BANFF PORK SEMINAR
Get ready for more disruptive technologies in pork production
Date posted: January 9, 2019
Think Uber. Airbnb. Cellular meat. Insect and plant-based alternatives to meat.
Disruptive technologies. It's a term coined by analysts to describe innovation-driven market disruption in today's fast-paced world and it's one that the pork industry will hear more of ahead and should be working to understand says a researcher on the frontlines of market analysis.
"We hear a lot about disruption and disruptive technologies in agriculture," Ellen Goddard of the University of Alberta told her audience at the 2019 Banff Pork Seminar in Banff, Alta.
"Although a lot is said about disruption and disruptive technologies, the meaning behind these terms is not always the same," she says. "We have a tendency to confuse surprising things in our work environment with disruption and although we may feel 'disrupted' it isn't always the result of someone or something disrupting our markets. Sometimes we are disrupting theirs."
The term "disruptive technologies", originally coined in 1995, has become a commonplace term. The process of disruptive innovation has been summarized in a recent article as a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses. Specifically, as incumbents focus on improving their products and services for their most demanding and usually most profitable customers, they exceed the needs of some segments and ignore the needs of others.
Entrants that prove disruptive begin by successfully targeting those overlooked segments, gaining a foothold by delivering more-suitable functionality, frequently at a lower price. Incumbents chasing higher profitability in more-demanding segments, tend not to respond vigorously.
Entrants then move upmarket, delivering the performance that incumbents' mainstream customers require, while preserving the advantages that drove their early success. When mainstream customers start adopting the entrants' offerings in volume, disruption has occurred.
A couple of key concepts arise here, says Goddard. Disruptive innovation usually arise due to a focus on 'mainstream' consumers leaving certain segments undersupplied and is usually initiated by a low cost entrant that eventually grows to satisfy all consumers in the market rather than just the underserved initial target. Examples are Uber and AirBNB.
Not all new entrants need to be responded to, and it will not always work to have the established organization purchase the new entrant since sometimes the resulting organization is dysfunctional. It is often through unsatisfied consumers (cost or product attributes) that the disruption occurs.
What does this have to do with farming and pork production? The term disruption is used regularly in the context of a variety of new technologies that are can and are being used in agriculture and food production. Ones identified include 3D printing, robots, drones, sensors, artificial intelligence, augmented reality, virtual reality and block-chain.
While all of these are new technologies and all may change the practice of agriculture, not all are true disruptive technologies, says Goddard. Beyond actual information technology we have the various uses of genetic technologies, including newer gene drives and gene editing. We can also include other developments such as cellular meat, refined plant based meats and insect meat products, all of which can and are impacting traditional livestock markets.
Are all of these classic disruptive innovations or are some normal competition for traditional livestock products? "The reason this is an important question is that the response required from traditional firms or sectors could be entirely different," says Goddard. "Regardless, the role of the consumer in these innovations is critical. Consumers may not only be looking for low cost alternatives, they are also looking for product quality attributes, ethical attributes (animals, environment, labour), health and convenience in their purchasing. And some of the innovations are aimed squarely at these perceived undersupplied attributes requested by today's consumers."
Bottom line for pork
It is certain that the development of new technologies that can be used in agriculture is speeding up and it may be difficult to keep on top of everything that is going on. Using new technologies may require different kinds of investments. The use of new housing for pigs is certainly something that requires significant investment, for example, but may result in the twin outcomes of higher animal welfare and higher animal health.
So are these developments truly disruptive technologies? Possibly not from the formal definition of disruptive technologies, nor will they disrupt the pig production sector out of existence. But are they disruptive to farmers in the pork production sector? The answer is likely yes.
Somewhat more disruptive to the pig production sector could be the development of substitute products in the protein space. Cost is not the core attribute of these products to date and so their disruptive abilities are likely limited. However, there is a core of consumers unsatisfied with their knowledge of current pig production practices that might be ripe for some substitute products that appear to provide the attributes of most concern. Animal welfare and environmental footprint characteristics to name two.
Will these products disrupt the entire pig production sector? Not likely given the approach to integrating the new products into an entire spectrum of protein products. There is likely a need to continue to develop higher standards for attributes of social concern within conventional livestock production, but there will likely always be room for both animal based products and plant based products in the protein space.
Genetic technologies are still generating some concerns within the livestock industries, with some CEOs identifying potential consumer resistance as a barrier to adoption. However, it is not clear that the public is uniformly opposed to the use of genetic technologies. What there is is more angst about is the use of genetic technologies without openness and transparency about if and why the genetic technologies are used.
"Our research shows that the potential disruptive capacity of the use of genetic technologies can be reduced if the public understands the trade-offs inherent in their use," says Goddard. "Not everyone will be satisfied with the use of any genetic technologies and maybe the development of substitute products provides avenues to alleviate some public concerns and shift the concerned consumers to other products. It is possible what is perceived as a disruptive technology could actually reduce some public impediments to technology adoption."