The Accordion, the Contrarian & the Robot

June 8, 2017

Although change happens all the time, in some areas human nature demonstrates great constancy. One of these areas is how Pavlovian we react to market fluctuations. Agriculture knows many cycles, most of which are as much the result of human nature as the mechanics of economics.

In the time of high commodity prices that preceded and followed the Great Recession of 2008, one of the main questions I was asked about the future of agriculture was to give predictions about prices and profitability of agriculture. This is a tricky exercise if there is any. So many factors can influence both supply and demand that it is unrealistic to believe someone could predict with certainty future prices. Price predictions would only be meaningful by predicting costs at the same time. Despite the difficulty, many economists venture in the exercise. The levels of accuracy are disappointing. Past research on economists’ and gurus’ predictions has shown accuracy levels of 47% on average. In other words, tossing a coin would statistically be more accurate by a margin of 3%.

When “predicting” the future, it is more useful to focus on patterns than trying to miraculously try to pull the right numbers. Human nature is rather predictable. When prices and profitability are good, suppliers want to produce more, because they expect the result to be even higher profits. It is intuitive, and it would work fine only if the competitors did not follow the same thinking. Unfortunately, they do and the result is an increase in supplies. As it takes two to have a supplier-customer relationship, the flip coin of the high price medal is that buyers are less warm to buy more of what increase their costs. I like to compare value chains to an accordion. There is only so much money that flows between the two ends of the entire chain, and all the links must share that money. One end is the consumer market and depending on prices, consumers switch foods when prices reach a pain threshold. Since the amount of money entering value chains actually come from the consumer end, consumer resistance limits the elasticity of the entire chain. Thus, depending on the relative supply and demand between the individual links of the chain, some see their profitability expand while others see it shrink. The FAO knows the conundrum. High food prices put the economically vulnerable into food insecurity, while low food prices put many small farmers in economic difficulties, and into food insecurity. There is nothing like a food shortage causing high prices to encourage farmers to produce more. Following high price years, they have done exactly that, and that is why prices have fallen, sometimes to the point that entire sectors suffer dramatic losses. Low prices will give an incentive to those who will survive to boost their production, and the cycle will continue.

The counter intuitive approach is to be a contrarian and to supply tomorrow products that have low price and low profitability today and reduce exposure to today’s attractive products. It is easier said than done, because natural conditions limit the choice of products a farm can produce and heavy investments for one kind of production can limit flexibility. Nonetheless, the contrarian approach is a good one from a planning and forecast perspective. Market swings happen because forecasts tend to be made with today’s prices in mind and assume that the system is static. It is not. Forecasts must take into account the big picture and project what all actors of the value chain will do, as well as in what shape other value chains are and will be. The tools have been here for a while. The exercise then comes down to technical analysis, which is a very common method used by traders. It uses historical data and the predictability of human behaviour to give an indication of which direction prices are most likely to go in the future. Unfortunately, too many actors in value chains do not use that tool for their forecasting and miss on the most likely picture of the future. Some help might be coming, though. The development of software, robotics and artificial intelligence will come to the rescue by eliminating the intuitive and preference of the present of human nature by more rational analysis and forecasting than is the case today. Price setting and negotiations will increasingly be automated and carried out by machines, squeezing out the human factor, especially for undifferentiated commodities. Wall Street is already working on this. Earlier this year, Goldman Sachs indicated that they were going to replace traders by software engineers to achieve this very change, and also to reduce their costs, as a software engineers cost them four times less than a trader.

Copyright 2017 – Christophe Pelletier – The Happy Future Group Consulting Ltd.

Advertisements

Curiosity: it’s where the future starts

August 17, 2016

The challenges ahead are bigger than ever before, and be assured that they will bigger in the future. The good news is that progress and new developments in science and technology are bigger and faster than ever, too. From a technical point of view, I would dare to say that the solutions to the challenges already exist or are very close. Often, the problem is that these solutions are not immediately economically viable. In such a fast-changing world, curiosity is undoubtedly one of the most desirable qualities to adapt timely and find new ways of running the business.

Perhaps, it is because a lot of my work is about finding as much information and gathering as much knowledge as possible about all sorts of technologies, facts, systems, science and experiences that I find curiosity quite natural. Perhaps it is also because I have a curious nature. In my daily activities, I find that people are relatively not curious enough. I also can see that the ones who have that quality are always ahead of the pack. What is really amazing is how much is already out there. The trick is to find it and to know about it. Often, the information originates from very different business sectors or comes from other parts of the world or is available in a different language. I can see regularly a lot of organizations busy reinventing the wheel, going through the pain of setting up research and spending vast amounts of time, money and resources to find out results that are already available and that they could have taken over and adjusted to their particular situations. Curiosity can deliver huge savings.

Curiosity is quite time consuming. That is a fact and its main drawback. This may be the reason why it does not happen enough. The quest does not always deliver, although for those who have a proper strategy, the yield is quite good. Curiosity, for a business, cannot be a random activity. It has to be structured and carried out with discipline. There is quite a similarity between curiosity and access to food. There are those who know where to find the tasty mushrooms in the woods and those who get lost in the forest. It is the same thing when going out there to find knowledge. Some are talented and find it often and fast and others just wander endlessly without spotting anything significant. Just as it is important to know the right spots to find food when hunting and gathering, there are some places where the good knowledge is. As with food, it is important to know the supplier and know the origin of the knowledge. To pursue the comparison with mushrooms, some knowledge is good and some can be toxic. The supply chain is just as important, especially considering how fast and far social media can replicate and distribute information. When it comes to knowledge, the reliability, seriousness and quality of the sources is of utmost importance. A discerning knowledge consumer must be critical about what they find. A solid critical sense is of the utmost importance. Regardless of whether the knowledge is found through a hunting/gathering activity or comes from a knowledge farm, it is essential to double-check its validity. The packaging can be deceiving.

Next to focused curiosity activities, it is also important to encourage what I would call open curiosity, in which there is no particular objective but just letting new findings lead to new discoveries. There is no business discipline involved. It more often research you would do in your free time. One piece of information generates interest to know more and you just follow. It is similar to a child-like exploration in which each answer triggers the next “why?” question. It is pure learning. There is no way to tell when or even whether the new learned knowledge will be useful, but there is no such thing as too much knowledge. The trick is to be able to retrieve it when it is needed.

Another important aspect of curiosity is to link experience to knowledge. Usually, knowledge is the result of certain protocols. The knowledge itself takes its full dimension and value only through the use we make of it. Some people make good use and others do not. When gathering new knowledge, it is essential to also learn about the lessons from the experience of those who used it. Why did certain things work in certain conditions and others did not? Which factors influenced the outcome and how would different conditions or a different environment affect the outcome? Getting the big picture is a very important part of curiosity. Expanding the scope and seeing how the pieces of the puzzle come together are the foundation of future successful strategy and adaptation.

Curiosity is a great asset when it comes to face and prepare the future. It is not the whole story, though. Food and agriculture are not intellectual exercises. They must deliver concrete products and results. It is nice to be curious but what do you do with that? The answer to this question is quite simple: action.

According to the saying, knowledge is power. Knowledge is true power only when it is active and circulates. Knowledge that remains in a brain or in a drawer is not very useful for the greater good. The first step that I advise curious people to do is to share what they learn. It is even easier today with the Internet, and there is a lot of knowledge out there. By sharing, I do not mean simply copy and paste or click the share button. Before sharing, it is essential to make sure that what you share is quality. There is too much information that is spread on social media while clearly not critically reviewed, not to say not even read, as it is quite often the case. The mindset here is a mix of enthusiasm, critical thinking and practical service orientation. The knowledge must be correct and the message must come over. It also must be useful to the recipients. It must connect to their needs and add value to them. The final result has to be better food through more efficient and sustainable systems that are financially viable. In the food and agriculture sector, it must lead to always more collaboration and knowledge transfer in all directions within the entire value chain. Often, the weakness of communication is that it stays too long in the same circle and other links, consumers in particular, are kept too long out of the loop. It results too often in misunderstanding, distrust and erroneous perception.

Through collaboration and brainstorming, curiosity helps create a more accurate and achievable vision of the future, on which action can further be carried out to shape the future. From this angle, it makes no doubt that collaboration between all stakeholders is an ongoing process. This is especially true with technology. There are new developments all the time and it certainly takes a curious mind to be able to keep up with novelties. It actually takes many curious minds, considering how huge the quantity of knowledge and information is. It also takes minds that can connect all the dots, and also connect with each other. Although time consuming, the back and forth collaboration, together with ongoing feedback about performance and new demands, allows all links of the chain to know better what the objectives are and how to foster ongoing improvement. As many new technological developments come from outside the food and agriculture sectors, I believe it is critical that the food producers be proactive in the development of technologies and applications, but stating clearly what they expect from technology suppliers and tell them what they expect from them. It is never too early to let them know what your problems, limitations and/or objectives are, so that they can work on it as soon as possible. Being proactive will help speed up the development of the right products, systems and applications.

In this process, leadership is of the essence. Leadership is essential to create the right dynamics to make knowledge transfer happen, fast and well. The role of leaders here is to make knowledge transfer attractive and stimulating for others, so that more stakeholders participate in the development of innovation. The more pressure they will be on suppliers to bring better solutions to the food sector, the higher the chances it happens, indeed. Leaders must also foster connections and networking across the disciplines, even or actually especially with partners outside of the food and agriculture sector. A vision that includes the bigger picture will have more chances of stimulating the cross-discipline and cross-sector collaboration. At the same time, it is crucial to stay practical. The goal is to produce food, and that must be in the minds of all participants.

Curiosity is really the starting point. It feeds an entire chain of ideas and decisions that are the basis for improvement. There is no doubt that fortune favors the bold. In the never-ending quest towards better foods and better agricultural practices, such a process becomes an illustration of “the best way to predict the future is to create it”. This saying may have not been so true as today. Progress and food security depend on it.

 

Copyright 2016 – Christophe Pelletier – The Happy Future Group Consulting Ltd.


Future implications and consequences of the ChemChina-Syngenta deal

February 16, 2016

The purchase of Syngenta by ChemChina did not go unnoticed. Many commentators are trying to see all sorts of reasons and all sorts of consequences, mostly depending on whether there are pro or anti GMO (Genetically Modified Organisms). When it comes to China, the best approach in my opinion is to look at it in a very pragmatic manner, simply because the Chinese have been quite pragmatic over the years. Their approach of food and agriculture is the same as for all other economic activity. It is dictated by the need for the government to ensure social stability or at least prevent social unrest. They will do what is good for China, meaning what is good for the Chinese government. It is not aimed at pleasing any other country or the financial markets. They still follow the principle express by Deng Xiao Ping: “It does not matter whether the cat is black or white as long as it catches mice”.

In both Future Harvests and We Will Reap What We Sow, I was announcing such a move, simply because it makes sense when looking at the economic and demographic changes the world is going through. The purchase of Syngenta is a very good move for China because it kills several birds with the same stone.

The Chinese seed sector was –and still is- fragmented and far from effective. By bringing a heavy weight company like Syngenta in their market, they will establish a much stronger seeds and genetic business to meet the challenges of the future. Syngenta brings expertise that will help China speed up the learning curve and create a critical mass of production that will be able to meet some serious volumes. It will stimulate further consolidation in China and also stimulate innovation and progress for other Chinese seed producers, if they want to stay in business. I read many derogatory comments about China’s quality approach. It is amazing how many people are stuck in clichés from the past. China is improving in many areas and quality is one of them. There is a generation of entrepreneurs who are quite bright and competent leading businesses. It is quite clear to me that Syngenta is and will be a quality player in the future, under Chinese leadership. Those who think this deal is bad news for Syngenta’s employees will be disappointed. I believe the contrary. They will get many more challenges to tackle and their jobs will be more focused than they were before or would have been if it had been bought by a North American company.

The purchase of Syngenta sends a clear message that China wants to be in control of its seeds. By buying such production assets, China will not have to go on the market, or at least will be much less dependent, to buy seeds from outside. It will strengthen China’s bargaining position towards other seed suppliers. Thus, China will be in charge of strategic choices that are good for China’s agriculture instead of having to choose from suppliers who do not have China’s long-term food security at heart or who would try to impose their conditions to China.

Regarding the topic of GMO, the purchase of Syngenta certainly offers China access to the technology, but it is not the main reason for the purchase. What it does though, is to offer China the option of using genetic engineering technology if they consider it useful. If they choose to do so, they will approach the use of the technology as a resource that supports their food security goals only and they will develop the products they actually need, not the products other suppliers would want to sell them. Whether China will use GMO is up to China and nobody else. Trying to see the Syngenta purchase as a sign of China’s attitude towards GMO is in my opinion wishful thinking more than anything else. When it comes to seeds, they will not look at the cat’s color. They will focus on having one that catches mice.

Further towards the future, the Syngenta purchase will have other long-term effects, and outside of China, too. China will be a significant seed producer and supplier. With an organization like Syngenta, there is no reason why they should limit business to China. I expect to see China playing a much more important role in the seed market outside of its borders. In particular, I expect to see China eye the huge African seed market. China has been active for decades in Africa and contributes to many economic development projects. China does not interfere with African politics but focuses on how it can help Africa developing and playing a future role for China. Considering the potential of African agriculture and its significance for China’s future food security, the new Syngenta should be instrumental for future progress of agriculture in Africa. A side effect of such a strategy would reshuffle the cards of the world seed market and bring a new and different equilibrium. There is quite a bit of activity on the mergers’ side. Syngenta had been the object of interest from other potential buyers, especially Monsanto. DuPont and Dow already brought their agriculture activities’ together. BASF seems to be looking at reshaping its activities. Further consolidation and mergers will take place in the coming months and years. What will be the next big merger? I can think of two possible ones: BASF and Bayer or BASF and Monsanto. I also see the possibility of Monsanto not being considered a purchase candidate at all by anyone.

Copyright 2016 – Christophe Pelletier – The Happy Future Group Consulting Ltd.


Nature will reshape food value chains

October 15, 2015

The recent climatic events, in particular droughts, have attracted more attention on future challenges for food production, and rightly so. Unfortunately, the mainstream media cannot help presenting the as all gloom and doom. Certainly, there are very serious reasons for concerns, but solutions can be found. I wish the media would present more examples of positive actions to face and overcome the challenges.

It is not easy to deal with a changing environment, especially when it is impossible to predict accurately what the change will be. Predictions about temperature increases are useful but they are quite insufficient. An increase of 2 degrees on average will be different if the standard deviation is 1 degree or if it is 20 degrees. Other factors such as hours of sunlight and precipitations (including their nature, frequency and intensity) will impact agriculture at least as much as average temperatures. Changing climatic conditions will not only affect plant growth and development, but they will change the ecology of weeds and pests as well and that needs to be factored in future forecasts and models

Nature will reshape food value chainsA special attention on water is necessary. Without water, there is no life. Unfortunately, over the past few decades, wasting natural resources has been a bit of a way of life. The issue of food waste has finally received the attention it deserves, but the waste is not just about food. It is about all the inputs such as water, energy, money, time, and fertilizers. Water is still wasted in large quantities. Just compare how many liters a human being needs to drink compared by the amount of water that is flushed in bathrooms every day. Before the housing crash of 2008 a study in the US had estimated that lawn watering used three times as much water as the entire national corn production. But the issue of water is not just about waste. It is also about preserving water reserves. The late example of the drought in California illustrate what water scarcity may mean for food value chains. California is not only a major agriculture power house, but it exports a large part of the production outside of the state’s borders. The issue of water scarcity and the dwindling level of the Colorado River are not new for Californian agriculture. It has been known for a couple of decades that problems were coming. California produces a lot of water-rich fresh produce by means of irrigation. It actually has been exporting its water in the form of lettuce, spinach, melons, strawberries and citrus far away to places from where the water will never return to California. The water loop has been broken wide open and that is why, among other reasons, the system is not sustainable. If California can no longer supply its current markets, it will have to rethink its target markets. At the same time, other regions, that may not be competitive with California today, because externalities are never included in the cost of production, will eventually take over and replace the Golden State as suppliers for some productions. Unfortunately for the future, California is not the only region with a water problem. Saudi Arabia changed its food security policy a couple of years ago as the country leaders realized that trying to produce all its food would lead to a severe depletion of its available drinking water reserves. Instead of pursuing food self-sufficiency at all costs, the country chose to find other supply sources through international trade and through the purchase of farmland in foreign countries. The examples of California and Saudi Arabia demonstrate how natural –and demographic- conditions shape food value chains. The issue of water is not just about produce. Animal productions require usually more water than vegetal ones. In the future, water availability will surely affect where which kind of animal products are produced. New regions will arise and old traditional ones may review their strategies from volume-driven to higher margin specialty animal products market opportunities because of environmental constraints.

Climate change and water scarcity show how international trade can actually contribute to food security when done responsibly and with long-term vision. The prevailing model of producing where it is cheapest to produce without taking into account negative environmental externalities is facing its own contradiction and demise. The next model will be to produce not only where it is the cheapest to produce but where it is sustainable to do so. When water runs out, it is no longer possible to ignore the externalities of a production. When water becomes scarce, it gets more expensive. The law of supply and demand commands. When inputs get more expensive, several things happen. The economic model shifts. Priorities and externalities change, too. At first, producers try to find ways to increase efficiency and eliminate waste. The benefits outweigh the additional costs. Uncertainty stimulates innovation. New systems, or sometimes old ones that found a second youth, replace the current ones. If that does not work well enough, then producers start considering producing something else to ensure the continuity of their operation and find new business.

It is not the first time that our natural environment changes. Finding successful solutions to deal with it really are about our ability to adapt and to preserve our future, as it has been the case in the past. The challenges may be of a magnitude like never before, but so are our knowledge, our technical abilities and the tools present and future.

From an agricultural point of view, adapting to a new environment is about finding the type of production that thrives under new conditions. It may mean different areas of production for some species. In North America, there is already a shift for corn. Iowa has traditionally the main grower, but the corn production area is now expanding north. Minnesota is now producing more corn than in the past and so are the Canadian Prairies. Similarly, the production area for soybean is shifting north. Minnesota is growing an increasing volume of soybean and even in the province of Manitoba in Canada, soybean production attempts have been carried out since a few years.  It is the result of better production conditions and the development of new varieties that can adapt to new less favorable climatic conditions. Because of the local supply for soybean, the development of aquaculture with local soybean products for fish feed is now considered a long-term possibility in Minnesota among others. In Europe, corn production regions also saw a shift to the north for corn during the 1970-80s thanks to the development of new varieties, which largely contributed to the growth of dairy production in these new areas through the widespread use of corn silage. For the future, there is no doubt that genetics will contribute again to ensure food security. There is currently a lot of work done to develop varieties that can withstand droughts, floods or soil salinity. The ability to know the complete genome of species, to spot genes through gene markers, to be able to create new varieties that are less sensitive to diseases help speed up the development of crops that can thrive under future conditions. The recent developments in synthetic biology are quite interesting. Research conducted at the IRRI (International Rice Research Institute) on the development of rice varieties that can have a higher photosynthesis efficiency and thus higher yields could open new perspective for a more productive and more sustainable production.

Next to the development of better and more adapted seeds and genetic material, the development of new technologies that I described in a previous article will bring a number of effective solutions as well. In particular the rise of precision agriculture is certainly quite promising. The ability to deliver to the crops exactly what they need when they need it at the right time and at the right place in the right quantity will help reduce the environmental impact of agriculture while offering the possibility of delivering higher yields. Similarly, in animal production, there still is room to improve feed efficiency. It can happen through further genetic improvement, the use of more efficient feed ingredients and feed composition and through better farm management. The latter is definitely an essential facet of a better future for food production. Better and updated skills for food producers will help being more efficient, more productive and more sustainable at the same time.

An area that is often forgotten when it comes to the future of food is the functioning of markets. If demand for certain products, and in particular animal products, increases faster than supply, price will go up and there will differential increases between the different types of products. As most consumers, unlike what marketers sometimes tend to make believe, still choose what they eat depending on the price of foods, there will be shifts. Some productions will thrive while others will struggle.

As prices still will be an essential driver of the location of the various vegetal and animal productions, markets and environmental constraints will increasingly have a joint effect. In the future, the dominant economic model of producing where it is the cheapest to produce will evolve. As the pressure on water supplies, soil conditions and pollution issues will keep increasing, the model will include an increasing share of negative externalities. They are the long-term costs that are never factored in the production costs but that will affect future production economics. Externalities are the hidden side of sustainability and they will determine the future map of agriculture, as it will no longer be possible to ignore them. Choices will have to be made between short-term financial performance and the long-term ability of various regions to be able to produce, and to keep producing, the volumes and the quality specifications that are needed by the different food markets of the future.

A friend of mine told me a couple of years ago after a trip to Asia how she could see from the plane the large plantations of palm oil trees, and how they had replaced the jungle. She described her impression as the view resembled the strategic game of Risk to her. Yes, climate change and water availability in particular, will reshape food value chains because agriculture, regardless of it scale, is a strategic activity. It is about life and death. It is about peace and war. Future strategies for both global commodities as well as for local food value chains will integrate Nature’s new deal of precious resources and conditions of productions. Together with the geography of future consumption markets, world agriculture will readjust, relocate and the Earth will look different once again.

Copyright 2015 – Christophe Pelletier – The Happy Future Group Consulting Ltd.


Beyond just technology… the human factor

August 6, 2015

Early July the SeaFest 2015 event was held in Ringaskiddy, Co. Cork, Ireland. The Our Ocean Wealth conference was aimed at showing the potential of the sea as part of a successful economic development for Ireland. I had been invited by BIM (Bord Iascaigh Mhara, the Irish Seafood Development Agency) as a speaker and my presentation was about future technologies and how they will change seafood production, both in fisheries and aquaculture. One of my previous articles, “Robots, sensors, drones and big data are coming to the sea, too” had caught some attention.

From left to right: Joe Gill (Goodbody Stockbrokers), Susan Steele (SFPA), Kieran Calnan (BIM), Donal Maguire (BIM), Helen Brophy (UCD Smurfit Business School), Eddie Power (Green Isle Foods), Øyvind Oaland (Marine Harvest) and Yours Truly

From left to right:
Peter Marshall (RS Standards), Joe Gill (Goodbody Stockbrokers), Susan Steele (SFPA), Kieran Calnan (BIM), Donal Maguire (BIM), Helen Brophy (UCD Smurfit Business School), Eddie Power (Green Isle Foods), Øyvind Oaland (Marine Harvest) and Yours Truly (Photo: BIM)

The agricultural sector is currently implementing many new technologies at an amazing pace. The comparison with precision agriculture is quite useful for the seafood sector. The development of robotics, sensors, satellite imaging and analysis, unmanned vehicles such as drones and driverless tractors, data software, artificial intelligence and interconnected devices are already revolutionizing many sectors of food production and it is just the beginning. The picture of the future that I have in mind is amazing and the possibilities seem almost endless. Imagine if fishing vessels do not need operators anymore. Would they need to float or should they operate as submarines? What would the effect it be on their size, their shape and the way they fish? Imagine robots equipped with sensors replacing divers on fish farms, executing the current tasks and at the same time being able to inform about water quality and other production conditions, presence of contaminants or diseases. Imagine fish farms being connected to such robots and to global satellite and data collection systems making them move or change configuration to get to better production conditions or to avoid negative interaction with wild marine life, thus constantly optimizing production performance and reducing –maybe eliminating- long-lasting environmental impact. Carrying out an “Imagine Exercise” is not only useful but it is fun.

While the previous generation of automation was about adding muscle to operators, the new technologies are adding extensions to the operator’s senses and creating a nervous system. The muscle era was about strong, big and fast, but it required an operator. The nervous system era is about smart, adaptable, much faster, and decision and action will be taken without human intervention.

By combining the possibility to monitor production parameters with the ability to detecting faster than ever before the environmental impact of production activities, new technologies will play a prominent role in helping food production become more efficient and more sustainable. They will help reduce the use of resources and save money. The interconnection of databases for both production and environmental monitoring will allow many possibilities for forecasts, simulations and comparison of scenarios. They will be outstanding tools for decision making and policy making. New technologies are going to offer a platform for collaboration between all stakeholders, be it businesses, governments and NGOs. Similarly, as the data will be made available, all the links of food value chains will be able to access and exchange information like never before. The potential to reconnect consumers and producers is amazing. Transparency and interaction are the way of the future and the tools that are coming will make it so easy. The global village is going to be exactly that. Virtually, everybody will have the possibility to know about everything they need to know about everybody else. Just like in old-fashioned villages, keeping secrets will be quite difficult and social control will prevail. Just see the reactions to inappropriate statements on social media to realize that this trend is already on. Communication and behavior of food producers will have to adapt to this new form of relationship, because there always will someone watching and telling.

Adjusting to a new technological world is a necessity. Food producers need to approach the future with the right mind. After all, technology is only as useful and effective as those who use it. I like to illustrate that statement with the example of gun powder. When the Chinese invented it, they used it for fireworks and entertainment. When the Europeans discovered it, they decided for quite a different use: weapons and killing people. Current technologies and future ones will also depend on who will use it and how. In my work, I always wish to make my clients realize the importance of the human factor on the future outcome of technologies and innovation. The outcome will depend on the intentions behind the development and the use of technology, but even if the intentions are pure, the outcome will depend on the skill of the users. Continuous training is essential to get the most out of technology. As I wrote in my first book, Future Harvests, there are several recurrent drivers of innovation:

  • Reducing physical labor.
  • Helping us live better and longer.
  • Increasing efficiency.
  • Helping communication.
  • Increasing mobility.
  • Offering more leisure and entertainment.
  • Making some people a little wealthier.

However, these drivers are not sufficient by themselves. An essential part of successful innovation lies in its practical use. I always insist in my presentations on practicality of technology. Innovation is not an intellectual exercise. When it comes to business, innovation must actually fulfil one or more of the drivers mentioned above and it must also be financially viable and advantageous. In other words, to be adopted, innovation and technology must add value. Although they may be fun, cute and exciting, gadgets do not really belong in that category.

For the future, we need to look beyond just technology. Giving the proper importance to the human factor and focusing on the practical side of new developments are two essential aspects of success. This is why the second book I published, We Will Reap What We Sow, is subtitled “Reflections on Human Nature and Leadership and Feeding a Growing Population”. Getting people to do the right things right through clear vision and solid leadership is what will eventually make the difference between prosperity and trouble. A number of qualities will help a long way towards a successful future.

Curiosity will be an invaluable quality. Innovation is taking place is all areas and many innovations can offer useful applications. It is necessary to follow what is happening elsewhere. In the past, innovations came from the own sector. It is no longer the case. Now it happens in start-ups that have nothing to do with food. The potential lies in creating applications for a particular purpose. There is much to learn from other food sectors, but also from the military, the medical sector, the tech sector, and not just in Silicon Valley. Another essential quality will be pragmatism and openness. Disruptive technologies will bring disruptive solutions. Tomorrow’s way will be different, technologically and philosophically. It will be useful to regularly brainstorm and review how things should be if they were to be set up from scratch all over again, by using all the latest knowledge and also from the experience, successes and mistakes from the past. To tackle the challenges of the future effectively with new technologies, it will be crucial to be practical. Applications must serve a purpose and deliver the solutions to the problems we face. It is not an intellectual exercise. A spirit of collaboration will be one of the keys for future success. Nobody can solve future problems alone. Wanting to help others succeed and not being shy to ask for solutions to succeed will get us a long way. Even though we seem to live in a world where pointing fingers, blaming and punishing is the preferred choice to deal with problems, it is necessary to approach the future with a 180 degree angle and reward and praise those who do things right and solve problems.

Copyright 2015 – Christophe Pelletier – The Happy Future Group Consulting Ltd.


How can insects be a part of future food security?

July 31, 2015

Since the FAO published a report in May 2013 presenting insects as a possible source of food to meet future protein demand, the topic has become quite popular in the mainstream media. I wrote an article about this (Insects on the menu) in May 2010, in which I was giving some of my thoughts. I still think along the same lines.

In the last few weeks, I bumped into the insect story several times, purely by coincidence. I believe insects can play a role but I am getting a bit frustrated by the lack of specifics in all the talk about insects and worms.

Apparently insects would present many performance advantages compared with traditional meat productions. Aaron Dossey did a presentation at the IFT15 symposium organized by the Institute of Food Technologists. Here are the advantages of insects he mentioned as reported in the article from Science Daily of July 14 2015:

  1. Efficiency. They use less land, water, feed, energy and other resources than livestock.
  2. Environmentally friendly/clean. Insects create fewer greenhouse gases and are not contaminated with pesticides. They also do not have any hormones in their bodies.
  3. Prolific. They reproduce quickly so they can replace depleted resources.
  4. Biodiverse. There are millions of insect species, so it is easy to find a match to a location’s need.
  5. Nutritious. They have protein and Omega 3s, a class of essential fatty acids that help lower cholesterol.

All of this is nice but…

  1. How efficient? How much less land, water, feed and energy and other resources?
  2. Environmentally friendly as long as they do not massively invade it. How many fewer greenhouse gases? No hormones at all, really? Of course insects contain hormones. They are necessary for their physiology and development. So which hormones was he referring to?
  3. Yes they are prolific, which raises the issue of what would happen if insects escape from farms in large numbers. They are prolific but they are tiny, so it takes huge numbers to match the weight of a cow or pig or even a chicken. The real question to answer is how many tonnes of insect protein can a farm produce compared with other animal productions? What should be the size of an insect farm and how many farms should there be to meet future demand. Also what feed will the bugs eat to grow?
  4. Biodiversity may be nice, but what species would be production worthy when it comes to the mass production of volumes that would be comparable with other productions?
  5. They are not the only food sources of omega-3

Unless someone can quantify the above, the story remains rhetoric. If insects are to become a large-scale production along the lines of other animal proteins, it is necessary to single out the species that will be the most efficient, technically and economically. It is also necessary to sketch the design and the magnitude of farms. There are a number of companies that have been venturing in the insect business but most of them are tiny, in the grand scheme of world food security. Aaron Dossey’s company produces 25,000 lbs of insect powder per year. That is 12 tonnes, and he does not sell them to the hungry of Asia and Africa. Compared with the world average meat consumption per capita per year, 12 tonnes of meat represents the yearly consumption of 250 to 300 people. If insects represented 1% of the world average meat consumption per person, his production would feed only 25,000 to 30,000 people, or less than 0.0005%! Clearly, even to cover 1% of the average animal protein need as it is on average per today, the magnitude of the challenge to set up a significant production is huge. The other challenge to overcome is to make insect production economically competitive, be it for human consumption of for animal feed purposes. Most businesses offering insect products today are operating in a small niche, just because there is little industrial production. The dominant part of the insects and worms consumed are picked in nature by those who eat them, as those animals are usually consumed when there is a seasonal shortage of other protein sources. The niche businesses sell their insect products at prices that even many people in wealthy country could not afford on a frequent basis. The insect products are offered to consumers at prices reaching several hundreds of dollars per pound.  Presenting such foods as helping the world feeding itself, which means mostly helping the world’s poorest to be able to afford nutritious food is at best delusional if not even plain cynical. Insects and worms can be contributors to future food security only if they are affordable and competitive against the other meat sorts. That cannot happen if they are limited to the treat sector.

Another aspect of insects as food is their attractiveness, or lack of it. Insects and worms are much more common in Asia and Africa, where the largest part of the world population is and will be in the future. In Western countries, insects and worms are perceived as repugnant by most people. In terms of marketing, it would make more sense to focus on the Asian and African markets instead of trying to convince Westerners to eat lots of insects, just because of the respective levels of acceptance.

However, there is communication to do and lessons to learn from the past. I would name two. First, escargots, which are so popular under their French name, are an expensive item on menus. Escargots are never sold as “snails” because that sounds gross for most people. Everything sounds tastier in French. Try presenting insects under a French names and the Anglo-Saxon population might be more tempted. Snails used to be, just like insects and worms in Africa and Asia today, food that the French were going to pick on walls after a rain in times of food shortages. My second example is lobster. Lobster used to be considered a bottom feeder that was only for the poor, and so it was. Clearly, the image of lobster has changed a lot. The other lesson about lobster, and I would add shrimp, langoustine and many other ugly crustaceans, is that there are expensive delicacies that actually look a lot like insects, and they are actually rather close to insects in their body structures.

When it comes to human consumption, I wonder whether people will still be tempted to eat bugs if the economic situation keeps on improving in Asia and Africa. Not that long ago, China was in situation of near famine. Anything that contained protein was food. They were roasted rats for sell. In France, during the privations of World War II, rats – and cats- were used to replace pork in many deli specialties. There is a big difference between having to and wanting to. Has rat meat consumption increased in China since the economic boom? Do the French since WWII ended have been asking their butcher for rat pâté? I may be wrong, but I really think that when people, wherever in the world, have the choice, they will go for a juicy steak or some chicken before looking for bugs.

Then, there is the possibility of using insects and worms for animal feed. The advantage of animals compared with humans is that they eat to satisfy their hunger, but there is no psychological side to what is in animal feed, at least from the animal perspective. A trial to feed live insects to chickens just started in The Netherlands. It will be interesting to see the results. What I am wondering about this trial is why use live insects instead of dead ones. When I worked in animal husbandry, one of the things farmers worked on preventing was the possible invasion of insects in the houses, in particular because of the damage to insulation material. Further, I hope they make sure the insects will not escape, and that at least, should that happen, they are not using species that could cause damage in the neighbourhood. Also, I hope that the insects chosen have been screened on the health safety in terms of passing on diseases. Especially, after all the problems caused over the past years by avian flu and contamination by migratory birds, one can never be too cautious.

So what will be a good production system for large-scale production? I do not know yet, and I cannot find much information on how insect husbandry of the future may look like. However, I remember a TV program I saw some 25-30 years ago on the Dutch channel VPRO. I am not sure about the title of the program, but here is what it was about. The documentary was presenting an old fellow living as a hermit somewhere in the wild. He was using meat offal from his farm animals to attract flies, by storing them in a large tank. The flies were colonising the offal and bones and used them to lay their eggs. Later, the maggots hatched and when he found they were large and ripe enough, the hermit harvested the maggots and boiled them in a large caldron. He used that mass of cooked maggots as feed for his pigs and so he recycled the carcasses leftovers of the previous batch of pigs to produce the next one. I found that it was a pretty smart feeding and recycling system. Perhaps, it could be a solution for the future. In his system there was no waste. Of course, it sounds a bit like a porcine version of the movie Soylent Green.

For as much as I can see potential for insects and worms, I also see a huge lack of number crunching and comparative trials to figure out which species to produce and in which productions systems to provide an abundant and affordable of safe insect and worm food for both consumers and environment worldwide. The generality talk about bugs is cheap and does not help me envision how insects would play a prominent role in feeding the future.


Robots, sensors, drones and big data are coming to the sea, too – Fishermen and aquaculturists: be prepared!

December 2, 2014

There is not a day that goes by without articles about new technologies in agriculture. I enjoy seeing the excitement because I believe it is will revolutionize how farmers produce food. When I started The Food Futurist in 2009, I saw right away that this was coming. I have to say that I am even happier to see the interest for all the drones, robots, driverless tractors and sensors as when I was telling about it in my presentations until probably just 18 months ago, the audience would look amused. They would love to hear my “Star Trek” story. That is how my topic was referred to. It was entertaining. They liked the story but they reacted as if I had a bit too much of imagination. For sure I never come short of that but to me, it was no fantasy. It was going to happen. And I do not see why it would not happen at sea just as well.

The arrival of new technologies is interesting far beyond simply the technological aspect. The possibilities are many if we decide to use them to their full potential, by linking them with each other and with the management of farms and of the environment.

Just like in agriculture, so far mechanization had been mostly about adding muscle to the operators. It was about performing physical tasks faster with less manual labor. The new technologies are of a different nature. They are about creating a nervous system. With the new technologies, the ability to monitor, collect data, analyze, make decisions will not only be faster, it has the potential to be autonomous, but under supervision of the farmer. It will provide more precise information, reduce the possibility of errors and will fix mistakes mush faster when they happen.

Just like on the land, new devices will be available. Satellites, drones and sensors will be able to be the eyes and the senses of the operator. Data processing software and artificial intelligence will be able to monitor in real time and 24/7 any event on the fish farm and in its environment. It will be able to report and initiate relevant actions. Robots will carry tasks that used to be done by the farmers. Fish robots are being developed. Fish robot MITFor instance, the Massachusetts Institute of Technology (MIT) has created a soft body fish robot. The development of such fish robots is aimed at carrying out research on fish schools in the oceans, but there is no reason why similar robots could not be made to swim between the fish on farms, to monitor them and to record and report information about proper feeding, fish growth and fish health. From a technical point of view, nothing stops us from adding biometrics software in the fish robot that could be used for ongoing sampling to estimate the size of the fish in production, and the size distribution as well. It would replace static cameras and the need to dive in the nets. The “vision” of robot fish would probably be better than the human eye. Of course, the information collected by the robot would be sent to the computer to continuously determine technical production results and readjust feeding and harvest schedules. Sensors inside and outside the nets would allow to monitor environmental conditions such as water quality, in particular oxygen content. Biosensors could monitor levels of plankton and risks of algae blooms as well as the presence or the level of pathogens. All that information would be linked to the computer and fed to the central nervous system assisting the farmer. Satellites and aerial drones can also help monitor events inside the pens and provide further production information to complement what originates from the fish robots. They also can give a bird’s eye view of the farm environment. This would work in two directions. One is the prevention of harmful events to enter the nets. The other is the monitoring of the environmental impact of farms to prevent any pollution or take corrective action at once. Sensors at the bottom of the ocean and aquatic drones could also take continuous sample of the environment around the farm to detect any potentially harmful component for the environment. This would help making fish farms more environmentally friendly. In such a design, the farm becomes part of the nervous system. It can be managed even from a distance. After all, some people have already built a number of houses that are connected in such a way these houses can send tweets to the owner to tell them of any event inside or outside, even if someone is at the door. It is also possible to think of linking the system to the nets and have the net size adjusting automatically to the production conditions inside and the need of the proper volume based on water quality data. The farms could also move –horizontally and/or vertically if needed, depending on water quality, but also to avoid harmful interaction with wild fish, which is always a contentious issue between fish farming and commercial fisheries. Such mobile cages already exist. With all these systems, the farmer could actually follow several sites, instead of one, at the same time on interactive screens and interact with the machine and the systems.

It gets even more interesting by looking from further away and higher up. By having robots and aquatic drones roaming the oceans, it will become easier to have a full monitoring of ocean ecology, environmental conditions, sources of pollution, stocks of the different seafood species and all other life forms present. It would make fisheries’ management easier and more effective. It would address sustainability issues both for fisheries and for aquaculture. It would not only help seafood producers, but it would provide fact-based support to make policies -locally and globally- and to manage an important part of food production in better harmony.

The use of new technologies does not stop at the farm or in the ocean, though. Seafood processing, like any other food production, is also going to use robots more and more. Quality will also be monitored through new technologies and reports will be produced automatically. Robotics and data collection will ensure production and quality system that can take corrective action automatically. By connecting all the data produced along the entire production chain, traceability and transparency will be improved further. If used well big data can help improve food quality, sustainability and cooperation between the different stakeholders. It will help manage more efficiently. It also will be a tool to increase trust in the way food is produced and allow a closer connection between producers and consumers.

Here is a presentation about new technologies I did recently at a Precision Agriculture Conference. If you invite me to a Seafood conference, I will be happy to talk about the future with your audience.

Copyright 2014 – the Happy Future Group Ltd.