Electrical engineer Fernando Martins has an ambition that may make domestic agriculture even more efficient for Brazil. For two years he was CEO of AgroTools, a company dedicated to providing digital solutions for agribusiness corporations, and today as a member of its Strategic Council he advocates adoption of a standard to interconnect the machinery manufactured by more than one hundred companies throughout the country. For this to occur, it is important that these competitors agree to speak a single technological language, and that connectivity reach everywhere in the field, not just the farm headquarters. The main innovation permitted by this vision is the intensive use of the internet of things (IoT) in the field. “Agriculture will be much more efficient with the IoT in all machines,” says Martins.
Martins received his undergraduate and master’s degrees from the Polytechnic School at the University of São Paulo, and his doctorate in electrical and computer engineering at Carnegie Mellon University, in the United States, and also pursued two courses in executive education at Stanford and University of Virginia; for 14 years he worked at Intel USA, where he rose to Director of Strategic Planning. Then he was executive director and general manager of the Brazilian subsidiary of Intel for five years. In May 2016, he became CEO of AgroTools, a company founded in 2007. The commercial division is located in São Paulo, while São José dos Campos houses the team responsible for tool development, data curation, and implementation of solutions and analysis offered to the company’s clients.
In the following interview, Martins (who is also on the Board of Directors for the Agribusiness Innovation Center at Jacto Agrícola in Pompeia, São Paulo), talks about the prospects for domestic agriculture, which is increasingly located within the digital world.
What led to the creation of a company directed toward digital agriculture?
AgroTools was founded to address the lack of digital coverage in the Brazilian agricultural sector. The founder, Sergio Rocha, is an executive who came from the area of trading and worked with agribusiness receivables certificates [fixed-income securities issued by securities companies to finance the agribusiness market]. He was frustrated with stocks that were great, for a business that really had a product behind it, like soybeans, but there was no way to inspect the land to prove it. Therefore, the stock didn’t have much value. He founded AgroTools with the idea of creating a digital system that showed what the producer was planting, how much he would harvest, and when the production would come to market.
And how did he think about structuring this digital system?
The area planted in Brazil is formidable, very large. We have farms the size of Belgium. How can it all be inspected by pickup truck, motorcycle, or even helicopter? Digital remote sensing was the tool that allowed it. At the same time, 10 years ago, ranchers had a serious problem: cattle purchased and farmed in the Amazon region were seen as linked to deforestation. Large corporations that work with meat stopped buying from producers who operated there, even if they weren’t sure that there really was a relationship between the two activities. How can we help to resolve these issues? The solution was to remotely and digitally observe the land where the animal was raised to ensure that there were no negative environmental practices like deforestation or slave labor. Today this product is used by banks, trading companies, and industries that produce inputs, among others.
It is important to have connectivity in the field to be able to use a smartphone anywhere and so that the data can flow
What does AgroTools do, exactly?
It provides digital solutions and insights to the large agribusiness companies. These solutions can be socio-environmental, like one of our products, AgroTools Safe, which reports what happens on the farm. If I am a large meatpacking company and I’m buying a steer from a producer, I check that the property where this animal lived has no problems. If I do this with all the producers I buy cattle from, I can certify that my production has good socio-environmental practices. Besides the socio-environmental analysis product, AgroTools also has a bank credit flow system for agricultural credit, and another flow system for risk analysis, which allows implementation of parametric insurance.
What is that?
When farmers go to ask for a bank loan, the bank uses these digital tools to verify the socio-environmental criteria and production over time. For this reason, AgroTools analyzes the property’s past, over the previous five years, and sees the frequency and quality of what was planted. If the owner is recognized as a good producer, he can obtain better commercial conditions from the bank. Today, when they operate in the dark, banks charge more because they need to consider the risk. The transparency provided by AgroTools creates an improvement in the relationship of trust between the bank and the farmer. Once the credit is issued, we continue to report to the bank on how the biological asset is progressing, whether this is corn, soybeans, or something else.
Where does the information you process come from?
From public agencies such as INPE [the National Institute for Space Research], private institutions, and they are also developed by the company itself. Our socio-environmental statement is forensic, it can be monitored and verified. Today we have the largest database on tropical agribusiness.
Are large companies your focus?
Not exclusively. McDonald’s, which is our client, uses the AgroTools system to certify all the meat it purchases in Brazil. Approximately 70% of domestic meatpacking passes through our system. Walmart, Carrefour, and corporations who want to receive this meat use the tool in their supply chain. Brazil is a pioneer in this. I presented the system in Washington, and Greenpeace and other large NGOs [nongovernmental organizations] endorsed it as efficient. AgroTools does not interact directly with the producer. We observe the land and we deliver information to the corporations.
When you took over as CEO of the company, you said that one of your goals was to transform the field into a “data federation.” Were you able to do this?
Not yet, but we are still progressing. Data federation is a term from computer science. It means that each company has a databank, and the idea is to unite these data like states in a federation. This process provides the ability for organization by aggregating different sources. The databanks remain independent, but share decentralized information and look for joint definitions to speak a common language. We need a national standard for interconnection that does not yet exist.
Why is interconnection crucial?
Because for example, today farmers buy green, orange, yellow, and red equipment, each with a different connectivity standard. Interconnection is already very good between products from the same manufacturer. If all my machines are green, everything is going to work. But the connection between machinery from different companies is not so simple. There are more than one hundred manufacturers of agricultural equipment in Brazil, and this standardized interconnection is needed. Just like there is a standard for the USB port on all computers and MPEG for video formats, it is important that Brazil organize so that there will be a single protocol for interconnection. All machines should talk to each other, no matter what system they use.
It would be one more step towards really making Brazilian agriculture digital…
It is important to have connectivity in the field to be able to use a smartphone anywhere, and so that the data can flow. When I think about the IoT in agriculture, I am thinking of the soybean seeds, the agrochemicals, the sprayer that will apply these chemicals, all connected in the IoT. In this vision of the future data federation, we will have machines autonomously sending information about the management they undertake directly to the cloud [digital data storage] and to the blockchain [platform for shared recording of information in the productive chain]. The spraying machine will be responsible for recording the quantity of chemicals it applied in the cloud. But the data will belong to the farmer, just as the odometer of a car belongs to the owner of the vehicle – although he has no right to change it when he sells the car. The same should be the case with the sprayer. When it applies a certain concentration of an agrochemical to a crop, this information is recorded in the blockchain, without interference by humans. This allows us to see how much of the chemical was used in that field. If it was too much, the retail buyer might not want that product. If the management is more organic, the product will certainly fetch better prices.
When will all this happen?
In five years, maybe less. Connectivity is a daily concern for farmers. I am referring to the 25,000 largest producers. There is a lot of interest among the large and medium ones. There is the mistaken perception that this is an elitist digital technology, just for the big ones; in fact, this technology allows medium-sized producers to access something large ones already have. And later, it is expected to benefit the small ones. We have a strong economic equation that pushes us in the direction of data federation.
Are there companies working towards this?
I will give the example of Solinftec, a consolidated digital agriculture company in Araçatuba [São Paulo State], which uses the IoT to connect machines and models of equipment from different manufacturers. Today, 65% of domestic sugarcane is harvested with their system: the IoT connects combines, transhipment trucks, and multiple-trailer hauling trucks to make the transport logistics more rational. This technology can reduce the cost of harvesting of sugarcane by more than 30%; this is an example where the IoT provides a very clear economic equation for the agricultural producer. Solinftec avoided the problem of precarious connectivity in the field by developing its own network of machine-to-machine communication that can transmit data even in remote regions and hilly terrain where many areas do not have cell phone network coverage. The company connects 30,000 machines in the field, using 100% Brazilian technology. It has no equal anywhere in the world, and it is expanding with grain solutions for the United States and Latin America.
Can this new world of agriculture help resolve the issue of excessive pesticide use?
Today, there is an economic force against the excessive use of agrochemicals because they are expensive. A system that allows more spartan use of these products would increase the profit margin for farmers. The problem is that there is not yet a complete system that tells the producer exactly how much to use, without waste. There are some initiatives in the country that target rational use of agricultural inputs. Manure, for example. If the producer also raises animals in confinement, the manure can be collected and spread evenly in the fields. However, there is a more efficient way of doing this.
What would that be?
If we have access to satellite images of the previous year’s production, we can see which fields produced well and those that did poorly. Where they produced well, there’s no need to fertilize more. He should only put manure in the field where production was poor. With this information, the digital manure spreader (a truck prepared for this function) does the job. It analyzes the productivity from the previous year and applies an input only where it is necessary, either chemical or organic. This method is already being used by farms in the region of Ribeirão Preto [São Paulo State].
What is the revenue of AgroTools and its investment in R&D?
I cannot give specifics about revenue. Last year, we grew 74.6%. In the same period, Brazilian agribusiness grew 13%. The rate of digital adoption is greater than the growth of the sector. As for investment in R&D, it is difficult to calculate because we never had input from outside, and the partners’ decision has been to reinvest everything. We pay the payroll and all the rest goes to R&D. This year we hope to grow more than the 74% last year.
How many clients and employees do you have?
Around 100 customers, mostly in Brazil. All our products are designed and developed in-house. We have around 60 employees: 45 are specialized professionals, including engineers, programmers, economists, animal specialists, agronomists, specialists in geoprocessing… Everyone learns to use digital tools. Normally, the professional is in the agricultural area and doesn’t understand the digital area, or is in digital and doesn’t understand agricultural. We need to complement training in the company. But there are advances in professional training. In 2009, a higher-education course on Mechanization and Precision Agriculture was created within FATEC [Faculty of Technology] Marília, in Pompeia [São Paulo State].
With what type of training?
It is a course to train technologists about agricultural mechanization and big data for agribusiness. It is the second of its kind in the world; the other is located in Oklahoma, in the United States. In three years, FATEC trains technologists who understand mechanics and computer science and are very curious to learn how to operate these complicated machines. The Paula Souza Center, which manages the FATECs, intends to expand this experience. The state of São Paulo has done much to lead the world in this segment.
Did you study these topics during your doctorate?
No. I was lucky, because I started right at the beginning of the internet and foresaw digital video. My thesis was on that: the compression and transmission of digital video. I got into Intel through this door and I have 27 patents on it.
How was it leaving Intel for AgroTools?
Some years ago, Intel identified four areas of digital transformation within Brazil. One of them was agriculture. When we made the business plan, we saw that it was greater than Intel’s own business in Brazil. In this strategic plan on how to approach this opportunity, we identified some start-ups, and AgroTools was one that emerged as one of the leading companies to invest in. I participated on the boards of Jacto [manufacturer of farm implements in Pompeia] and AgroTools, and when I proposed some more radical ideas they invited me to be CEO.
It was quite a change in your career, wasn’t it?
Yes, and one of the motivations for me to accept this new challenge was the opportunity for Brazil to lead the world in this business and help the country set up a digital structure in which competitors establish a national standard for interconnection. I had already done something similar with the question of video. Via Intel, I participated in the ITU [International Communication Union] of the United Nations [UN] to establish the MPEG standard, which is how digital videos circulate. I worked on that for 10 years, I know exactly how to make 188 companies that compete in the same market agree on something. I have the same hope of doing this here with digital agriculture, because the economic forces are favorable. Permeability of innovation is very strong in Brazil, and particularly in Brazilian agriculture.