Study says agrifood industry ill-prepared for digital disruption

Disruptive Technology in the Agrifood Sector report released

A study by researchers from the Massey Business School, funded through Microsoft’s Academic Programs initiative, suggests that the $170m expansion to the UFB footprint, announced this week by communications minister Simon Bridges, could prove a mixed blessing for the agricultural sector — with the improved connectivity benefiting overseas players more attuned to the opportunities created by digital disruption.

When he announced the $170m expansion to the UFB footprint Bridges said he wanted to ensure that some of the biggest sectors of the New Zealand economy – agriculture and tourism – could benefit from the productivity improvements offered by better connectivity.

However, after interviewing technologists and members of the agrifood industry, the researchers say they found a gap between how the two groups perceive the future. Lead researcher professor Stephen Kelly said the significance of the findings should not be underestimated and could have major implications for the sector.

“In the agricultural industry people are making really pragmatic business decisions to invest heavily in technology, but they firmly believe that tomorrow will be like today, just with more technology added,” he said. “Meanwhile the technologists are predicting change at an unprecedented rate, causing major disruption to business practices and models.”

He said New Zealand should prepare for the arrival of large, global corporates that can produce so efficiently that cost structures could be halved in a relatively short period of time. “If that happened, most New Zealand businesses would not be able to compete using their current business models.”

According to the report, Disruptive Technology in the Agrifood Sector new technology was most often seen by the agricultural sector as important rather than critical, and purchased under an ‘all you can afford’ rather than a ‘strategic imperative’ principle.

“While operational practices were clearly punctuated by significant step changes underpinned by technological change the benefits of technology were often seen as incremental, in that they added to existing business models, processes, and/or network relationships,” it said.

The report concluded that technology is “rarely seen as strategic, disruptive, or game changing,” by the sector, adding “that is not to say there is resistance to technology and acceptance that practices will change within the agrifood sector; rather, that technology is perceived as a tool in the pursuit of continuous improvement and incremental gains.”

On a more positive note it said: “there are pockets within the agrifood industry that do recognise the potential for radical transformation and are responding to that potential.”

The report said that ,while there have been many introductions of ICT in the agrifood sector, such as precision agriculture, tracking and tracing along food value chains, consumer communication, agricultural information exchange, logistics, and identification of product characteristics on labels), “there remains limited widespread adoption of innovative technologies, and many of the existing tools focus on single or limited-range processes.”

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