Will we have enough food to feed the growing population by 2100? According to Science Magazine, there is an 80% probability that the world’s population, now 7.2 billion people, will increase to between 9.6 billion and 12.3 billion in 21001, a population growth between 30% and 70% in only one generation. In addition, with climate change challenges and aggressive cost competition, it has become increasingly important for corporations to adapt their business and operating models to take advantage of available technology and catch up with growing demand. Dairy products companies are not the exception. They are re-writing the history of this industry making use of digital technology.
Cow milk and dairy products have been part of humans’ lives since 7,000 B.C when cattle became herded2. Since colonization, dairy products in America have been part of our diets as some of the earliest settlers brought cattle from several European regions in the 1600’s2. Before industrialization, the business and operation model of dairy farms were pretty simple. Farmers created value by exchanging hand extracted milk for help in their farms. As populations began to grow and human settlements became larger, the market required a change in the production processes to catch up demand. With the industrialization revolution, dairy companies adapted to incorporate large-scale production methods that have re-shaped the industry2. Today, the most common business model is one in which large milk cooperatives transform raw milk, acquired from independent farmers, into ready to consume dairy products that are commercialized in retailers.
Figure 1: Traditional business model in the dairy industry4
To increase milk production and reduce costs, cooperatives and farmers have made use of available digital technologies. Some examples of key usages are:
- Sensors attached to heifer’s tails that notify the farmer by text when the cow goes into labor, or when it is ready for insemination. This enables the farms to increase survival and production rates while saving time3.
- New agricultural practices that increase pasture output per hectare. These practices include digital auto controlled irrigation systems that keep track of weather conditions and automatically decide when pastures need water. This contributes to cost reduction and overall yield increase4.
- Digitalization of pedigree and milk production records of cattle is helping farmers choose the best animals to breed, transferring the best genetic attributes to new generations increasing overall production5.
- Better management of diseases by the creation of digitalized cow’s files, routine monitoring, disease prevention and control systems. All these things have enabled the farms to have an Integrated electronic medical records set up, detailed by animal, facilitating the implementation of statistical analytic functions to reduce disease rate and guide cow immunization6.
- Wireless sensors inserted in cow’s stomach to detect when the animal’s temperature rises above 31℃ indicating a change in pH, enabling immediate intervention which traduces in potential milk production increase of 10%3
To continue taking advantage of the world’s digitalization and internet of things, I think the milk producers should also consider creating the Uber of milk. This application could potentially connect producers and consumers bringing better, cheaper and fresher dairy products to the average household. I think this could be possible by creating scale in the application, including not only milk, but also vegetables and fruit producers that want to trade their products. This interaction could reshape the business model by disintermediating the cooperatives ultimately bringing additional profits for the small farmers.
In conclusion, digitalization not only creates great opportunities for the different players in the dairy industry but also brings the possibility to transform the current business and operating models. In a world in which the population is expected to grow between 30% and 70% in the next 84 years, now is more important than ever to continue developing new technologies and ideas to survive as human civilization. Will we have enough food to feed the growing population by 2100? 649 words
1 Alon Keinan, “Recent Explosive Human Population Growth Has Resulted in an Excess of Rare Genetic Variants,” Science Magazine, May 11, 2012, http://science.sciencemag.org/content/336/6082/740.full, accessed November 2016.
2 Linea Carlson, “Milking the Truth: The Facts about Dairy Farming in the United States” (paper, Carleton College), https://apps.carleton.edu/curricular/posc/assets/Carlson_Milking_the_Truth.pdf, accessed November 2016.
3Nesta Organization, “Precision Livestock,” http://www.nesta.org.uk/news/precision-agriculture/precision-livestock, accessed November 2016
4 Capstone Partners, “Technology & Business Models in the Dairy Industry” PowerPoint presentation, February, 2015.https://static1.squarespace.com/static/5509ff29e4b0ed764d676b33/t/552f307fe4b034c9174b212f/1429155967462/kim_walker_presentation.pdf, accessed November 2016.
5 National Dairy Research Institute, “Dairy Cattle Breeding,” http://www.ndri.res.in/ndri/Design/ShowDivisiond.aspx?id=Dairy%20Cattle%20Breeding%20Division, accessed November 2016.
6 Lin LiHongbin, WangYong, YangJianbin, HeJing Dong and Honggang Fan, “A Digital Management System of Cow Diseases on Dairy Farm” (paper, International Conference on Computer and Computing Technologies in Agriculture), http://link.springer.com/chapter/10.1007/978-3-642-18333-1_5, accessed November 2016.