Advantaged Raw Material
The drive towards de-commoditization of raw materials continues as consumers increasingly demand sustainable and clean label food and beverages
In modern agriculture, crops have largely been characterized and grown as homogenous commodities. In fact, entire industries were long developed to grow, market, transport, support, finance, insure and manage crops as commodities. With commodities low prices and high volumes, the consumer has been well served. But consumer behavior has been notably changing in recent years.
The terms “commoditization” and “de-commoditization” are increasingly being used to describe trends in agriculture. Producers fit into two broad categories: those who produce homogenous commodities like corn, wheat, beef, or soybeans (“commoditization”); and producers with contracts to produce crops with specific attributes (“de-commoditization”).
Producers who grow homogenous commodities and market through traditional commercial channels need to be a low-cost producer to remain economically viable. Producers who choose the alternative work collaboratively with food companies to meet consumer demands and earn premium prices.
How extensive will the shift away from “commoditization” go? Today, with changing customer behavior combined with economic realities and the availability of new technologies, crops and food and beverage ingredients need to be and can be grown to specific attributes. This ability opens new opportunities for new products, price premiums and differentiation for both food companies and producers while disrupting others.
Advantaged Raw Materials
We are using “decommoditized crops” synonymously with “advantaged raw materials.” Both terms describe raw materials grown to specific functional & technical attributes.
The attributes are specific to a crop and its intended use. For example, wheat for pasta; wheat for bread; and barley for malt and beer or spirits.
Certain attributes improve manufacturing efficiencies, others improve taste, nutrition, clean labels, and yet others respond to consumer preferences such as GMO.
Examples include dormancy, DON, friability, and color.
Cleaner & Simpler Label
Consumers are demanding greater transparency in how and where their food is produced and its ingredients. They want to know what they are putting into their body. A “clean and simple ingredient label” is the common way transparency and quality is communicated to consumers.
Traditionally, food companies have compensated for raw material deficiencies by blending raw materials and using additives such as coloring, preservatives and unproduceable chemicals.
Additives are paradoxical to clean labels, plus they add costs. Raw materials with desired attributes require fewer ingredients and additives to compensate for deficiencies resulting in a cleaner label.
Proprietary & Differentiated
Homogenous commodities make differentiation difficult.
Attributes can be proprietary to a food company and provide long term differentiation.
Reduced Manufacturing Costs
Commodities have not advanced at the same rate as modern manufacturing technologies. As a result, manufacturing costs may be too high and efficiencies low.
Certain attributes improve manufacturing efficiencies for example, batch size, timing and speed.
Other attributes can increase flour yield (amount of flour extracted from wheat), mash efficiencies.
Sales & Margin Growth
Sales and margins will grow for food companies and producers who provide products consumers want.
Consumers have shown they are willing to pay premiums to get what they want.
New products such as oat milk, craft beers, and plant-based protein all require ingredients with specific attributes or heavy processing of raw material.
Growing crops with specific attributes are a critical success factor for many new products.
Risks will continue to increase due to factors including market and climate change and geopolitical events.
Contracts with growers combined with production practices correlated with growing a crop to a specific attribute reduce risks.
For example, tillage or drainage to reduce risks for attributes such as pre-harvest sprouting, protein and DON.
CONTEXT from Aglytix
CONTEXT is an AI analytic and data solution, for key stakeholders throughout the agri-food supply chain, that offers high confidence level predictive modeling of the attributes that impact grain quality. It identifies the underlying root causes of poor quality attributes and provides the intelligence needed for action to be undertaken to remedy or mitigate future recurrence.
For each crop type and for each variety and hybrid, there is a unique Recipac™ quality assurance recipe that aligns the quality parameters needed to meet the needs of the final customer, whether it is a brewing company, a malting company, a miller, a baker or a food processor .
“Recipes” are an AI derived model that capture the correlations between the functional specification and a field’s characteristics, grower’s practices, inputs, and timing.
Recipes are proprietary to a client, specific to a crop and application of the crop; for example, barley and beer and will include multiple quality objectives such as sprouting, protein, plumpness, and extract.
Preventing low quality results should start by selecting the optimal fields and Recipac recipes can be used pre-season to identify the fields and operators with highest susceptibility to meet the required quality specifications.
Grower based analytics that identify the corrective actions a grower can take to improve profitability and increase quality.
SolverPod™ is designed to be used with growers to improve their profitability and performance and is a key tool for gaining grower adoption
it equally identifies a grower’s unrealized yields and avoidable costs and their root causes.