This was yet another interesting year in the world of agriculture. And, the three lenses I would like to use to zoom in on the subject are markets, agribusiness and data Science (MAD).

Each lens provides a meaningful insight into developments in the sector in 2014.

The markets started off bullishly at the beginning of the year and ended on a bearish note.

Agribusiness started with some lower margins due to higher energy and logistics costs combined with raw material prices, but ended with higher margins as energy prices dropped (as seen in the soyabean industry).

In terms of data science, the year began with some interest in the use of information and ended with a multitude of precision farming and big data firms focused on the agricultural markets and how data science could serve as an enabler for agribusinesses to grow efficiently.

Across the value chain, agri-businesses have always relied on the markets to transfer risk, create efficiency, improve margins and provide an indicator for where the next opportunity lies. This has been the case for the last hundreds of years, and this is unlikely to change with the advancement of technology.

That said, data science is an additional enabler that can provide insights into agribusinesses as never before.

These could be in precision agriculture, logistics optimisation, predictive risk management, sales portfolio selection, and so on.

The combined power of data science and markets as enablers will help agribusinesses innovate at the fastest rate we have seen in last several decades.

Greater alignment In the coming years, we will see much greater focus and alignment across these three areas. For example, there has been a significant focus on precision farming and the development of related analytics products serving clients on a subscription basis.

As much as innovation in the farming sector is exciting, there is so much more of the fuller value chain that is yet to be explored in the agricultural industry.

The capital flows at this moment are extensively focused on one segment – farming. Let us reflect on how this focus could impact markets, agribusiness and data science.

The focus on precision farming, analytics and technology will improve yields, reduce farming inefficacies, and eventually cut the cost of production. This should mean lower volatility in markets, greater margins for consumption-side agribusinesses, and a direct impact of investment in data sciences.

That said, an under-investment in data sciences in other parts of the value chain will have consequences too.

First, this will arguably lead to a lesser ability to extract value out of the investments in precision agriculture analytics.

Second, over-production and a structurally lower price regime could drive margin revenues below marginal costs, creating a disincentive for crop production or in economic terms, a “consumer deficit.”

Third, downstream parts of the value chain will be under capacitated to absorb this overwhelming output from upstream.

Fourth, agribusinesses that are production driven will likely be late adopters of technology and thus slower to react. In agribusiness, enablers such as data sciences and markets should strive to create consumer surplus.

This can be achieved best by a proper understanding of the agribusiness value chain and where the opportunities lie. 2015 should be an exciting year in all facets of MAD (markets, agribusiness, and data science).

The writer is Founder and MD of OpalCrest. Views are personal.

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