High Tech Cows & Open Source Farm Equipment: Yes, The Economics Of Farming Is Relevant

from the innovation-impacts-lots-of-industries dept

I frequently get asked why I spend so much time talking about the entertainment industry here on Techdirt, and one of the points I make is that I think what's happened to the entertainment industry over the last decade and a half is really a leading indicator of the type of disruptive change that has already started to impact, or will soon be impacting, nearly every industry imaginable. As such, by understanding what's happening and how not to respond, perhaps we can help lots of other industries move more smoothly into the future. So I'm always interested and intrigued by parallels in totally unexpected industries. Just recently, the good folks over at NPR's Planet Money put together a fascinating episode about modern farm economics (and host Adam Davidson also wrote a NY Times piece on the same subject). While it mainly focuses on Claudia, the high-tech cow, it also has some key economic points that will likely sound familiar to regular readers (unfortunately, these key economic points are only in the audio version of the podcast, and were left out of the transcript). Near the beginning, host Adam Davidson lays out his "four clear lessons about how to have a shot at thriving in the current global economy."
  1. Stay on top of technological change.
  2. Focus. Specialize on the things you can do best.
  3. Find some way to buffer yourself against unexpected changes that are definitely coming.
  4. Find something that you can sell that your customers are willing to pay a premium for because you've given them something they want which no one else can give them.
All of those sound familiar to one degree or another, but clearly number one and number four are ones that we hit on frequently. They then use the example of Fulper Farms to show how it can work. They talk about the technological change and innovation not just in process, but in the breeding of better cows, which leads to the "bleeding edge high tech cow." They then talk about specialization, where the Fulper's don't do everything that a farmer used to do, but instead focus on raising and milking cows, and rely on other experts to handle the breeding of cows (to get those high tech cows) and even cow nutrition (letting this other person stay up on the latest in cow nutrition science).

To some extent, it's like the differences we've talked about between gatekeepers and enablers. The gatekeepers wanted to be at the center of things and control all aspects of production, distribution, etc. But in a world of enablers there's much more specialization. So, for example, in the music world, musicians can pick and choose from best-of-breed solutions to help create, distribute, promote and monetize their work, rather than just relying on a single provider.

Not much time is spent on the third point, but there's a brief discussion about financial tools to help buffer the swings in the market -- things like grain futures and such, which are really just forms of insurance to protect in a volatile market. I'm a little less interested in this particular point. I think it can be important in some industries but is less of a key point long term.

But the fourth point was what I found the most interesting, and obviously fits most closely with some of the theories and business models I've espoused for years: sell something scarce which people want to buy. But, in a commoditized world such as farming, how is that even possible? Well, we hear the same thing in the music world all the time, where people insist that there's nothing to sell but the music, but then we see lots of folks get creative and do amazingly creative things. And the same thing is clearly happening on the Fulper Farm as well -- thanks in part to the youngest generation, who attended my own alma mater (Go Big Red!), and is applying some of what she learned about being more entrepreneurial back to the farm.

She's trying out a few things to take some special facets of what the farm has available, for which they can charge a premium:
Breanna realized they kept talking about this "problem" they had. They're really close to New York City. Land is really expensive in Northern New Jersey. There's not an agricultural world there, so they have to travel really far to buy ag equipment. There's all these problems being so close to New York City. And she realized, by using her farm as a case study in college, that being so close to the City might be the best way to make money. It might be their secret to being a successful farm. I looked and I couldn't find any farm closer to New York City. I think this is the closest one to Brooklyn... And people in Brooklyn are kind of obsessed with farming....

Breanna has figured out that there's money in that. She's working with a cheese maker who's going to help them make a premium Fulper-branded cheese. You and I, some time soon, can go to our local shop and buy really, really local... this is "the closest cheese to Brooklyn."...

Breanna had this other idea. Did you know that you could send your two daughters for a week to summer camp at Fulper Farms?.... Families pay a few hundred bucks, their kids have an awesome week experiencing agriculture.... You know what's amazing? A few weeks of summer camp that Breanna did as a college project? Brings in almost as much money as a whole year of milking cows.
Hello alternative revenue streams. I'm sure the purists will insist that just like a musician should only sell music, a dairy farmer should only sell dairy products. But a smart business person finds ways to capitalize on real scarcities, and that's exactly what Breanna appears to have done with the Fulper Farms.

The report concludes with another key point that we've definitely seen in the music business as well. Davidson notes that there's a lot more opportunity, and the average farm is now making more money than in the past, but it's a lot more volatile, and lots of the old guard simply don't make the transition well. Once again, this sounds mighty familiar.

It's kind of neat to see the parallels between such different industries when it comes down to the basic economics of progress and technological change.

Along those lines, perhaps there are even more parallels moving into the future. As I was working on this post, Leigh passed along a TED talk from about a year ago by Marcin Jakubowski, who is taking the concepts of the maker culture and the open source ethos and applying it to farming. It seems like an appropriate thing to end this post with, so check it out:


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Richard (profile), Mar 22nd, 2012 @ 3:23pm

    Ironically

    Ironically for many farmers the answer to No. 4 might just be to take a subtle approach to No. 1 and produce a traditional product - for which there will always be a market!

    Sort of mirrors the return to live performance - which has turned out to be one of the successful approaches in the entertainment industry.

     

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  2.  
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    Anonymous Coward (profile), Mar 22nd, 2012 @ 3:55pm

    heh, so in essence, when i hit craigslist for a half cow sourced from a local farm, butchered and delivered in the city...i'm once again being a pirate and pissing on the grave of the traditional gatekeepers (grocery store).
    I can live with that.

     

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  3.  
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    John Doe, Mar 22nd, 2012 @ 4:25pm

    Entitlement vs. Adapting

    I'm sure the purists will insist that just like a musician should only sell music, a dairy farmer should only sell dairy products.

    This argument is the one that makes me the maddest. Why is a musician, or any business person, entitled to only do what they want to do to make a living? The economy, market, consumer demand is always changing and a business has to adapt with it.

    I left college as a COBOL programmer, since then I have gone to C++, C#, Java, Visual Basic and other lesser languages. Add to it going from the mainframe, to fat client, to client server to web development. From flat files, to index sequential files to SQL database. The technology is constantly changing. I can never take a break. Do I run to the government and get laws passed that we will freeze technology at this point in time to suit my needs? No I don't and I wouldn't dream that I am even entitled to that.

     

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  4.  
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    BeeAitch (profile), Mar 22nd, 2012 @ 4:25pm

    Here in the Midwest, apple orchards have been doing this for years. Not only do they sell apples, but they let people pick their own, they have hay rides; hell, they even pick up spoiled apples off of the ground and charge people a buck or two to use a stationary slingshot to lob them at various targets!

    Add to that a gift shop with all kinds of local agricultural products (honey, popcorn, maize, pumpkins, gourds, etc.). The produce is more expensive than at the local market, but the experience helps to drive sales.

    The 'city folk' get a chance to get outdoors on a farm with their kids, and the local farmers increase their revenue.

     

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  5.  
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    Anonymous Coward, Mar 22nd, 2012 @ 4:52pm

    "the average farm is now making more money than in the past"

    Mostly through consolidation, and the turning of agriculture at all levels in the US into a corporate business, not a family business.

    I always love the logic: Don't worry about selling milk, sell "milking lessons" to the few suckers willing to over pay for them. I am sure that is why all these farms are suddenly rich.

     

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  6.  
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    Anonymous Coward, Mar 22nd, 2012 @ 5:26pm

    Re: Ironically

    I dunno, the market for regular milk and beef is dwindling as people are switching to crap like soy milk and soy-filler in their burgers (hello Monsanto!)

    If you're paying attention, the "traditional products" are being produced by multi-national companies that are destroying the little guys and then altering those products so that they can sell more of them for less cost every day.

    As someone who has 3 kids in 4H, we see firsthand what is being done in the agriculture industry. There are products being fed to animals that require gloves and masks when handled by humans, but within hours of eating said products, the animals are suitable for slaughter.

    My kids are generally well educated on the value of "real food" and how to properly grow it and harvest it, but not many people are. Even "organic" food isn't what people think it is these days, as the definition of "organic" has been skewed by lobbyists.

     

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  7.  
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    Killercool (profile), Mar 22nd, 2012 @ 7:45pm

    Re:

    Who said anything about rich? No, we're talking about enough money to not have to depend on government subsidies quite so heavily.

    Also, you seem to ignore the fact that, unless you keep selling milk, there is no way your "milking lessons" will be able to stay relevant.

    On the other hand, all of these other, more profitable revenue streams are, at heart, dependent on a continued supply of milk for them to have any value. I wouldn't want to buy cheese that claimed it was "the closest cheese to Brooklyn" if the milk came from Iowa.

     

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  8.  
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    Anonymous Coward, Mar 22nd, 2012 @ 8:06pm

    Defective Transcript

    these key economic points are only in the audio version of the podcast, and were left out of the transcript
    So you are saying that Planet Money is producing defective transcripts? The whole purpose of a transcript is to make a text version of what was said. Leaving out stuff would constitute censorship. If the transcribers want to produce their own document they are welcome to do so, but do not pretend that it is a transcript. People rely on official transcripts to be accurate. Are the Planet Money people unaware of the inaccuracy? Do they not care?

     

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  9.  
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    mike d (profile), Mar 22nd, 2012 @ 8:32pm

    Re:

    I have been to more than one of these in NY. About 1.5 hrs north of NYC. They did NOT have the slingshot though!!

     

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  10.  
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    Anonymous Coward, Mar 23rd, 2012 @ 3:28am

    Re: Re: Ironically

    There are products being fed to animals that require gloves and masks when handled by humans, but within hours of eating said products, the animals are suitable for slaughter.

    You're in the US aren't you?

     

    reply to this | link to this | view in thread ]


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