WHEN Andrew Johnson needed to purchase a new tractor to support his cropping operations, he approached two neighbouring farmers and they agreed to share ownership and use the tractor co-operatively.
Mr Johnson is a Tintinara farmer in the upper south-east of South Australia. He manages Mt Boothby Pastoral Company, a diversified family farming operation.
The three farmers had formed a legal entity for the finance and ownership of the new tractor, and fitted it with sensors.
However, the data received was hard to read and review.
In an example of how relationships between farmers and their financiers are evolving with technology, it was their bank that helped to provide the farmers with the ability to make better use of the data, and experimenting with a blockchain based system to simplify management and security of their unique collaborative sharing model.
To help understand their data and usage of the asset, CBA’s Smart Assets experiment developed a proof of concept (POC) asset management and sharing platform using Internet of Things (IoT) devices connected to a crop sprayer and machinery.
The simulated platform enabled Mr Johnson and the partnership to view real-time location, usage and performance of the asset not previously realised.
As part of the platform, CBA built a dynamic dashboard that visually presented the operational performance of the crop sprayer. The data was instantly captured and presented back to the farmers, allowing them to make on-the-spot decisions on how to best operate the machine, as well as guide decisions on maintenance and renewal.
Digitised business assets connected to the Internet of Things (IoT) and managed with smart contracts and blockchain technology – or ‘smart assets’ – are predicted to become commonplace in many industries of the future.
Mr Johnson said that through the Smart Assets experiment with CommBank they were able to harness the variable data inputs and make sense of what the data was telling them.
“We were then able to bring that back in to make decisions on how we operated our machines.”
CBA Agribusiness Executive Corey Barlow-Jensen, farmer Andrew Johnson and CBA Emerging Technology Manager Andrew Despi on the farm.
“Originally, we had a data capturing system that was fairly weak and very clunky, to the point we weren’t using it. To extract that data and develop it, we needed assistance,” Mr Johnson says.
“It’s become incumbent on us to set up the systems of today for tomorrow. Agriculture is merging into the next phase of its life, and business is going to be right behind that. When I look at the future of agriculture, what we did 20 years ago, if you did that now you couldn’t survive – it’s too inefficient.”
Blockchain dashboard developed to underpin sharing model
To enable assets to be easily shared between farmers without requiring any intervention from the owner, CBA worked with EY (Ernst & Young) to investigate the potential benefits of sharing high-value assets between businesses, using a crop sprayer as a Proof of Concept.
As part of the experiment, a dashboard was built on blockchain technology allowing a possible future state of sharing and fractional ownership.
Managed through smart contracts, the platform is designed to enhance trust and transparency of asset availability to all participants by integrating smart-lock functionality that could be automatically locked or unlocked when a payment is made.
CBA’s General Manager of Strategy, Innovation and Operations for Regional Agribusiness Banking Tim Harvey said high-value assets in agriculture were ‘ripe for innovation’.
Owners often paid big money upfront for the asset, but it caused a drag on profit margins if it lay idle, waiting to be used. In farming it was very common for specialised and expensive equipment to be underutilised for much of the year, Mr Harvey said.
Many agribusinesses were looking at their high-cost assets and wondering how they could increase how much the equipment gets used and how they might reduce operating costs.
“From listening to these customers, it was clear there’s a lack of understanding of how to collect and take advantage of data that those assets could provide,” Mr Harvey said.
“We considered CBA’s expertise from other industries, including the Daily IQ dashboard for retailers, and knew the value agribusiness customers could gain from data presented in a simple and easy-to-interpret way.”
EY Principal & Global Innovation Leader, Blockchain Technology, Paul Brody said farming in Australia is heading for a tectonic shift how we think about the way enterprises and assets are managed.
“It will be an epic battle of the business models,” Mr Brody said.
“The interplay between blockchain, smart contracts and IoT with high-value assets is a significant development towards maximising the value that businesses get out of their assets. By developing a platform that offers fractional ownership as well as a sharing marketplace, customers will be able to reduce costs of asset ownership and maximise utilisation.”
Shared ownership model maximises value in diversified operation
Mt Boothby Pastoral Company encompasses a 1000 sow piggery, 7000 merino ewes producing wool and prime lambs, Angus beef cattle, irrigation seed production and mixed cropping of canola, wheat, barley, lupins and beans.
Mr Johnson said the partnership with CommBank’s innovation team had allowed he and his partners to better understand the data insights they needed to optimise use of the new tractor.
Mr Johnson said that the partnership brought new technical skills and resources to the table, enabling the farmers to use data from the equipment to make sounder business decisions.
“In particular, the people at CommBank assisted in making the data readable and usable, by working out a way to harness the variable data inputs – and make sense of what they were telling us,” he said.
“We were then able to bring that back in to make decisions on how we operated the machines.”
While initially other farmers were sceptical about the arrangement, Johnson says that many are watching to see how this new ownership model plays out.
“Initially we heard ‘that won’t work’ … now we’re at the point where we get calls asking to be involved or how you go about setting these types of things up. While change is hard to take, they’re prepared to listen and watch – I guess there are lots of people watching where we are at the moment.”
Source: CommBank. This is an edited version of an article originally published on the CommBank website. To view the original article in full click here