$1b from milking the cloud

Federated Farmers may become the steward of a vast amount of data gathered from farms by cloud-based software applications, ensuring it can be combined to drive productivity improvements that one industry expert believes could be worth $1.1 billion annually to the dairy sector alone.

President Don Nicolson says several companies, including Telecom's Gen-i and privately owned firms Tru-Test and FarmWorks, are looking to establish portals for the farming sector.

These could aggregate data from farm management software systems and public databases such as the soon-to-be-established FarmsOnline database and details of herds recorded when the electronic tagging of cattle and deer becomes compulsory next year.

Federated Farmers held a conference in Wellington on Wednesday in conjunction with online accounting software provider Xero to explore the opportunity.

If farmers allowed information from operational and accounting systems and public databases to be linked – and potentially aggregated so farmers could benchmark their performance against their peers – they could better see how they could improve, sector leaders said.

Livestock Improvement farm software business manager Gavin McEwen says the volume of milk solids "per udder" has grown by a compound annual growth rate of 1.7 per cent over the past decade, thanks in part to genetic improvements in dairy herds, delivering an extra $132m a year to the economy.

But nutrition and management practices account for about 65 per cent of the variance in productivity between herds.

He says a former head of Livestock Improvement's Farmside farm consultancy business estimated the productivity of the dairy sector could be increased by 15 per cent simply through improved management practices. With milk solids worth $6 a kilo, that would equate to an annual productivity gain to "NZ Inc" of $1.1b.

Landcorp strategy manager Collier Isaacs says the state-owned farmer has had a 25 per cent annual return from its investment in software that tracks the productivity and health of RFID-tagged cattle, allowing it to make informed decisions on which cattle to cull. All its 109 farms are connected by broadband and it analyses the performance of herds through a computer "dashboard".

Mr Nicolson says there is some tension between companies that hope to play a role in aggregating information from farms and there is a need for data standards, so farmers can more easily switch between technology suppliers.

Federated Farmers was looking for new revenue streams and could be a body that would provide oversight.

But he says it needs to be careful in any commercial relationships it develops and it is critical that intellectual property generated by data harvested from farms remains the property of farmers.

Chief executive Conor English says Federated Farmers is certain it has some role to play.

"Specifically what that role might be we are still trying to figure out, but we are the trusted partner of our farmers.

"They know we are looking after their interests, that is our primary focus. We would see ourselves as a potential facilitator in getting that hub going."

Brendan O'Connell, business development manager of software application developer Tru-Test, says cloud computing isn't a technology, but an operational model. "If that is true for cloud computing in general, it is even more so the case for farming."

In some parts of the farming industry low profitability means a 15 per cent productivity gain isn't itself going to be enough, he says. "Having said that, that is what we are focused on.

"Our tools are currently used to collect data that could potentially be used to inform better decisions.

"Many existing farm decision processes are based on an environment of limited data input. The `cloud' has the potential to transform things. It isn't about having a hub, or the coolest application or devices on farms, it is about all of those things and supporting a new level of knowledge and skills in the industry."

Xero founder Rod Drury says he believes there is a revenue opportunity in creating an online hub for the sector.

"The big thing with farming is a lot of the data is not financial. Drivers like effluent management and animal traceability are creating opportunities to create these external datasets.

"We believe the secret to productivity improvements in this sector is connecting business owners to really smart people who understand their business."

That is easier if information is stored "in the cloud".

But Mr Drury says that is not confined to the farming sector. All industry associations have to work out "how they want to play in this cloud world".

The Dominion Post