MARKET | Mar 1, 2019

Smart Agri-food: the successes, mistakes and challenges of Agriculture 4.0

Digital Transformation is reshaping the world of Agri-food. However, only a few sectors know how to exploit the advantages of the new technologies.

In agriculture, digital technology has reached a turnover of between 370 and 430 million euros: a massive + 270% compared with 2017. In 2018 the turnover reached about 7 billion dollars (doubling that of 2017) and achieved 18% of the European market and 5% of the global market, of which only 30% was generated in Europe, where Italy is taking on a vital role thanks to an acceleration in the growth of the role of digital technology in all its components. These are the data by the Osservatorio Smart Agrifood (Smart Agri-food Observatory) of the Politecnico di Milano and by the Laboratorio Rise of the University of Brescia, which mapped 110 companies (74% established brands and 26% startups) and over 300 technological solutions dedicated to the world of Smart Agri-food.

Which digital solutions for Agriculture 4.0?

According to the survey, the growth of the technology offer remains primarily oriented towards the products and solutions of precision agriculture: 49% of supplying companies offers advanced solutions such as Internet of Things (IoT), robotics and drones; 22% produces solutions which focus on agricultural big data and data analysis; 16% manufactures machines and equipment for the field; 7% provides electronic components and instruments; only 3% is a productive reality in the agricultural sector. Therefore, the Agri-food sector is aware of an increasing availability of accessible data and of the fact that they are the key elements for developing applications, models and systems which are increasingly indispensable to make conscious decisions on quantitative grounds, but there are still some curbing elements which do not appear to have been overcome yet.

Which are these curbing elements?

Digital technology is redesigning the dynamics of the Agri-food sector, this is a fact. However, the lack of an overview, a lack of clarity on the part of operators on how to exploit the opportunities of digital transformation, the poor perception of the need for innovation and the lack of a systematic approach to the digitalization of processes, are still unresolved issues. As confirmation, the majority (79%) of the 4.0 agricultural solutions can only be applied to the cultivation phase, while the other phases are supported to a lesser extent: 13% for planning, 4% for monitoring stocks and 3% for corporate logistics. The positive fact is that in 53% of cases work has been carried out on systems which can be used across multiple agricultural sectors (53%), thus taking a more systemic approach, but there are only three highly technological production chains: the cereal (24%), fruit and vegetable (24%) and wine (16%) sectors.

These curbing elements also clearly emerged from a recent Research on the impact of digital technology in agriculture, prepared by the Digital Transformation Institute and Cisco Italia, which extensively analyzed the entire agri-food sector for the first time, from the field to the table, in order to identify the technologies with the most impact and to investigate the state of the art in the various supply chains. The research clarifies that the absence of an overall picture and the poor perception of the need for innovation are added to the sector’s lack of qualified figures with the necessary skills to drive a digital transformation, to the inability to effectively evaluate the impact of the investments and to the fact that the focus on Digital Transformation prevails in companies with an industrial dimension and that only companies which already invest in digital technologies actually perceive the advantages of digitalization. “It is the classic snake which bites its own tail – explains Stefano Epifani, president of the Digital Transformation Institute -, with a mechanism which seriously risks leaving another tail behind: the long tail of the agri-food sector made up of thousands and thousands of small and medium companies, which, by using technology, could step into a wider market, improve control of their production processes, recognize and make others recognize the quality, excellence, originality of their products and grow”.

The wine sector is among the most technologically advanced

In its focus on the wine sector, the survey by the Digital Transformation Institute confirms what has been said so far: 47% of questioned companies states that investments made in technology have not yet brought or will not bring an increase in revenue and 15% is not able to evaluate any possible benefit obtained. Furthermore, 77.3% of Italian wineries has not yet invested or has invested up to 5,000 euros in ICT technologies during the past five years. Of the remaining 22.7% – which has invested more than 5,000 euros – half (49%) is represented by larger companies. Here too, the investment in innovation is not homogeneous throughout the supply chain, but concerns, in this case, the final part: distribution in 41% of cases, direct sales to the public in 43%.

As regards future investments, however, the focus is on production and process optimization (49% and 57% consider these interesting). The issues concerning logistics, administration and management remain central, but above all the traceability and safety of the product. 51% of the sample believes, in fact, that traceability should always be mandatory, even if 30% believes it is “a cost for the producer” and 29% believes that institutions should bear the costs, since this is required by the European Union. Finally, a similar percentage (31%) recognizes that traceability is useful for commercially promoting products. There is in any case considerable scope for intervention since, for example, as many as 65% of the companies keeps a record of the product treatments in the field still in paper format, therefore not suitable for an automatic integration with the product data and an inclusion in a wider traceability system.

All these data pave the way towards new considerations as they show us a contrasting picture of the Italian Agri-food industry, a sector which is probably to date one of the most open to Digital Transformation processes.

Stefania Farsagli