The Client’s TaskA large Russian agricultural holding was interested in long-term optimization of its existing crop rotation in order to maximise profits in agronomic constraints and market data in short-term and medium-term periods.
Solution by the Deloitte Analytics InstituteTo solve this task, we developed a comprehensive approach consisting of the following stages:
- Task Formulation Experts of the Deloitte Analytics Institute have collected information on the expectations, problems and requirements of the project stakeholders. They have specified the system requirements and formulated the client's vision of the results.
- Data Collection and Preprocessing At this stage, the holding’s historical data on fields (history of sowing, size and number of fields), yields value, sowing costs, and average market value of crops in the region have been collected. In cooperation with the holding’s chief agriculturist, tables of the best forecrops, the period of the return of crops to the field, and water consumption have been compiled. This data have been cleaned, the names of crops and dimensions have been unified, all the information has been presented in tables.
- Data Processing and Algorithm CreationThe solution was based on the Modern Portfolio Theory that enable calculation of an efficient frontier and selection of optimal portfolio for a given level of risk. In order to determine the maximum and minimum share of each crop in the portfolio for all the fields, suitable crops were determined based on agronomic and technical constraints. Following that, this information was aggregated for the entire farm fields and transferred to the algorithm in conjunction with the calculated gross profit from the crops. The ready-made solution allowed optimization of the crop rotation for specified periods and selection of different strategies based on expected profit.
- Prototyping of the user InterfaceThe results of this analysis were presented as an online platform that allowed to apply various strategies, select a specific period, and view potential optimization outcomes.
Modern Portfolio Theory
ResultsThe Deloitte Analytics Institute has provided the client with a system allowing optimization of crop rotation for a given number of crops for a random number of fields in the long-term and the medium-term. Testing results of historical data allowed to evaluate the system’s effectiveness:
- Investment strategy of crop rotation optimization gives gross profit growth of up to 30%
- Conservative strategy of crop rotation optimization gives gross profit growth of up to 7%