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Unique opportunity for Dutch companies in the agri sector for the global sustainability of farm to food

October 2, 2021

It is a permanent challenge to produce enough nutritious food with a growing world population. By 2050, 60% more food will be needed, according to scientists in the leading scientific journal Science. Food producers in agriculture are challenged by environmental challenges, such as droughts or floods that affect harvests.

In addition, there are also large post-harvest chain losses, for example at supermarkets but also at consumers: annually some 34 kg of food per capita is thrown away. The Netherlands is in a unique position to tackle food shortages and make the chain more sustainable, due to its strong market position in agriculture combined with a high degree of innovation in technology (including robotics and artificial intelligence (AI)).

Focusing on sustainability and innovation can further strengthen the position of the Netherlands in the food & agri sector and lead to new winning business cases and companies. Finally, value and/or chain-oriented innovation also offers opportunities to counter the commoditization of food, create new niche markets and thus a more attractive earnings model for agricultural entrepreneurs.

 

Innovation is the key to increasing efficiency and value

Denso invests in greenhouse builder Certhon
Foto: CerthonGreenhouse solutions

Intensive agriculture is often portrayed negatively because of its impact on the environment, such as nitrogen and phosphate emissions. Besides emissions, the use of pesticides can also be harmful to the environment and public health. Solutions to this negative impact are often sought in reducing the scale of businesses and/or extensification of activities. Even though intensive agriculture has detrimental environmental aspects, it is questionable whether we can meet the need for sufficient food for a growing world population without intensive agriculture. It is obvious that extensive and intensive agriculture will develop side by side in the future, each for its own market. In addition to focusing on agriculture itself, it is desirable to focus on making the entire chain more sustainable. In this way, both the individual links and the chain as a whole can increase in value.

Innovating agriculture and making it more sustainable requires an initial investment, but it does offer (international) opportunities for Dutch companies that want to establish themselves on the international market. The need for automation and robotics in agriculture is greater than ever - COVID-19 has contributed to an existing labour shortage that can be met by automation and robotisation. Investment in automation in the agribusiness sector shows a clear growing trend: in 2014, for example, less than $200 million was invested globally, and over the past few years this has grown to at least $650 to $850 million by 2020 for robotization and automation alone. Agribusiness totals $2 trillion with an annual growth rate of 3-4% (PWC, 2016). These investments have, for example, helped to ensure that AI is used to identify which crops are ready for harvest and which are not. Should the crop be ready for harvest, it is immediately picked by one of the robotic arms. This also prevents waste. Robotics thus offers a solution for various aspects: mechanical pest and disease control, harvest and cultivation labour and finally the optimisation of harvest moments.

Biological pest control companies are also betting on AI and automation. Market leaders Biobest and Koppert Biological Systems have both started a collaboration with Canadian AI company(Ecoation) to improve pest detection. These kinds of techniques make agriculture smarter and better: the human eye can't always detect all the small insects or fungi but a robot can, and besides that, big leaps are made in efficiency.

Unique opportunity for Dutch companies in the agri sector for the global sustainability of farm to food
Foto: Wageningen University & Research

Another example of smarter agriculture is the innovations being made in greenhouse construction. The majority of all greenhouses in the world are of Dutch origin. The Dutch company Certhon offers solutions for controlled climate (both heat/cold flows and LED light regulation) in greenhouse horticulture. As a result, food production can even take place in locations with an unsuitable climate. Innovative greenhouses can also contribute to the demand for locally produced crops.

Dutch melons, for example, are now available in supermarkets and their taste is not inferior to that of Spanish melons. Wageningen University & Research has also indicated that the cultivation of tropical papaya has great potential in the Netherlands. These initiatives are probably not yet sustainable because of the energy that needs to be invested in these developments, but in time these systems will be optimized and the balance between energy input and yield will balance to a favorable level.

Innovation in animal husbandry will also contribute to dairy and other animal proteins with a lower environmental impact. Milking of cows has been optimised by milking robot manufacturer Lely in such a way that it can be done stress-free and without waste. Through smart techniques, cows are monitored on their health which not only makes milking tailor-made for each cow but also allows for optimizing living conditions and rations. Also in the field of milk processing, emission management and manure processing, many innovations have taken place in recent years that may lead to lower emissions and a more circular use of raw materials.

For example, circularity is also a central issue at Protix: a company that breeds insects as both a fat and potential protein source in fish feed and pet food. The insects can grow on waste sources, for example from residual waste (peelings) from chip producers and/or the organic waste from the catering industry and/or households, which contributes to the reduction of waste.

But how to anchor the position of Dutch companies in this international market in a sustainable way?

The major disadvantage of smarter agriculture is the cost of development and implementation. For small entrepreneurs, the costs can be too high and it is questionable whether a certain product is feasible. In addition, the costs often have to be put before the benefits. However, there are solutions: there are many parties interested in investing in this and it is often possible to finance these investments (partly) by means of subsidies. The Netherlands has a strong position throughout the agricultural chain. This makes joint action in consortia a solution for smaller entrepreneurs, but also if interdisciplinary knowledge is required. Moreover, it ensures that innovative techniques can be applied internationally, but are not lost. Innovation that is the result of a consortium is more difficult to copy by a competitor, because the knowledge is dispersed and the network is needed to create the product. ASML has created a complex landscape of suppliers, for example, which makes it almost impossible to imitate ASML's products.

The danger of handing over techniques and products is that they are copied, which puts pressure on the profitability of the company that developed the technique. To combat the theft of technologies and products, countries such as the United States, Germany and the United Kingdom take measures against, for example, international investments if there is a suspicion that the main reason for the investment is 'copying' the technology. This decision-making sometimes takes place at a political level, for example by not issuing export licences. In addition, patents can of course be used to protect business models against plagiarism. In this way the entire chain is strengthened and the Netherlands can establish itself permanently.

Protix - farm-to-food-JBR
Foto: Protix

The highly advanced technological developments in robotics and AI combined with the knowledge of the Netherlands in the food & agri sector ensure that there are many opportunities to make the chain more sustainable which we can now seize. The Netherlands has a long history of very effective forms of cooperation within the food & agri sector. Science, the development of technical applications in plant cultivation and livestock farming, and farmers' practices are close together, making it easy to share information. In fact, the Netherlands has been the Silicon Valley of the agri sector for years. By using interdisciplinary knowledge and knowledge of integrated food supply chains and by working together in consortia, unique business models can be created that can further strengthen the position of the Netherlands in the development of sustainable food production chains.

 

This article was written by Joséphine Blaazer in collaboration with Bart Kroon and the Food & Agri sector team (Harold Brummelhuis, Merijn Veltkamp, Gustian van der Linde and Marten Giersch).