By Hans Andersen
Here in Canada, participants in the agri-food supply chain typically fit somewhere on a continuum. This band stretches from supply-managed industries like poultry and dairy — where trade is more highly regulated — to more open market industries like grain, pork and livestock, which can be more affected by country restrictions, fluctuating prices and exchange rates. Based on where an organization fits along the scale, its challenges, business strategies and appetite for innovation, specifically investment in technology, will be quite different.
The challenge is that where you fit along the continuum can easily change. Many industries that are supply managed today are being pushed down the continuum, opening them to risks they haven’t historically considered. For example, producers who once relied on the Canadian Wheat Board to sell their product are now relying on their corporate partners to export to places like China and Mexico. Although the risks are indirect, the level of insulation provided is not what it once was.
These producers have also had to invest in technologies to gain a leg up in a more competitive market. For crop production, precision agriculture companies have paved the technology way in this regard, investing in technology that gives producers a digital solution to the age-old question: How do I get the highest yield while managing my input costs?
There is little doubt they’ve seen value. Despite a dismal start to the crop year in Western Canada, the final crop from a volume perspective was similar to the prior, and in some cases record, year. While part of this may be ascribed to Mother Nature, technology’s assistance cannot be understated. The reality is that leveraging technology in a bad year can be the make or break point for producers, and this impact can trickle its way down the supply chain.
But what does this mean for producers, processors and distributors in the supply chain looking to invest in technology? How can you determine what will help most? As a starting point, you should ask yourself three questions:
- Where do you sit on the continuum?
If you operate in a supply-managed industry, the benefits you can gain from technology will be different from those operating in more volatile industries. In both instances, knowing where you are today can help you make more informed investments.
- What do you expect to change in the future?
Based on where you sit along the continuum, look at how your industry is evolving. Consider what parts of your supply chain you control and what you rely on other organizations for, and then determine how these might change over time.
- What do you need to be able to do tomorrow that you can’t do today?
Thinking about where your industry is going, what skills will your organizationneed to be successful? If you’re not a data and logistics expert, you may need to become one as your industry moves down the continuum. This could mean investing in data mining technologies to create new products, to provide saleable intellectual property, or to make more informed business decisions.
When it comes to food production in Canada, the future will not likely be a reflection of the past. It’s more likely that change is coming. If you take the time now to evaluate what the future might hold and to invest in technology that will meet your future needs, you will be better positioned to succeed as your industry evolves.
Hans Andersen is a Partner and Agribusiness Leader at PwC Canada, located in Winnipeg. Contact him at [email protected]
This article appeared in the print issue:March 2016 edition, Ask the Expert section