Bloomberg Interview with Irfan Donat

Bloomberg Interview with Irfan Donat:

Is the Agriculture and Food Sector Ready to Tackle Climate Change?

In a recent interview on Bloomberg TV, Doktar co-founder Tanzer Bilgen delved into the intricate world of agricultural production strategies, financing modern agriculture, risk management in the sector, and the transformative impact of agtech and regenerative agriculture.

The conversation also delved into the evolving landscape of consumer preferences in food products and how these trends ripple through the broader economy. With a finger on the pulse of the agricultural sector, this interview delves into topics that resonate with stakeholders, from producers to consumers, providing a comprehensive perspective on the latest developments in the industry.

To watch the interview on Youtube, click here!

İrfan Donat: Welcome to smart agriculture. I'm Irfan Donat. We are here before you as every Tuesday. Today we will try to consider how much the agriculture and food sector is prepared or prepared for the process of combating and adapting to climate change with a little technology dimension. In restorative, regenerative agriculture -everyone can use different terms- we will try to talk a little about the companies' perspective on this area and perhaps the cost dimension of the work. What is the point of access of small-scale enterprises, i.e. small-scale enterprises in agriculture, to digitalized agricultural equipment? What kind of studies are being done about this? We will look for answers to these issues for a while together with Doktar co-founder Tanzer Bilgen. Let's say welcome back. Welcome to our publication.

Tanzer Bilgen: Thank you, Mr. Irfan.

İrfan Donat: Now let's start with climate change if you want. We recently left COP28 behind. The expectations were not very high, but already there weren’t many things to meet the expectations. There may be small improvements, but on the one hand, companies need to be prepared. Companies, especially on a national and international scale, may be more aware of the incident, but we are going through a process that competes with time. So it's important to take action. It is important to bring its’ continuation. How much awareness do companies have about this? I also know that you work with companies. What kind of process are you observing?

Tanzer Bilgen: I was also at COP 28 two weeks ago. I went for the first time in my life. It was a different experience. As you said, it was not a very result-oriented event, but from our point of view, the most important output of this rate from the point of view of agriculture was the emphasis on regenerative agriculture. In fact, the Boston Consulting Group even talked about a regenerative agricultural transformation of 160 million hectares. 15 companies will allocate $ 2.2 billion for the transformation of approximately 3.6 million farmers by 2030 over the next 15 years. We can actually think of this regenerative agriculture as another method of sustainability. Its basis is to improve the health of the soil, not to consume and use resources. It is necessary to transform agriculture in this. Awareness is high. Awareness is especially high in America and Europe, that is, in developed countries. Here, food and beverage companies that provide products to the international consumer generally lead the way. But we can still say that we are at the beginning of the transformation, even for the European and American Sundays.

İrfan Donat: So this issue is being approached more systematically or holistically. Or are we just at the beginning of the job?

Tanzer Bilgen: It's starting to get closer slowly. Different things are happening here now, different players. In order for you to use resources, you need to make decisions based on information, based on data. On the one hand, there are technology partners. So you enter the field, you digitize. What are you doing? You are managing irrigation. Or you are trying to do plant nutrition in a more scientific way at work. On one side there is technology, on the other side there are implantation partners. So you're putting a team on the field. You train farmers, you do soil analysis when necessary. After that, at some points, farmers need technical support. You provide agronomic agricultural support there. Thirdly, in fact, validation is required to show that these programs really produce value, create benefits. There you have also installed technology at work, you have entered the field, you visualize all the data collected from here on a platform or with a report and open it to audit. At its core, these programs have three components. Let's say we're approaching it a little differently.

 İrfan Donat:  Each company's approach to the subject may be from different angles. For example, a soft drinks company may be focusing on the water saving part of the business. A chocolate company may be giving more priority to the biodiversity side of the business. Or a contract manufacturing company may be prioritizing reducing its carbon footprint. In fact, they are all in a direct or indirect interaction when we look at each other. Has the joint working culture of the companies started to form at this point? Or is everyone going their own way?

Tanzer Bilgen: We can say that everyone is going their own way right now. In other words, there are exchanges of ideas about joint work. There are starting to be more activities aimed at these in the world. For example, every year I think there are three big events related to regenerative agriculture. One is happening in Amsterdam, one is happening in the United States, and the other, I think, will be in South America sometime, I know. Dec. Companies are just talking to each other, but basically everyone is implementing their own regenerative transformation program. There are several barriers here. Actually, these are the barriers. 1- A common way of doing business has not yet developed.

İrfan Donat: Shouldn't it actually be?

Tanzer Bilgen: Of course it is necessary. So, the Sunday is already moving towards there, and how can I say while doing this, companies are having to work with many different partners in the current situation in order to reduce many effects to the field. So what are you doing? Let's say you are an international company? You have operations in seven countries. You are working with a university in Mexico there, but there is one implantation partner in France, Germany, but each country also provides a different player technology. Therefore, instead of being able to manage this entire international program from a single point, it has to be carried out with five subcontractors of each local office in each of your local offices. There's a difference happening here. So we've been focused here for the last 18 months. In addition to the technologies we provide, we have also established a program management unit.

İrfan Donat: What is program management? 

Tanzer Bilgen: The program management unit actually focuses on designing and managing digital and green transformation programs on behalf of companies.

İrfan Donat: Companies with a climate commitment, especially.

Tanzer Bilgen: There may be companies that have a climate commitment. There may be companies that perform contract farming and carry out all their operations in excels. Or you are an organic company, you are exporting to Germany, Europe. Now comes the green memorandum. Here you will measure the carbon, you will show the organic certificates digitally. All this is actually a digital transformation. Digital and green transformation, and because they are not with such a magic wand, that is, when you put a technology on the field, it does not immediately show its benefits, normal companies need to transform. Both companies and farmers. This requires a scientific approach and a systematic approach. We also set up a unit about 18 months ago. In fact, we have been designing and managing programs for climate commitments of various companies for the last five years. For example, we manage the digital transformation program of a major player in the tomato paste industry.

İrfan Donat: So are we talking about every link of the supply chain from field to table? I am asking because you gave an example of tomatoes, such as the meeting of seeds with the soil, fertilization, spraying, irrigation, and industrial processing.

Tanzer Bilgen: So actually we are very focused on the part from the field to the factory. That's our main area of expertise. We are also creating digital copies of each field there. We keep all the environmental data as well as the data with human intervention. When he watered, when he planted, etc. We collect this information and teach data-based decision-making methods to both agricultural teams and farmers. So what does it mean to make data-based decisions? You know what used to be? I water for 10 hours in each of the waters six times a season. So it's not like that now. Now you can also water it 5 times. Or water it 14 times. You can give 25 tons per decare every time. So, each of these decisions are now done with a sensor.

İrfan Donat: More measurable.

Tanzer Bilgen:We're talking about doing it with measurable, data-driven and Big Data driven systems. The key to these transformation programs is this: let's think about our childhood. Our teachers used to make us draw lines for 3 weeks begore writing the letter A first or the first word, like that. It takes practice to transform. In other words, by entering one classroom education and saying that I have trained 13,000 people, no competence is gained. Therefore, frequent practice is required for this. One of the things that Doktar does well is this: We have developed a methodology for practicing following the phenological calendar over the past 5 years. For example, we want farmers to irrigate with digital methods. We talk to farmers at least 5 or 6 times a year through different channels. So we do physical visits, we do online meetings. After that, we also make people discuss their conventional memory-based methods, whatever they are doing, and what should be the new data-based decision. While doing so, we always have our customers' agricultural teams with us. Because it's a new way of doing business for them too. And that means a transformation. And that transformation journey can take 3 years, 4 years for digital transformation, and 5 years and more when you talk about regenerative agriculture.

İrfan Donat: Well, there is also a cost to this transformation on both the digital and regenerative agricultural side. What kind of invoice is coming out to you?

Tanzer Bilgen: It seems like there will be a huge cost in people's minds all the time. I mean, they think so, but actually there is no such thing. On the basis of how much product you buy, it does not exceed 1.5% per year. So let's say you buy tomato paste for $10 million a year. Your cost will be around 150 thousand dollars every year.

İrfan Donat: Beyond this cost, there is also a process by which you recover.

Tanzer Bilgen: You're saving about 25 percent on fertilizers. This is just for fertilizers. For example, this year farmers in the Karacabey plain sprayed about 9 times for Tuta absoluta. We helped save on two applications with the farmers we deployed digital insect traps for. That’s around 20% percent less.  

İrfan Donat: Both a financial and an environmental factor. We are also talking about an environmentally friendly application from an ecological point of view.

Tanzer Bilgen: There are 4 principles in regenerative agriculture. Using water carefully -called water replenishment-, biodiversity enrichment, improving soil health -that is increasing the organic matter in the soil- and adding cover plants next to your main product in the soil to keep your field or garden constantly green and increase soil vitality. When you put these 4 components together, you can do it individually, you can do it all together. That's basically what regenerative agriculture is all about.

İrfan Donat: This is of course climate change we are talking about, the pressure on water resources, this destruction of the soil... When we add them all up, the bill is actually very big, the bill that goes out to humanity. As a company, of course, you say that bigger companies can handle this with very small resources to manage it. It's an important point. Yesterday, the National Water Board was established and held its first meeting. The Minister of Agriculture and Forestry Ibrahim Yumak also shared some data there. It's really very striking. Mr. Minister says that we’re anticipating our population to increase by 10 percent by 2030. And that says that we’re anticipating that our water resources will decrease by 20%. If this goes on, that is, if the current system continues in this way, after 6 years, 78 percent of our population will face water scarcity, 49% of it in irrigated agricultural areas. I mean, it's a serious, catastrophic scenario actually. Therefore, there is a lot of work to do in the next 6 years from today. The time is tight. There's a lot of work to do. Companies operating at the national and international scale, in general, are more aware of this business and are moving towards it. Or are have small and medium-sized enterprises and companies started to move in this direction?

Tanzer Bilgen: They started. It's actually about who's running the company, rather than the size, the smallness, it's about vision, it's about foresight, it's about openness to change, and it's about realizing that preparation will take time. Many companies in Turkey will say ‘oh no what will I do on January 1, 2026?’ Some of them started to take action.

İrfan Donat: This is not a choice, it's actually a necessity. It will be left to the companies, I wonder if I should do this or not, there is no preference right now. Everyone will do it. You can do it starting today or when the egg comes to the door.

Tanzer Bilgen: So the world needs to transform. We need to transform it so that we don't go hungry. What are we supposed to do? We should not use up resources, we should not consume them. There are 2 methods for this, one, you will make decisions based on data; two, you will make production respectful to nature, and you will make it sustainable. One is digital transformation, the other is green transformation, and both of them are transformations, and cultural transformation movements, and both take time. Therefore, we need to start now. There are Turkish companies that started here, and there, but of course, we are behind in terms of the number of humanitarian companies compared to international companies. We have been working on this transformation issue for 6 years for example, with a customer who works in the tomato paste industry . We will start working with a new organic producer soon. Apart from that, international companies operating in Turkey, with whom we’re working on biodiversity in Bursa. We are working on water replenishment with another company in two different locations. Last year we saved 1.1 billion liters of water in nectarine orchards and sugar beets. Next will be sugar factories I think. Therefore, there is relevant interest. There are proven methods for this. You definitely shouldn't be afraid of the price either. Because it doesn't exceed one and a half percent.

İrfan Donat: Unnecessary fear sometimes turns into a Greenwashing story. So it looks like something is being done, but not when we're looking at it in the background. I’m not just talking about agriculture and food. There should be this transformation in every sector at the point of combating and adapting to climate change. But as we said, should I say sometimes unnecessary fears, unnecessary cost calculations, or a culture of procrastination? I'm not talking about it specifically in Turkey; this is all over the world. There is a greenwashing, but now it will be eliminated gradually.

Tanzer Bilgen: So it's like this. A reason for this was related to the fact that the topic of climate change didn’t have an owner in businesses. They gave it as a side agenda to the CEOs. Now there is a role called Sustainable Procurement Officer in international companies. So how do we ensure sustainable supply? For them to provide the supply, they really need to make that green transformation. They are focused and have clear goals. That's the way it is with ownership of goals. So if sustainability is only an item on the edge of your calendar, then it can turn into greenwashing.

İrfan Donat: Now, while we are talking about digitalization, we are already experiencing, seeing and witnessing digitalization in agricultural equipment. But there is such a perception as ‘ Yes, the agricultural machinery that we will invest in technology is fine, nice, but when we look at the scale in Turkey, how does a small or medium-sized producer farmer access the size of an average large enterprise? What kind of path can be followed there, from autonomous systems to fertilization systems or similar? In other words, I know that there are studies on the digitization of agricultural equipment, but the work is a little more like this, there are tailor-made case studies of such a scope in Turkey. What is the situation there?

Tanzer Bilgen: Now we have a developed equipment sector, but the weight of our equipment sector is iron and steel works, and a little mechanical work. Therefore, we are behind our European competitors on the digital side. Maybe the reason we're behind is because there's not enough depth. A specialized knowledge is required.

İrfan Donat:There needs to be some more R&D and innovation investment.

Tanzer Bilgen: Yes, and if you look at the fact that these talents- the people who can work on this topic, do not live near the facilities of these companies. Therefore, we have installed many of the technologies that collect data from the field. We are now putting it on the market commercially. We collect data from the field, process them with artificial intelligence algorithms and transmit decision suggestions to the farmer via smartphones or messages and calls as for decision recommendations. And then there is the implementation of these decisions which happens with smart equipment. Therefore, we have now taken the final step in this vertical integration. But what are we doing? For example, since Doktar will never produce machinery, we cooperate with several leading agricultural machinery brands in Turkey.

İrfan Donat: What are you doing?

Tanzer Bilgen: We have produced a prototype for a variable rate fertilizing (VRA) machine. We tried it on the field. Now we will produce four more and do the final field tests in the next few months and then turn it into a commercial product.

İrfan Donat: In other words, you will install and adapt your digital device to a non-digital fertilizer machinery system. Thus, it will measure exactly how much fertilizer needs to be applied in specific sections of a field.

Tanzer Bilgen: It's actually going to be like this. In such machinery, there are flat, non-digital equipment and various apparatuses for section control. For example, the name of the device that allows you to throw five different amounts of fertilizer with your spreader is section control or the name of the system that allows you to turn off the four guns on your sprayer when spraying the field from above is called section control. Here we are creating variable-rate application maps via satellite imagery. In Europe, this can be downloaded to tractors via a system called Agrirouter. But since tractors are not digital in Turkey, we have digitized the fertilizer spreader, which is the sectional control of a machinery manufacturer. By digitization, I mean, we connect a computer to a modem plus, add this data from the satellite, and enable the device to perform variable-rate applications. The next product will ensure that the spraying machinery can do variable rate applications.

İrfan Donat: What kind of price difference does this affect?

Tanzer Bilgen: We estimate that it will be at least halfway.

İrfan Donat: It will become more commercial, more widespread.

Tanzer Bilgen: Definitely so. I know that full digital devices of foreign brands are 30 35 thousand euros. Such fertilizer spreaders can vary according to their width.

İrfan Donat: So what will be the average price of this device that you will make?

Tanzer Bilgen: We haven't worked out the latest prices, but we plan that they will be at least 50 percent cheaper. Therefore, it will be very useful in Turkey. Meanwhile, the machinery sector in Turkey is also a sector that exports quite decently. So we're deploying it to Africa, Australia, and Eastern Europe. Therefore, these digital equipment can also be exported. We will have a competitive edge.

 İrfan Donat: In this case, we will also be able to talk about agriculture, equipment, tractors, and know-how exports.

Tanzer Bilgen: Yes, we met and talked with these Turkish companies at the Agritechnica fair in Germany. Now there will be a lot of improvements in this upcoming year.

İrfan Donat: We hope there will be good results. We will also share it with you from here to the public. I wish you success. Today, together with the co-founder of Doktari, Tanzer Bilgen, we tried to convey to you both the place of regenerative agriculture in digital transformation, the companies' awareness or practices on this issue, and the up-to-date information from the field. We will be here with agriculture tomorrow at 12:30 as every Wednesday.

 

To watch the interview on Youtube, click here!