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Data - the new productivity and competition catalyst

Mick Keogh - Sunday, May 21, 2017

Imagine that you are a livestock farmer who has sold lambs that will be consigned to two different processors, and you are trialing two different ram sources in your prime lamb enterprise. Being able to identify the lambs from each ram source and compare the carcase characteristics of each bloodline group is going to be a key step in identifying which bloodline will best increase enterprise productivity. Imagine at the same time you also operate a cropping enterprise, and have managed to accumulate ten years of yield map data from your current harvester, which you use to apply variable rate crop planting and fertiliser programs that improve cropping productivity. You are now considering the purchase of a competing brand of harvester which promises better performance, but has incompatible yield map formats for your current planting equipment, and you potentially face the loss of the benefits arising from all the accumulated data if you switch.

In both these situations, the importance of data as a tool to improve farm productivity is very obvious. 

A robust and objective comparison of lamb carcase data (irrespective of which processor they were consigned to) can provide vital information about the relative performance of different bloodlines, and allow a lamb producer to accurately identify which ram source is best for the lamb enterprise. To be able to conduct such a comparison, it is important that both lamb processors make available detailed carcase data, and ideally make it available in similar formats for ease of analysis.

Similarly, the yield data produced by a harvester is a critical piece of data that enables farmers to identify parts of a paddock which will respond to additional fertiliser, and parts that will not. Using multiple years of yield map data (rather than a single year) has been shown to improve the benefits that can be obtained using variable rate cropping systems, with up to 10% increases in productivity achieved by some farmers. This also highlights that the productivity benefits that are able to be obtained from crop data increase as more years of accumulated data are available.

Both these cases also provide very obvious examples of the role of data in competition in the agriculture sector. If only one lamb processor is prepared to make detailed carcase data available to lamb producers, then those lamb producers for whom objective carcase data is important will have little choice about which processor they consign their lambs to, and face less competition for their lambs. Similarly, proprietary harvester data formats can mean that it becomes increasingly problematic for a crop farmer to switch to a different harvester brand, if they use that data to enhance crop productivity.

The increasing importance of data as a tool to enhance productivity, and the potential for data to be used in ways that limit competition has been recognised in the recommendations arising from a recent inquiry conducted by the Productivity Commission, which were released by the Australian Government recently. 

 A key recommendation arising from that inquiry is that legislation should be implemented to create a "Comprehensive Right" for consumers (and small businesses) to access and use their data, and to have control over its use. This is spelled out in Recommendation 5.1 (noting that the term 'Consumer' also refers to data associated with Small to Medium Enterprises, which encompasses most farm businesses).

RECOMMENDATION 5.1

Consumer data must be provided on request to consumers or directly to a designated third party in order to exercise a number of rights, summarised as the Comprehensive Right to access and use digital data. This Comprehensive Right would enable consumers to:

share in perpetuity joint access to and use of their consumer data with the data holder

receive a copy of their consumer data

request edits or corrections to it for reasons of accuracy

be informed of the trade or other disclosure of consumer data to third parties

direct data holders to transfer data in machine-readable form, either to the individual or to a nominated third party. 

Where a transfer is requested outside of an industry (such as from a medical service provider to an insurance provider) and the agreed scope of consumer data is different in the source industry and the destination industry, the scope that applies would be that of the data sender. 

The Productivity Commission envisages that different industry sectors may have different needs in relation to the management of data, and that industry sectors should be able to develop agreed data sharing standards relevant to their industry. Once these standards are authorised, they would have the potential to override the Comprehensive Data Rights legislation.

The Productivity Commission recommendations, if implemented by Government, have the potential to improve both competition and productivity in the Australian agriculture sector. They would also potentially create a competitive agricultural software and data application market in Australia, and at the same time help to enhance the information available for farm advisors such as agronomists.

There will undoubtedly be a few issues that need to be addressed in order for these recommendations to be successfully implemented. The definition of data, for example, requires careful thought. At its simplest, a harvester yield map is simply a collection of weight data produced by a load cell located in the harvester grain elevator, with each weight reading also having a corresponding GPS co-ordinate to identify the location in the paddock at which the reading was recorded. Software incorporated in the control screen of the harvester or on a tablet computer is able to process the data, and convert it to a visual map that is displayed on a screen. That software also usually makes a number of adjustments to the data, and corrects obvious errors and gaps. 

There is an argument that at some point in this process, the original data has been modified and no longer fits the definition of 'data' for the purposes of the proposed Comprehensive Data Right. Unless this definition is appropriate, it creates the risk that data 'value-adders' such as software developers will be de-incentivised, and a competitive software sector will not emerge.

Another issue that will require consideration in the livestock industry is exactly who has the right to access carcase data. A typical scenario might be that a cattle breeder sells weaner calves, which are purchased by a background feeder, who then sells these to a feedlot, who then sells them for slaughter. The cattle breeder may be interested in the carcase data, but has no involvement in the final transaction before slaughter and would therefore be unlikely to have any legislated right to access the carcase data, in the event the above recommendations are implemented. Despite that, the original breeder of the cattle is probably best placed to make productivity gains from insights available from the carcase data.

Clearly, the agricultural sector has the potential to capture significant benefits from the rapid growth in digital technology, and the recommendations made by the Productivity Commission have established a very good framework for the sector to ensure that both productivity and competition benefits are secured. That said, there will need to be detailed discussions about these issues involving a wide cross-section of the industry to ensure that the potential benefits are able to be secured by as many as possible, and that decisions about data rights and access do not create impediments for technology and software developers.
 
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