Nothing new under the sun ☀️
Prime Future 048: the newsletter highlighting trends in livestock & meat
Let’s talk about 2 ideas on innovation by way of the last 150 years in ag. These ideas stood out after reading 3 fascinating books about the early evolution of cattle, grain, and fertilizer. While these ideas aren’t actionable per se, I hope they’ll be food for thought.
To set the stage, here’s a quick recap on the 3 books:
(1) Cattle Kingdom: The Hidden History of the Cowboy West describes the early development of the open range cattle industry in the US and all its many dynamics. The elimination of buffalo that ruled the open range so cattle could be trailed north to markets. The completion of the transcontinental railroad so live cattle could be shipped to urban areas which led to the creation of “cattle towns” and then to the geographic push to Chicago where packing plants were built after refrigerated rail cars were in play to move meat east instead of animals. Gustavus Swift not only pioneered the idea of vertically integration from feeding cattle to processing to distribution directly to wholesalers (and the restaurant that made the steak popular, Delmonico’s), his design for a (dis)assembly plant established the future of the modern packing plant and served as the blueprint for Henry Ford. The author actually argues that Swift’s company initiated a lot of management principles still around. The development of barbed wire was the death knell for the open range, as settlers blocked off their sliver of the world, but proved an invaluable early management tool for ranchers.
(2) The Alchemy of Air: A Jewish Genius, a Doomed Tycoon, and the Scientific Discovery That Fed the World but Fueled the Rise of Hitler tells the story of how South American reserves of bat guano increased yields for European farmers until supply began running low. Experts claimed the population was soon going to outstrip the planet’s ability to produce food….until a German scientist created a mechanism to convert nitrogen from the air into nitrogen that could be applied to fields, prompting a massive boost in food production and saving millions of lives.
(3) Merchants of Grain: The Power and Profits of the Five Giant Companies at the Center of the World's Food Supply walks through the driving forces of the international grain trade since the late 1800’s and the companies that survived the geopolitical turmoil, economic chaos, and rapid advances in everything from transportation to harvesting (move over wheat, now corn is on the move) to markets, both new segments and new financial instruments to trade. (FYI this one is not as reader friendly. Michael Lewis should make this his next project.)
Those 3 threads together perfectly demonstrate how mega trends in technology collided with industry specific mega trends to radically accelerate each space from where it was originally, to where it evolved.
Thus, two takeaways on innovation:
(1) Context matters: innovation is only & always a bridge FROM some current state TO some future state.
(2) Timing matters: innovation only & always happens when emerging mega trends converge, both technology trends and industry trends.
Case and point:
“Always bet on the megatrends” sounds like great advice for….everybody? Including producers and players up and down the meat & poultry value chain.
So shifting to the current Current State, what are the mega trends playing out in livestock & meat, and in tech?
Industry mega trends include:
Buzz about traceability
Sustainability - economic, environmental, animal welfare
Need for automation
Transparency at all layers
Rising land prices, volatile commodity prices
Meanwhile, current tech mega trends include:
Ubiquitous cloud computing
Drastic increase in sensor capability / decrease in cost
Massive investment in alt proteins
Focus on data privacy & data security
Solving rural Internet access gaps (thanks Elon)
Which of these industry & tech mega trends converge, and how they converge, will determine the next future state of livestock & meat.
This whole idea of “innovation is contextual” matters for a few reasons, especially in a livestock production context:
The funny thing about innovation is that for us much as, yes, it is creating the future at some time horizon....it never gets the chance to take off unless it's rooted in the realities of the current state, both operational AND value proposition realities. There’s also the added complexity of many value propositions that fluctuate with commodity cycles. Look at precision farming - tech that gets adopted at $6/bu corn does not always get adopted at $3/bu.
Innovation is only innovative for a little while. The goal posts move. (No one inherently gets this better than farmers…what gets a premium today is mainstream tomorrow.) Synthetic fertilizer was truly game changing and life saving in 1920, today's innovations are replacing synthetic fertilizers with biologics. From/To.
Timing is not everything, but it's a really big thing. Look at online grocery, which grew from 3% in 2019 to 10% in 2020, a massive inflection point even though variations of grocery e-commerce has been a thing since the late 1990's. The graveyard of failed online grocery startups is not small…but ask any of those founders and they would likely tell you that technology was not their challenge. Their challenges were consumer behavior and (lack of) retailer motivation, that they couldn’t stay afloat long enough for the consumer trends to catch up with the tech capability. Startups launching 20 years ago in that space never had a chance, yet companies started in the last few years were perfectly poised to ride that sweet COVID rocket ship. Timing matters.
All that to say, context and timing drove innovation 150 years ago just like they do today. Context and timing are often (usually?) the difference between success and failure (an already fine line for most startups).
Innovation is only & always a bridge FROM some current state TO some future state, and it only & always happens when emerging mega trends converge.
And sure, maybe what happened 150 years ago isn't directly relevant today.....then again, many of today's industry dynamics were hard at work way back when. There is nothing new under the sun.
Exhibit A of nothing new under the sun:
Heads up - I'm now part of the Merck Animal Health Ventures team. This newsletter is in no way representative of anyone's views but my own. Sometimes it doesn’t even represents my views :)