The world is changing more quickly and more distinctly that at any point in its billions of years of history. Everywhere you look, major macroeconomic events are taking place that will have considerable ramifications on ‘what happens next’. Nowhere is this more acute than in the world of agriculture as we grapple with feeding our growing population.
In the last few years alone we’ve seen the emergence of food miles, low carbon emissions trading, fragmented supply chains and many more, all of which are incredibly vital to those that grow, trade and consume agricultural commodities.
Complexities of agriculture
It’s not that agriculture is without challenge anyway. The entire premise of the sector is a constant chasing cycle of growing, harvesting, shipping and consuming and because of natural seasonal and geographical variations, this rarely happens in the same place or time. By 2050 the population is forecast to be around 10 billion – that means we will need 70% more food than we produce today. And this is from the same number of farmers or farms.
Agriculture needs to predict what the world needs months in advance, produce it (and hope the elements remain on-side) and then ship it. This is before the issue of movement and storage raises its head which is complex, costly, timely and susceptible to a vast spectrum of disruption ranging from rats to rain. Of course, it all needs to reach the supermarket at a price Mr. & Mrs Smith is prepared to pay.
This is why the role of agricultural trading is so critical in mapping this journey and precisely the reason it has such a vital role in the emergence of a green economy.
Driven by demand
We’re going to be carbon neutral some time in the future. It was only recently that the prime minister announced plans to reduce UK carbon emissions by 78 per cent on 1990 levels by 2035. This, and other pledges like it, drive massive change almost overnight – the reduction in consumption of meat and dairy is a good example – and it has a knock-on impact in the need for commodities.
Transport and vehicles is another area. The demand for steel, iron and copper has been pretty much the same for some time but has suddenly shot up based on the move to electric vehicles which need more of these minerals in the batteries than their traditional fossil-fuelled counterparts. At the same time, demand for oil is going down. The ability of the global COVID vaccine programme to go from 0-60 overnight is an anomaly. This kind of prediction, response and reaction is complex and takes time and highlights the need for traders to have a solution fit for purpose for today’s economy.
Suffocated by spreadsheets
Unfortunately, many do not. Smaller agricultural traders run on spreadsheets which are totally unsuited to the wider world. They’re often multiple in nature with broken formulas, poor security and buried in bigger systems. Almost certainly creating as many problems as they’re intended to solve. Bigger organisations are arguably worse. They have more systems that are disparate and designed to deal with specific stages of the trading cycle. These legacy systems should be interfaced with the ability to talk to each other and share the right data with the right people at the right time but they rarely do. Oh, and they still have the spreadsheet problem as well.
Some of these companies have invested multiple millions of pounds to build their IT infrastructures but gaps, fractures and overlap are perhaps some of the only elements that are consistent. What is required is a system that plugs the gaps between those disparate systems or replaces them entirely. Without one, the race to become green will be stuck at the starting gate as the businesses involved in moving the products from A to B will be looking left when they should be looking right.
Certainty where possible
Everything and everyone works better when we know what we’re dealing with and, in the world of agricultural trading, certainty is worth its weight in the most profitable commodity going. This means having access to one singular version of truth and the right data – from crop yield to cost or temperature to timings. Change is uncontrollable. There will always be political decisions or natural disasters that no system can predict but the foundation for building a cleaner, greener and sustainable future needs to be built on certainty where possible. Contact Brady Technologies to learn how we can help your ags trading business grow, addressing the challenges described in this article.
Tasja Botha, Managing Director, Commodities Portfolio at Brady Technologies
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