Pathways to Precision: Managing Risk With Germplasm

No one can know what the conditions will be for the next growing season. Is it possible for a grower to act with precision even when the most important factors are inherently unpredictable?

This is not unlike the dilemma faced by an investment advisor who manages a portfolio for clients interested in growing their financial security. Nobody really knows which way the markets will turn over their “growing season.” So peoplpathways_precisione turn to brokers to meet very specific financial goals, such as providing for retirement or saving for college. Some individuals are willing to risk a lot to achieve the best possible returns over time. Others are not so daring. They cannot afford to lose any of their investment and make it a priority to protect against the downside.

A similar set of tradeoffs exist for farmers seeking to benefit from the upside while protecting against the downside. A seed advisor can only recommend the right germplasm if the growers reflect on their upside desires and how much risk they are really willing to tolerate. The advice will vary with the goals, just like the advice given by the investment advisor.

Consider, for instance, that on really good soil, seed genetics with maximum potential will deliver great results in good years. In dry years, however, those good, deep soils will have much less stress than other fields.  So, maybe that high-performing germplasm will still be the best bet.  On rough, light, variable soils, even in a good year, seeds with high-performance genetics will not fully express their potential. So the selecting the right germplasm means finding the right genetics for the conditions and fitting that within the risk tolerance of the grower.

As we discussed in the last article in the Pathways to Precision series, there is no such thing as the “best” germplasm without considering the growing conditions. There is only the best germplasm for a given purpose.

It is the same in the world of investing, where brokers seek to manage risk for their clients. No honest investment advisor has a one-size-fits-all investment vehicle. They all must be tailored to the client’s specific needs.

There are safe bets, like municipal bonds for investors who are near retirement and need safe, reliable options. Younger investors might opt for stocks in start-up tech companies, where the potential for growth is as large as the risk of complete failure. Others, who do not seek the extremes—maximum growth or lowest risk—will want a mix of equities and equity types that will diversify their portfolio.

This can be done in a number of ways. Investing in a group of similar equities creates a fund that ensures that a single business’s failure will not take down an entire investment portfolio. Or, some might seek geographic diversity by investing in emerging markets in the event the domestic market falters. Structural diversity can be achieved by favoring, for example, high-dividend stocks, and so on.

While the full range of investment vehicles can be incredibly complex, the strategies behind their use all boil down to a simple principle: managing risk through diversification. Among the most sophisticated are investments that respond directly to market conditions, such as options and hedges that more closely tailor upsides and risks for clients.

The Germplasm Strategy

Germplasm diversity can fulfill a similar role for farmers. Like hedge investments, germplasm diversity can increase the upside at the cost of choices that involve incremental risk. An agricultural analyst who is armed with facts about the grower’s upside desire, downside avoidance preference and the regional conditions—the geography needed for proper placement and agronomic practices—will be in a position to begin tailoring germplasm options.

It is data analytics that make this possible.

By tracking the historical performance of seeds, weather patterns, soil conditions and all the relevant variables, we can know within a given level of confidence the range of expected performance for various growing options. We can validate such analysis against actual results to confirm the value of the analytical methods. Armed with this knowledge, the agricultural analyst can make better recommendations that are specifically tailored to the grower’s precise needs.

Forget about tradition and guesswork. What worked last year is not necessarily what will work for the upcoming harvest, just like past performance of a particular portfolio is no guarantee of future investment results. Data analytics enable acting with knowledge in the face of highly variable conditions.

What germplasm analytics do is answer a series of question for both growers and their suppliers. Farmers will want to know, “What is best for my geography and field conditions?” They also want to know what is best for their strategy in terms of risk management and yield upside. Most importantly, they answer the question about the trustworthiness of the analysis, the facts that enable educated decision making, and who will best manage the germplasm in the long-term.

Seed companies also have their most important questions answered when using data analytics, including: “How do we best optimize our global germplasm pool?” Data analytics show how to maintain products that fit localized needs and how to bring insight and facts to the market for best utilization.

With these answers in hand, growers are on the pathway to making informed choices that overcome uncertainty with knowledge. The result is better and more profitable harvests.

Joseph Byrum, Ph.D., MBA, PMP, is Senior R&D and Strategic Marketing Executive in Life Sciences – Global Product Development, Innovation and Delivery at Syngenta. Twitter: @ByrumJoseph

 

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