I believe the leverage will be shifting back to the farmers and the growers and those who are actually controlling the genetics that are in the ground that deliver to the first part of the supply chain.
AL: Who has the political clout to make that happen?
AT: The market makes that happen. That's where the real clout is. The market got us here, the market can get us out of here. It’s going to be driven by bankers, risk mitigators, insurance companies, the consumer. The clout is also definitely there with regard to regulation and policy, and the politics of agriculture very rarely speak together. But when they do, it's very powerful. I think this will empower agriculture.
AL: What do you see as the role of on-farm technology and ag tech?
AT: I'm a firm believer that on-farm technology and technology in agriculture is one of the most important pieces of this entire thought process–this change in thinking, the new order that's coming to agriculture. There is a massive amount of data that can be generated from a single plant, to a single acre, to a single farm.
I would also argue that overwhelmingly, no one actually mines the data. We talk about it, we think about it, we pontificate about it, but we don't really use the data. I believe that data is the central piece of the mantle with regard to everything we do, from how we manage throughput of production systems to how we protect the environment to how we empower and engage farmers.
More importantly, it’s how we create a new definition of sustainability, how we create new levels of traceability, and how we improve the integrity of the entire platform.
AL: Are there winners and losers?
AT: I think we're all losing right now. I think whether you're a consumer, or a retailer, or in food service, a processor or a producer, you're losing. And you're losing for lots of reasons.
One is that we've had a tsunami that has created a crisis throughout the entire ag and food platform. We are probably going to be irreparably changed. A lot of restaurants aren’t going to come back. A lot of food products are not going to be available and we're going to lose a whole generation of farmers. We're going to see consolidation, or at least restructuring that we've never seen before. I also think consumers are more confused today than they ever have been about food and how it gets to their plate.
Now that said, I think everybody has an opportunity to be a profound winner if they use this time, this experience, this crisis, in a way that is in the interest of all. Not some, but all.
AL: How do you think this shift will happen?
AT: Specifically around food and agriculture, there's this unique opportunity to take the whiteboard, clean it up and start anew in a way that has the benefit of knowledge from this pandemic collapse – the capital, the technology, all the information and innovation that's out there and available. I kind of think there's a silver lining.
Then, I take it one step further. People are starting to understand that we really do need to be thinking about soil health, water use, emission issues, and traceability in ways that are truly transparent. We need to be thinking about sustainability in ways that we haven't before.
This is the opportunity to look at some of those things and say ‘alright, let's put value to them.’ Let's really understand what we're trying to accomplish and begin to do those things as we rebuild these systems. Data, technology, on-farm applications of that data and technology, these are the absolute, unequivocal cornerstones of the new building.
AL: Do you think that farms will get smaller?
AT: No, I actually think the definition of a farm is going to change. The one thing farmers are is really innovative. They're risk takers. I think how we operate farms is going to change. There's going to be a really concerted effort to figure out how we restructure form, function and legality, what that means, and how things operate. Technology and innovation are going to continue to push people to effectively manage a lot more with a lot less. I think farms are actually going to get bigger. I think that people are going to get a hell of a lot smarter. And I think that risk is going to be transferred in ways it's never been transferred before, to people who were unwilling to take it or simply didn't know that they needed to assume some of it.
Rather than farmers riding around in their pickup trucks with their left arm sunburned and never getting out of the truck, we have the chance to create a brand new paradigm where they now have a piece of technology that can be deployed multiple times over and actually give not gut feelings, but real data.
AL: Do you think the consumer will share some of that burden?
AT: There's no doubt. This country has a political and policy history about cheap and abundant food. That is going to be, to me, a piece that's going to be very hard to shake because we're so used to having anything we want, when we want it, and compared to anybody else in the world, at an affordable price. But what that means is that consumers are going to participate in different ways than they participated before.
AL: So, they’re finally going to figure out how to use that kohlrabi?
AT: Absolutely. What you're going to find is that on very traditional commercial farms like ours in Iowa, a rotational farm, that while we may not have kohlrabi as part of our substitution, what will happen is that those cover crops that we use every year may have a different value proposition going into the supply chain. Rather than simply being added to the organic matter of the soil, which is really important, they could have a different use and application. People are starting to think about those things already.
AL: How long do you think this sea change will take?
AT: It's a generational issue, but in the course of history, that's a blink of an eye. We have a whole group of older farmers who are going to leave the business and a whole new group of people coming in that will be thinking about these issues in different ways. And that's so critically important to Arable and data and technology. They think about it totally differently. Saying ‘Hey, I have my clipboard over here and the spreadsheet and this is the way I've always done it’ – that's going to change.
Additional reporting by Stacy Basko. Photos courtesy Al Tank.