Roland van den Brink: The third agricultural revolution

July 23, 2024

_{This column was originally written in Dutch. This is an English translation.}

By Roland van den Brink, Founder of TrigNum

Around 2009, after the hype about the possibilities of the Internet, expectations arose that biotechnology would cause the next wave of innovation. Agricultural progress is now well underway. The key question for investors is: who benefits from this?

Artificial intelligence (AI) looks like a magic wand. Several investors believe that the application of AI will quickly lead to improved biological products. However, the laws of Mother Nature partly determine the pace of agricultural progress. In addition, there are long-term approval processes for modified crops to protect us from consequences that are difficult to repair, such as the DNA-manipulated factory potato with a lot of starch that, although now banned, still causes problems.

Breeding through crossing takes time

Traditional breeding hardly causes any problems, but it does take time. After all, in the first generation of plants with the desired characteristic, other good characteristics are often reduced. For example, a variety that requires fewer pesticides may have a lower yield. This property must then be improved again through crossing.

For large-scale application, this often involves at least two new properties. Making a crop less vulnerable to an insect pest can be done, for example, by selecting plants with hairy stems or a repellent odor. But one lock on the door is not enough, because with a global rollout there will soon be an insect that has adapted. Only with two locks on the door - hairy stems and repellent odor - is the chance of adjustment small.

Despite new techniques such as AI, breeding through crossing remains a long-term process that can take ten to twenty years before there is an industrial variant. For the quick calculators among us: 2024 is fifteen years after 2009. Where are we now?

Real change: an interplay of factors

The rise of the Internet was only possible due to advances in various areas, such as affordable mobile phones, high-speed connections and reliable web applications. Acceleration will only occur when the environment is ready for it. In agriculture, the human side is also important, because farmers are careful about applying improved crops and new techniques, because a bad harvest can be disastrous.

An example. Already in 2020, a third of the population in India had a smartphone, which provided opportunities for collaboration between seed breeders, the app developer Wingsure and the insurer Caisse Centrale de Réassurance. The farmer can register via the ordering app, map his land and receive advice on which seeds to order. Acceptance for improved seeds is greatly increased, because people are automatically insured against loss of income. During the summer, the app provides advice on crop treatment and harvest times. This approach, which costs little and can also be used by poor, illiterate farmers, has led to a 30% increase in yield and less use of water, energy and pesticides.

There are now various useful innovations available, especially for agriculture in the third world, such as cheap solar cells and sensors, which accelerate more responsible production. Our textbooks state that the second agricultural revolution from 1750 onwards had major consequences, especially in Europe. The third agricultural revolution has started in 2020. As our national soccer legend Johan Cruijf said: 'You won't see it until you realize it.'

What are the consequences?

The third agricultural revolution makes various UN and climate goals more achievable and with improved crops the impact of climate change is smaller. Areas with many poor farmers, such as India, China and Africa, in particular benefit from the derived economic growth. It also depresses food inflation. The winners are the crop breeders, an industry in which the Netherlands is strong. It also offers prospects for insurers because of the large numbers of new customers. The pesticide industry is at a disadvantage, but it can adapt quickly.

Pension funds regularly report that they would like to add impact investments to the portfolio. Therefore, they should take a look at Dutch seed breeders: there are plenty of opportunities.

More columns by Roland van den Brink