Future of farming: Charging growers for outcomes instead of inputs

Advances in computing and communications technology is making possible a new business model where companies engaged in selling seeds, traits and crop protection products may charge for outcomes. This is being made possible as biology and chemistry are evolving to make farming sustainable while feeding a growing population and coping with the uncertainties of climate change.

Crop yield is influenced by the genetic traits of seeds and also by factors like composition of the soil, the presence of beneficial microbes, moisture, temperature, nutrients and crop protection measures. Machines can analyse this data received through satellites, drones and sensors attached to farm equipment to enable growers to manage variability within a field. They can enable higher crop yields through customised agronomic plans for precision application of irrigation, fertiliser and pesticides. Post-harvest, the data can help in evaluating the performance of different seeds.

“We are trialling this in the US; we are taking out some of the risk,” Liam Condon, President, Bayer’s Crop Science Division. He was speaking at the ‘Future of Farming Dialogue’ held in Germany earlier this month. The event was attended by journalists, academics and activists from over 40 countries.*

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Bayer has an advantage by virtue of its acquisition, completed in June 2018, of Monsanto, a US agri-biotechnology leader, which in turn had acquired The Climate Corporation, a digital farming start-up in 2013. Based on farm data obtained from 2009 onwards, Climate Corp has developed a predictive model about how maize hybrids will perform across different weather patterns and soil conditions.

When tested against customer data from four million acres, it was found to be right in four out of five times, a company podcast said. During split-field trials at a US farmer’s field on 20,000 acres, the maize hybrids suggested by the model yielded six bushels (152 kg) more than the farmer’s choice. This year the trial was extended to 17 farmers and one lakh acres in the US Midwest and there was an average yield increase of 229 kg per acre.

If crops underperform the promise, the company will give a partial refund of the price paid for inputs, but if they do better than the promise, it would want a share of the upside, Condon said.

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“We are on track for (receiving data from) 90 million paid acres globally by the end of 2019,” said Sam Eathington, Chief Science Officer of The Climate Corporation. By paid acres Eathington meant the acreage planted globally by growers subscribing to its digital farming tool, which provides advice on what to plant, where and how, using weather information, field data and global positioning.

Digital farming is one of the tools by which more output can be obtained from fewer resources. It is an advance over the Green Revolution which was high-input, high-output agriculture. Advances in biology and chemistry are also making agriculture more efficient and sustainable.

There was much emphasis on sustainability at the Bayer event. It undertook to reduce the environmental impact of its crop protection products by 30% by developing active ingredients that are effective in smaller doses. It said it would cut down earth-warming emissions by 30% from fields in the regions it serves. It undertook to make ‘sustainable’ technologies available to 100 million small-holder farmers. These three goals would be achieved by 2030.

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Sustainability is both a political and commercial compulsion. Germany has a strong environmental movement. In the May European Parliament elections, the Greens got the second highest number of votes after Chancellor Angela Merkel’s conservative bloc. Bernd Olligs, a sixth generation farmer who cultivates 360 hectares at Damianshof, near Cologne, said the government pays them 1,500 euros (Rs 1,18,000) a year for one hectare of flowering strips where bees and beneficial insects to nestle in.

It is a commercial necessity because seed without resilient traits will not sell. Bayer says it had developed short-statured maize to withstand strong winds. A product that kills sucking pests in citrus plants uses 70% less active ingredient and has 70% less impact on nature according to the Environment Impact Quotient developed by Cornell University. A pesticide distributed for a third party kills pests by disrupting cell function and feeding activity. Its active ingredient is a by-product of extra virgin oil. A fungicide uses a strain of bacteria to stimulate the plant’s natural defences. Synthetic biology is being deployed to make maize plants behave like legumes and store nitrogen from the air in root nodules.

RNA interference (RNAi) is a promising technology to silence unwanted genes in a targeted way to delay resistance to herbicides and pesticides in weeds and bugs.

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This is not quite farfetched. On 11 October, the US Food and Drug Administration approved cottonseed as a food and feed source, Reuters reported. Scientists at Texas A&M University used RNAi technology to silence a gene that produces gossypol, a toxic chemical. The genetically-modified edible cottonseed tastes like chickpea, the wire service said quoting Keerti Rathore, plant biotechnologist at the university.

Some of Bayer’s sustainability goals will be attained through business as usual. It is betting big on crops tolerant to glyphosate, an off-patent herbicide which it sells under the brand name Roundup.

The company has lost three US lawsuits which allege that the herbicide causes cancer and it hid the information. Since June last year, it has lost $40 billion in market cap which is 60% of the price it paid for Monsanto. It believes it will win on appeal and takes heart from the US Environment Protection Agency not agreeing to a demand for a cancer warning label.

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Sopybean, engineered genetically to be resistant to herbicides and borers, yield more by preventing yield losses to weeds and insects.  This means less rainforest cut. Herbicides also make possible conservation agriculture, where fields are not ploughed and seeds are planted with drills through the residue of the previous crop left to rot in fields. The tractor use averted by the use of herbicide-tolerant soybean in Latin America has resulted in lesser emissions equivalent to keeping three million cars off the road annually, the company says. No-till agriculture conserves soil moisture, enriches it with organic matter and enables microbes to thrive.

In response to an email, Bayer’s Swiss rival Syngenta, which is now in Chinese control, said it has a Good Growth Plan to make measureable contributions to sustainability. It intends to increase the average productivity of major crops by 20% without using more land, water or inputs. It says it has 44 reference farms in India for maize, cotton, rice, soybean and tomato to educate farmers in new technologies. Its outreach touched 10,000 farmers last year, it claims.

It also has initiatives to rescue degraded land, raise the productivity of smallholder farmers by 50% and educate agricultural workers in safe handling of pesticides. It cites 380 pollinator safety programmes in collaboration with the Indian Council of Agricultural Research and Krishi Vigyan Kendras as a measure of its commitment to biodiversity.

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Will high-tech innovations that the big companies talk about be relevant to smallholder farmers? Miguel Altieri, Professor of Agroecology at the University of California in Berkeley who was invited to the Bayer event, doubts it. He says practices that have been developed over centuries by smallholders already make their agriculture sustainable. He cites Andean farmers who grow rice at high altitudes in fields surrounded by pools of water to beat the frost. Altieri says smallholders not only produce cereals for own use, but also vegetables, eggs, milk and meat.

They are much more productive, he says, than large farms. Bayer’s pitch for smallholder outreach admits that they own 12% of the world’s agricultural land but produce 80% of the food that is consumed in Asia and Africa. It all boils down to whether smallholders should produce for own consumption or for the market.

*The author participated in ‘Future of Farming Dialogue’ at Germany as an invitee of the Bayer’s Crop Science Division

(The writer is a journalist and blogs on www.smartindianagriculture.com)

(The Federal seeks to present views and opinions from all sides of the spectrum. The information, ideas or opinions in the articles are of the author and do not necessarily reflect the views of The Federal)