Empowering the Producer Through Big Data

Jim O'Brien, Agrograph CEO/Co-Founder. He has held leadership positions at four startups, two of which he co-founded. His experiences have taken him around the globe from wine grapes in Europe, to potatoes in the UK to weather forecasting in Southeast Asia. James was on faculty at The Ohio State University in agricultural extension along with founding his own consulting company Ten 10 Solutions LLC. He has lead product innovation teams at several multinational corporations ranging from The Weather Channel to American Family Insurance, along with financial services and healthcare.  James holds an MBA from Edgewood College, a Master of Science (Soil Science) from University of Wisconsin-Madison and a Bachelor’s degree (Agronomy) from Iowa State University. 

Transcript

Phil: 0:05

Welcome to Farm Food Facts. I'm your host, Phil Lempert. We hear a lot about the importance of big data, but what does that really mean? Well, today our guest is Jim O'Brien, who will bring his insights and clarity into empowering the producer through big data. Jim is the co-founder of Agrograph and has held leadership positions at four startups. His experiences have taken him around the globe from wine grapes in Europe to potatoes in the UK to weather forecasting and Southeast Asia. Jim was on faculty at the Ohio state university in ag extension. He has led product innovation teams at several multinational corporations that range from the weather channel to American family insurance, along with financial services and healthcare. Jim, welcome to Farm Food Facts.

Jim: 0:59

Thanks, glad to be here.

Phil: 1:01

So I guess give me the, give me the one-on-one definition of what big data really means.,

Jim: 1:12

The way we look at it on the Agra finance side, uh, is, is really, uh, kind of encapsulating all this information that we know about, uh, uh, a piece of land, a parcel, if you want to call it that, uh, and distilling that into, uh, a useful set of data, whether that's a sustainability audit or an, uh, credit risk, kind of a FICO of ag, which we'll talk about in a minute, uh that's to me, there's a lot of data, but you know what the world doesn't need is more data. What the world needs is solutions and really focused on taking this and aggregating this data into, you know, easily digestible solutions and indexes that really helped to drive, uh, you know, uh, a need at an insurer bank. Uh, what have you,

Phil: 1:59

No, I think, I think you're right on, um, when we talk about data, because, you know, in talking to supermarkets all the time, especially on their frequent shopper card programs, they've got boxes and boxes, boxes of data, but you know, they're not doing anything with it or they don't know, they don't have a resource such as you, uh, who can really look at that data and turn it into something useful for them on your, on your website. You say that you can address just about any production climate or global market request in the field level.

Jim: 2:34

Yeah. I mean, what, w I mean, we're a data platform Phil, and what we do is, is use a combine again, like I was saying before in big data, we combine satellite imagery and machine learning and crop models to create agricultural information at the field level. So we could look anywhere in the globe and tell you any crop that's planted, uh, and for a handful of those crops do a, a yield estimate for, but otherwise we can do biomass estimates and water use and irrigation. So, you know, for us, you know, we're not, uh, we, you know, we don't do precision ag. We're not telling farmers how much fertilizer per down. We're not doing a global grain forecast though. We can, uh, really focused on the Agra finance side of the industry, uh, and helping folks understand based on their yield potential and cropping history, kind of their credit worthiness from a banker or an insurance standpoint. So, so those industries can really understand, you know, what's that risk I'm taking on, again, going back to think of it like the FICO score, uh, for agriculture. Sure.

Phil: 3:39

So when I look at what's going on in California and in the Northwest with climate, with fires, with droughts, how nervous are those, are those banks and finance people right now, when you're talking to them

Jim: 3:56

Most, um, to answer your question, there definitely is some, uh, uncertainty, but it's not anything they've not dealt with historically. Uh, and that, um, to a certain degree, you know, these industries have, have dealt with this, uh, uncertainty mostly through, uh, going out and talking with folks and the difference today, and really COVID helped drive a lot of this change, which is already changing in ag. Ag has always been kind of a, a slower adopter of technology is the ability to be able to do analysis remotely, right from the seat of your desk. How do I go out and look at, you know, you know, thousands of acres and do it accurately and standardized way from, from my desk. And, you know, it was companies like Agra graph and what we're offering is allowing those banks and insurers to go out and look at, you know, huge areas and do it efficiently and effectively and accurately. And, and that's really, what's changed is a lot of the industry. I'm sure as you've talked on this podcast and in your career, a lot of the, the, the, uh, you know, big ag startups are focused on the farmer, uh, which is great. But again, I'd say, you know, the number of farmers are decreasing in farm sizes increasing, but what all those farmers still need is their, their banker and their crop insurer, right. And their ag service provider. And what we're really doing is helping to provide, uh, uh, a more standardized and automated and efficient dataset, uh, for, for those industries, uh, to help, uh, to help the farmer.

Phil: 5:27

So let's talk about the farmers and the ranchers and the producers. How do you work directly with them, um, to, to make sure that, you know, you're helping them,

Jim: 5:39

When you talk about this, this, this lack of transparency, you know, works against them. You know, again, using the example of a bank, you know, both the bank and the farmer, you know, they, they, they pay a cost for not sharing data bank. You know, bankers, don't ask a lot of information for the farmer who fill a form out, tell me how many are yours, you've farmed and crops. You've grown in the annual production history. And the farmer let's look at one or two years of financial data, but we don't know anywhere where your 8,000 acres located. Couldn't tell you, so this, you know, this lack of transparency ends up in higher costs that both have to pay, right? The banks have to put a higher interest rate to cover the risks they don't know, and the farmers have to pay that. So, you know, our, the example I give on there is, uh, you know, think of like stock trading right back in the seventies versus the nineties versus today. Right? If you want to trade a stock, you know, back in the seventies, it costs you hundreds of dollars today, nothing. Right? And, and that's because there's been this, you know, uh, and this evolution to, to, to share and exchange information. And for that, you were willing to give up some data and in order to get some data, to pay lower costs,

Phil: 6:50

Look into your crystal ball, what are future areas of collaboration, um, that you can, you can envision not only for your company, but for farmers as well as the finance folks.

Jim: 7:04

Yeah. Th there's a, there's a handful of areas that we would that re we are focused on. And I know we haven't talked about it implicitly here, and we will now, but on sustainability and the sustainability audits, again, you know, Agra graph, you know, we've recently trademarked the credit score of agriculture. Uh, and for us, you know, we're not trying to create, uh, a sustainability, uh, saw carbon market where we're saying, well, let's help the banks and the insurers, the companies we work with better audit and better, better create, you know, what type of crop residue and tillage practices and, and water use efficiency and irrigation, uh, or do those farmers have on their property. So when they're going to go look at a loan, or they're a rating agency, who's doing that sustainability assessment that they can help provide kind of some automated data to fill that report out, uh, before the farmer even walks in the door. And then they can combine that with the data that the farmer does provide, uh, to go fill out this audit. We're also doing work, uh, on soil carbon. Uh, and now I'll say, we're what we've done is building, building this holistic model. You know, I mentioned, we work with satellites, looking from the biomass from the, from the top down, and then also, uh, from the, uh, actual, uh, carbon that's in the soil. And from there building, you know, are you accumulating carbon staying the same or decreasing, uh, and as a soil scientist, you know, that was a real big part, uh, for, for us to get involved in, in the soil carbon market. Well, what could we really do in a way that we could do it accurately and in scale, uh, so farmers can get involved with us again, in this exchange of data, there's gotta be a value exchange. Nobody's going to give you data for nothing, right. There has to be return. You give me some data, I'll give you a soil carbon score. Right. Um, and then we're also, we have another product we're working on the parcel report thing, like an automated appraisal report, uh, where you can help, uh, get all the information about a parcel, whether they're going to buy it, or we're going to farm it. Uh, but get that, uh, you know, within 60 seconds, rather than six weeks.

Phil: 9:09

So, you know, you, you talked about the sharing of data a lot. Um, do you ever come across farmers or ranchers who say, yeah, I don't want to give you or the bank, my data. And how do you deal with that?

Jim: 9:26

Absolutely. Uh, and it's, as, as one, uh, ag investment firm, uh, founder told me, uh, there has to be a reason that they want to give you that data. Again, I use that exchange of value, uh, and so many of these, uh, and I don't want to put a blackout in the precision ag area, but folks feel like they give this data to this company. And then the company uses that data for their own use, right. And the farmers just kind of, they are along for the ride. Um, and you know, we've all participated at some point again, we, I think we gave our privacy up the moment we joined internet. Right. Uh, but now if I'm going to ask you for data about your yield, right, you have to feel like you're getting something of equal or greater value back for that. Right. And for us is saying, let me show you information. I can give you, you know, again, we're not selling directly to farmers, but our data says, you know, if we can help your bank better understand, you know, your farm and, and, and your healed history and your production, and you can get a lower interest rate while sudden that makes sense, right? Or you get a more risk-based pricing. That's really the big movement in the insurance. And the banking side is how do I wrap an interest rate around risk for the bank? Or how do I wrap a coverage policy premium based on the risk right today it's, uh, in small pockets, uh, organizations are doing it, but as the industry, as a whole is still, uh, migrating and progressing towards that.

Phil: 11:03

So as far as the farmers and the ranchers go, are they reaching out to you and saying, here's some, here's some other new stuff that we would love to have Agrograph, get involved with and develop new tools for us.

Jim: 11:21

Most of that interaction is coming through our relationship with the industry and the industry. Again, these, these three themes, uh, you know, we do work not just the United States, but in many areas around the globe. And these three themes of convenience consolidation and risk management come up time and time again, that, you know, we live in a 24, 7, 365 world, right? You can, you can buy data online, you can get access to information, but you know, the way that the ag lending side, for instance in crop is set up. It's not, not really automated yet. It's not done on a convenience standpoint. And it's the same. It's interesting as you talk with banks around the globe, it's the same situation, crop insurance. Like they want to do more parametric insurance, right? Farmers want to get paid right away, the fall of claim. And the insurer wants to process that claim, right? They want better customer service, but they need to have the technology to help do that. The other is this consolidation, as we've seen in many industries, but in ag and particularly, and even in banking, again, they use banking as another example where, you know, the number of farm credits 20 years ago, there were 200, there's like 68 today. You know, there's the same as the banks, the private banks, the numbers have gone down and that consolidation is changing the way they run their, their processes and they want to automate as they get bigger. Um, and then the risk management, the risk management industry has changed, um, uh, kind of across the board risk management used to be key executive risks. Don't put everyone on the same flight and now it's risk accumulation and risk-based pricing. You know, how, how do I, you know, it's adverse risk selection? How do I make sure I can get the best folks, uh, that fit the level of risk that I'm comfortable with putting a price around? And that's really how this, uh, how these, this industry is evolving and growing and how that's, again, bringing back to the, to the farmers and ranchers of how they're involved with their organizations, uh, to help, help better meet those goals.

Phil: 13:18

So what would you say if, if someone gives you a call and says, I want to be a farmer, um, I want to get into farming. I see everything that's going on. Uh, today, what advice would you give them? Um,

Jim: 13:37

Given they have the capital to get involved? Uh, I would, I would start off with being, um, being willing to be transparent with their banks and their crop insurance. I, I think, um, again, that exchange of value that, you know, they want to do the best they can to serve the, the farmer and the farmer wants to get the best rates that they can. And the best way to do that is to be upfront, upfront with what you're trying to do and where you're trying to grow, uh, and either buy more land. And because folks, you know, the industry is really looking for, uh, there's tons of great producers out there, but again, that data isn't always reflected back with, what's shared with those organizations and sometimes there's this mismatch. Uh, so I think, you know, having great records, uh, and access to those records in a way that the banks insurers can help, uh, digest them, uh, I think is, is, is a huge, again, it goes back to the question you started Phillips beginning, big data and data management. It comes down to being organized and well-organized, uh, I do sometimes hear, you know, farmers have a shoe box full of, uh, uh, of receipts and data. I I've not run across that. I'm sure other folks in the industry, that's not my quote, but, uh, and a lot of that, again, as these farms get larger and more corporate and more structured, uh, some of those issues will become more of the, uh, the tail end. Uh, and the, the larger organizations are just going to just more structured. Uh, I hate to say more bureaucratic, but definitely more, more structured.

Phil: 15:13

So I know you're involved in USF RAs, decade of ag. How are you aligning with the values of the decade of bag and what do you hope that Agrograph can get out of it?

Jim: 15:28

Well, we, we joined in may and it was, uh, uh, of this year and it was really a no-brainer for us. I mean, what the decade of ag is doing it, us farmers, ranchers and action, uh, you know, it was, it was easy to sign our name. Uh, but as we've talked today about what we do, uh, you know, we're not everything everyone really say, what's the niche that we really can, can contribute to the decade of ag. Um, and the two areas that we've signed up for is this investing in the next generation of agriculture systems. And, and we've talked about some of the evolution that's happening in that risk management industry for ag, and then for us strengthening the social and economic fabric of American agriculture. Again, uh, it's one thing to be sustainable, uh, but sustainability has to fall with profitability, right? Uh, and so for us, it's really marrying those two together in a way that we can help, uh, you know, both sides of the equation. It's not just helping the farmer, just helping the banks and saying let's help open and increase that transparency and that understanding, therefore you can better match price to risk. I think everyone would agree on that. So it's more market-based approach. Uh, and then, uh, you know, I, I, again, I think this, this market equalizer starts to occur when better data's exchange. Again, you see that stock industry, the prices, you know, interest rates won't fall the zero and crop insurance won't be free, but there'll be more based on the risks that, that asset and that farm represents in a way that just isn't representative today.

Phil: 17:01

I also think you've said something very important, uh, that I want to repeat that without profitability, there is no sustainability. Um, it just, you know, you, you can't keep on running a farm or a ranch if you are not profitable. Uh, Jim, thanks so much for joining us today on farm food facts.

Jim: 17:22

Thanks for having us.

Phil: 17:23

Thanks for more on all things, food and agriculture, please visit us@usfarmersandranchers.org. Also be sure to look out for us on Facebook at us farmers and ranchers and on Twitter at USFRA until next time.