More Food For Thought: Lombard Odier rethinks it with the FT
A revolution in agriculture is needed to feed the world’s growing population.
The second of our three-part series with the Financial Times sees pioneers embracing technology to meet the demand.
Below we hear about the spectacular yields of crops grown in nutrient solutions rather than soil and how cows, equipped with sensors to check their condition, are producing more milk and breeding more effectively.
Transforming by rethinking is a subject dear to our heart at Lombard Odier. It’s how we have survived more than 40 financial crises. An eye for detail unites precision farming and precision banking.
They have been dubbed Fitbits for cows but there is much more to Connecterra’s business than the smart sensors strapped to the herds of its dairy farm clients.
The fuel of the Netherlands-based start-up’s business is the data that the devices, incorporating an accelerometer and GPS, send wirelessly from the field to Connecterra.
If data is the fuel, then the engine of the business is the artificial intelligence (AI) tool Connecterra has built. Its cloud-based predictive analytics offer valuable insights to the farmer who can receive them on any digital device, something the firm’s rivals do not offer, says Yasir Khokhar, the firm’s founder and CEO.
Connecterra can use the data to tell the farmer when a cow is at her most fertile, how healthy she is, how well she is grazing, if she is drinking enough and her location. This saves time, improves animal welfare and milk production and ultimately helps boost profits by optimising breeding cycles.
“With the technology we are making, you can understand what’s going on with any animal at any given time and predict their health issues. The farmer becomes less of a herdsman and more of a technology manager,” says Khokhar.
“The perspective we have is different. We are the only company that has built something of this nature. Anyone else that has an activity monitor is generally using it in a fixed system that does not have any intelligence built into it.
“It is one-size-fits-all and unlike ours doesn't take into account the farmer’s feedback. We can also combine the insights we gather with other data sources like financial data to give them insights into how to make their financials more efficient.”
It is this combination of AI and smart sensing applications that promise to transform agriculture in a revolution that promises to be as great as the Green Revolution of the mid-20th Century.
“I am interested in looking at the value chain,” says Khokhar. “If you want to create real value you can’t just look at point solutions like oestrus detection for cows or soil moisture monitors. They solve a problem but not the bigger ones of efficiency because they are still making the farmer or user the analyst.”
In 2017 the company expects to be working in at least eight countries and with thousands of cattle, up from just a few hundred in 2016. It has already collected the equivalent of 20 ‘cow years’ of data but this will increase rapidly from here, says Khokhar.
The global opportunity is large. Internet of Things (IoT)-enabled precision dairy technologies are currently only being used to monitor around 2.5 million dairy cows out of a total global population of 1.5 billion cattle. Such technology will be sought after as dairy demand is set to increase by 36% by 2024.
“As farm sizes get bigger and farmers get older it becomes a scale problem,” says Khokhar. “If an animal is sick, not eating, has a leg problem or is ready to become pregnant, how do you know? All these things add up to massive inefficiencies in production.
“At the same time we have to find a way of producing more food for a population that is going to be almost double in a few years,” says Khokhar. “There is a desperate need for technology in this area. It is becoming increasingly critical to have precision farming and precision agriculture.”
“It’s hard to quantify how big this market is. Everything is going to be up for grabs in the next five to ten years. What’s happening in AI these days is staggering, just look at the progress being made with self-driving cars.”
“There are huge opportunities if you make an early start,” he says. “One of the main things you need for a good AI strategy is data. As soon as you begin to collect the right type of data you are better placed for survival. It is better to be the disruptor than be disrupted.”
Video can be downloaded here:
Growing enough food sustainably for a growing population is one of the big challenges ahead of us. Re-thinker UK Salads is showing the way.
When Giovanni Abella started his vegetable growing business in four rented glasshouses in 1968, production techniques were basic. He grew his crop in straw bales and watered them with a hose pipe by hand.
Decades of investment later and the process is almost entirely automated, transforming productivity out of all recognition. The rows of modern greenhouses at UK Salads contain peat-style, sustainable coconut fibre growing beds, in which plants are fed nutrients hydroponically (in solution rather than through soil) individually depending on their needs.
Temperature, light, moisture content and humidity are all minutely controlled with the help of a weather detection system on the roof that controls a system of vents and blinds. “A hundred per cent of our crop is grown using sophisticated hydroponics,” says Abella’s daughter Leonora Milazzo, who runs the business today with her sisters.
“Our system allows the plants to talk to a computer, which automatically reacts to what the plants need. More, or less, nutrients, water, temperature adjustments. We are always growing them at optimism conditions.”
This enables UK Salads to grow multiple crops almost year-round. It supplies cucumbers from January to October and peppers from March to November.
Every aspect of the business is run to be as efficient and as sustainable as possible. The water the business gathers from a borehole is mostly recycled and the ultimate aim is to be carbon neutral. UK Salads takes its responsibility to the environment seriously, says Milazzo. “We have always been deeply committed to the environment and have invested heavily in green energy. “
Exhaust fumes from the firm’s natural gas generator are purified to capture CO2 which is piped to the nursery, further boost growing conditions, the waste heat is used to warm the borehole water and the excess electricity generated is sold back to the National Grid.
Two new biomass boilers burn wood chips used to heat the nursery in the colder months have significantly cut UK Salad’s consumption of gas and in time may replace it altogether, says Milazzo.
UK Salads is not working developing all these innovations alone. It is part of a cluster of local growers along the fertile Lee Valley, on the eastern outskirts of London, who share ideas to improve yields and reduce the energy and other inputs used to grow their produce.
The improvements have been dramatic. In the 1960's it took 6,000 workers in 1,100 acres of greenhouses along the fertile valley to grow as much as 2,500 workers manage to produce in 350 acres today. The group now grows 75% of the cucumbers and 60% of the sweet peppers grown in the UK.
Its members are mostly family owned, just like UK Salads. “We all have a responsibility to think about the major challenges we face on this earth. I am proud that we are building on my father’s legacy. Our family’s heritage is part of the planet’s future,” says Milazzo.
Boosting productivity in this way helps these businesses stay competitive against continental European growers and is also playing its part in securing more sustainable food sources for all. “It’s said that in the next 50 years the planet will have to produce as much food as the last 10,000 years combined to feed our growing population,” says Milazzo. “Really, it’s down to the farmers to figure out a way to do this, for the farmers to feed the world.”
This is a marketing communication issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter "Lombard Odier"). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This marketing communication is provided for information purposes only. It does not constitute an offer or a recommendation to subscribe, to purchase, sell or hold any security or financial instrument. It contains the opinions of Lombard Odier, as at the date of issue. These opinions and the information contained herein do not take into account an individual’s specific circumstances, objectives, or needs. No representation is made that any investment or strategy is suitable or appropriate to individual circumstances or that any investment or strategy constitutes a personal recommendation to any investor. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Lombard Odier does not provide tax advice. Therefore you must verify the above and all other information provided in the marketing communication or otherwise review it with your external tax advisors.
Investments are subject to a variety of risks. Before entering into any transaction, an investor should consult his/her investment advisor and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. The information and analysis contained herein are based on sources considered to be reliable. However, Lombard Odier does not guarantee the timeliness, accuracy, or completeness of the information contained in this document, nor does it accept any liability for any loss or damage resulting from its use. All information and opinions as well as the prices, market valuations and calculations indicated herein may change without notice.
Past performance is no guarantee of current or future returns, and the investor may receive back less than he/she invested. The value of any investment in a currency other than the base currency of a portfolio is subject to foreign exchange rate risk. These rates may fluctuate and adversely affect the value of the investment when it is realised and converted back into the investor’s base currency. The liquidity of an investment is subject to supply and demand. Some products may not have a well-established secondary market or in extreme market conditions may be difficult to value, resulting in price volatility and making it difficult to obtain a price to dispose of the asset.
European Union Members: This marketing communication has been approved for use by Lombard Odier (Europe) S.A., a credit institution authorised and regulated by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg and by each of its branches operating in the following territories: Belgium: Lombard Odier (Europe) S.A. Luxembourg • Belgium branch, a credit institution supervised in Belgium by the Banque nationale de Belgique (BNB) and the Financial Services and Markets Authority (FSMA); France: Lombard Odier (Europe) S.A.• Succursale en France, a credit institution supervised in France by the Autorité de contrôle prudentiel et de résolution (ACPR) and by the Autorité des marchés financiers (AMF) in respect of its investment services activities; Italy: Lombard Odier (Europe) S.A. • Italian Branch, credit institution governed in Italy by the Italian stock market regulator (Commissione Nazionale per la Società e la Borsa, or CONSOB) and the Bank of Italy; Netherlands: Lombard Odier (Europe) S.A. • Netherlands Branch, a credit institution supervised in the Netherlands by De Nederlandsche Bank (DNB) and by Autoriteit Financiële Markten (AFM); Spain: Lombard Odier (Europe) S.A. • Sucursal en España, a credit institution supervised in Spain by the Banco de España and the Comisión Nacional del Mercado de Valores (CNMV); and United Kingdom: Lombard Odier (Europe) S.A. • UK Branch, a credit institution in the UKsubject to limited regulation by the Financial Conduct Authority (‘FCA’) and the Prudential Regulation Authority (‘PRA’). Details of the extent of our authorisation and regulation by the PRA and regulation by the FCA are available from us on request. UK regulation for the protection of retail clients in the UK and the compensation available under the UK Financial Services Compensation Scheme does not apply in respect of any investment or services provided by an overseas person.
In addition, this marketing communication has also been approved for use by the following entities domiciled within the European Union: Gibraltar: Lombard Odier & Cie (Gibraltar) Limited, a firm which is authorised and regulated by the Financial Services Commission, Gibraltar (FSC) to conduct banking and investment services business; Spain: Lombard Odier Gestión (España) S.G.I.I.C., S.A.U., an investment management Company authorised and regulated by the Comisión Nacional del Mercado de Valores (CNMV).
Switzerland: This marketing communication has been approved for issue by Bank Lombard Odier & Co Ltd, a bank and securities dealer authorised and regulated by the Swiss Financial Market Supervisory Authority (FINMA).
United States: Neither this document nor any copy thereof may be sent, taken into, or distributed in the United States or given to any US person.
This marketing communication may not be reproduced (in whole or in part), transmitted, modified, or used for any public or commercial purpose without the prior written permission of Lombard Odier.
© 2017 Bank Lombard Odier & Co Ltd – all rights reserved. Ref. LOCH/LOESA – GM – en – 122016.