Exploring the Potential Risks of AI for Food and Agriculture Companies
Key Insights:
The swift advancement of artificial intelligence is prompting agricultural companies to openly address the potential challenges of adopting such technologies in their processes and products.
Archer-Daniels-Midland Co. outlined in its most recent annual report that the speed of AI integration amidst a complex regulatory environment exposes the company to technical, legal, and risk-related issues.
Seth Goldstein, an equity analyst with Morningstar, mentioned to Agriculture Dive that while he does not perceive an immediate AI threat for ADM and similar agricultural firms, there are several scenarios that could lead to adverse outcomes.
Analytical Perspective:
Generative AI is rapidly transforming various sectors, compelling companies to navigate both its advantages and the associated risks.
A recent survey conducted by Arize, a technology platform, indicates that around 20% of Fortune 500 companies reference generative AI or large language models in their annual filings, with approximately 70% acknowledging the technology’s potential as a security or competitive risk.
The sectors most worried about generative AI include media and entertainment, software and technology, and telecommunications, as per the survey. However, industries such as retail, manufacturing, and consumer packaged goods have also issued risk warnings to their investors.
In ADM’s annual report, the company highlighted concerns such as data privacy and security risks, loss of innovation opportunities, misleading communications, and potential competitive drawbacks associated with AI. Nevertheless, according to Arize, many enterprises may merely list these risks without providing a holistic view on the technology.
Among agricultural and food sectors, ADM and its rivals leverage generative AI systems to hasten and enhance research and development for new flavors and ingredients, an effort that can be resource-intensive, as noted by Goldstein.
Goldstein also pointed out that advanced language systems might take over some trading functions within ADM’s grain operations.
“These systems could potentially fully replace a trading desk,” he remarked. “However, I don’t foresee any immediate risks brewing.”
Although ADM did not respond to requests for comments, the Coca-Cola Company, while a strong advocate for AI, has shared some apprehensions regarding the technology in its financial disclosures, primarily about the potential pitfalls with third-party service providers not adhering to its governance policies.
A significant concern for companies in the food and agriculture sectors regarding AI revolves around data privacy and security. A Retail Economics survey revealed that nearly 47% of food retailers consider legal and regulatory issues as major obstacles to investing in AI technologies.
Maria Sanchez completed her Bachelor’s degree in Plant Sciences from the University of California, Davis, in the USA. Her studies focused on plant genetics and biotechnology, with an emphasis on developing disease-resistant crop varieties. Maria has contributed to several research projects aimed at improving crop resilience to climate change and is now pursuing her Master’s degree in Plant Breeding.