In the first half of the 20th century, agriculture underwent a process of productive transformation unprecedented in human history. The “green revolution”, an event that marks the adoption of new production techniques, with the intensive use of technology, marked a period of unprecedented productive increase, which supported the development and growth of the world population in the second half of the last century.
Although belatedly, Brazil experienced the same phenomenon between the 1960s and 1980s, especially with the advancement of research undertaken by EMBRAPA, with the purpose of developing tools for the exploitation of the country’s soils and natural resources, especially the cerrado.
In the 21st century, Brazilian agriculture has become highly competitive, emerging above all in the beef and grain market, among the main international players in commodities. However, as in every economic sector, maintaining and increasing competitiveness in a scenario of high demand and competition is a challenge that requires the adoption of management tools that are not only more efficient, but also even more aligned with the concepts of innovation and value creation to the production chain.
It is not enough to produce more bags of soy per hectare or improve animal genetics if, on the other hand, the crop or herd is not aligned with quality standards in governance, sustainability and commitment to social development in the context in which the production chain is included.
In addition, the expectation for the development of ideas that allow the efficient and lower cost resolution of issues associated with the production chain leads to pressure for increasingly innovative solutions and at greater rate than 10 or 20 years ago. The global value chain added to goods and services is increasingly dynamic, integrated and efficient and the business model seeks innovation and cost reduction.
As an example, there is a meatpacking plant that in the year 2000 slaughtered 500 animals a day in its production line aimed at serving the domestic market. By 2002, this business model has not only become obsolete, but unsustainable. The consumer market no longer accepts the same product that it used to consume at the beginning of the century. In addition, the production line that “takes the cow apart” underwent considerable modernization, which increased the average number of animals slaughtered and processed per day.
In addition, other demands of an ethical, sanitary and environmental nature have changed the scenario of the animal protein trade, creating demands whose fulfillment and attention to the product require a faster, consumer market-oriented response, which sometimes can go beyond the facility’s main purpose.
In this context, the concepts of ESG and Agritechs increasingly make up the vocabulary of rural producers, as they are both a management and business model applicable to agribusiness with the aim of improving quality and production standards, associating disruptiveness and attention to the efficiency and quality of production in line with market and consumption requirements.
ESG refers to the English acronym Environmental, Social and Governance, having been used for the first time in 2005 in the UN report “Who cares wins” to designate environmental, social and governance practices of a company or business. Thus, ESG designates a set of measures adopted by a company to demonstrate commitment to certain quality and management standards that guarantee its customers or consumers the commitment to its production.
Agritechs, on the other hand, are close to the concept of startups. Low capital, highly disruptive companies that offer innovative products and services to solve demands with more efficiency in planning and scalability in the application of innovation, offering agile responses to practical challenges faced by the producer and consumer market, which are often not met or offered at a high cost by traditional companies.
Both concepts have in common that they do not just translate the corporate language of the 21st century, increasingly present in the daily lives of Agro companies, but instruments of high efficiency, low cost and great results in the management of goods, products and services within the agribusiness chain.
The application of management and disruptive concepts and practices, in addition to adding value to the production chain, allows the creation of a dynamic business environment that is open to innovation, allowing producers, managers and consumers to make decisions based on accurate information, obtained through consolidated processes.
Let us take the meatpacking plant as an example again. In the case of a plant that has kept the same techniques or productivity rates since the year 2000, its competitiveness will certainly have been almost made unfeasible.
On the other hand, a plant that has updated its management techniques, adopting standards of governance, social responsibility and sustainability allied to innovation, with investment in research and solutions, not only has a gain in productivity, but also – with the review of processes and solutions – cost reduction that increases business profitability, making the industry more competitive, focusing on core business results.
In line with this reasoning, the innovation and governance process applicable to the industry can be transferred to farming, introducing ESG, business management and innovation models practiced in the market, with a view of making the production process more efficient, profitable, meeting quality standards, improving the perception of the business to consumers and stakeholders.
An example of how the innovation process works in the field can be seen in the activities developed by ESALQTec, the ESAL/USP technology incubator that has been supporting innovation for over 15 years, providing support for students and researchers who work in transforming knowledge into a project with agribusiness-oriented production or technology solutions.
The incentive to research and innovation within the Brazilian Agtech movement, largely still located in the state of São Paulo – mainly in Vale do Piracicaba (AGTech Valley) – is fostering the transformation of the primary sector, which already accounts for 1/3 of the national GDP, making it one of the main hubs of modern world agriculture, alongside other centers of excellence in agricultural research such as the University of Wageningen, HO, University of California and University of Cornell, USA and University of Hainan, China[1].
Thus, after the quantitative leap experienced between the 1930s and 1980s by the world production of food and commodities, the change is now made through qualitative criteria oriented towards the development of solutions and the application of quality and production efficiency standards, meeting social demands, ecological and market demands, allowing the rural producer or entrepreneur to guide their production with greater assertiveness and more efficiency.
Therefore, the new green revolution will take place not only though the revolution in agricultural and production techniques – which will undoubtedly continue to develop and add value to the chain – but, above all, it will be proportional to the development and application of new management and control techniques over the production chain, combined with the disruptiveness and low cost of innovations that allow the producer, both inside and outside the farm gate, to apply solutions to their business that make it more efficient and profitable, ensuring that value is added to the production process even before the seed is planted until long after the product is delivered to the final consumer.
[1] Esalq newsletter – Edition no. 356 – https://www.esalq.usp.br/boletim/incubadora-tecnol%C3%B3gica-da-esalq-chega-aos-15-anos-como-protagonista-do-movimento-agtech-brasileiro
Available at: https://exame.com/bussola/agritechs-e-esg-a-revolucao-verde-do-seculo-21/
Autor: Pedro Batistoti Boller • email: pedro.boller@ernestoborges.com.br
