Will 2024 Be the Year of Automation? By Walt Duflock, Senior Vice President, Innovation
A lot of spaces have been overhyped in AgriFoodTech the last couple of years. Controlled environment agriculture (CEA) got $7 billion in investment, and the unit economics for vertical farming facilities and SKUs is still far too high. Alt-protein received similar amounts, and Beyond Meat and Impossible Burger are facing massive headwinds. Both spaces are likely to see fundraising headwinds as the space looks to be trending closer to 2022’s $30 billion in venture investing compared with 2021’s $50 billion. Meanwhile, the next hype factor appears to be around Environmental, Social and Governance (ESG) investing and carbon marketplaces, with a focus on sequestration. Much of the investments to date have been in marketplaces that are generally acknowledged to be hard to verify, hard to audit, and in some cases, hard to even measure. What could go wrong as money pours in?
In many cases, the investments in climate and ESG seem driven by food buyer specifications and general retail willingness to set targets they may or may not believe in strategically. This is a poor way for companies to make decisions. Even more problematic, the opportunity cost of these poor investment decisions is often overlooked. If we hadn’t spent $7 billion on CEA over five years, how much closer would we be to solving food safety, or how much further would spaces like biological controls be in terms of scale and commercialization? That is not all. With the slow down to $30 billion in 2022, venture investing will now not be able to fund startups that would have otherwise been funded in a $50 billion market space. So not only do the bad investments hurt the companies that never should have received the money due to the hype factor, but they also hurt the startups in other segments in the AgriFoodTech space. We can all hope that investors who were burned by some of the hyped categories have gotten reality checked in board rooms enough that next time they’ll do more due diligence. Similarly, we can hope that startup founders seeking quick fame and fortune will find it more challenging to secure funding. So, what about an area the Western Growers Innovation team spends a lot of time on these days—automation? It’s a good question. Let’s look at automation first. Many startups have secured significant fundraising in the past couple of years and are starting to deliver robots to the marketplace that work at grower economics for all sides. There are still hundreds and not yet thousands of these machines in farming operations but there are some very positive signs beyond just the fundraising. At FIRA USA, the messaging from startups was very focused on use cases, problem statements and economics from the grower’s perspective. There are customer stories and solid answers to questions about support and product availability in different regions. The space is maturing, and individual startups are maturing as well.
The demo area at FIRA USA 2023 in Salinas included 16 demos in vegetables, orchards and vineyards, and there were over 55 exhibitors. Over 2,000 attendees came to the show. There was not much hype and a lot of good conversations. It is becoming clear there will be a range of price points from Burro/Farm-NG ($15,000 to $25,000) to Stout/ Carbon Robotics/Farmwise ($350,000 to $400,000, $1.4 million, $1 million) that can do a variety of functions on farms. AI is helping push automation solutions to do more things to more crops and weed varieties as the AI can learn faster for each new plant. Finally, international startups are entering the U.S. market and U.S. startups are entering global markets, and the search is on for effective partners all over the globe. Multiple sprayer solutions (GUSS and Robotics Plus) and autonomous solutions (Bluewhite, Agtonomy) are in market and prepared to scale. Frequent conversations about manufacturing partnerships and dealer partners suggest that the product set is rounding out with a complete ecosystem forming around it. All of that said, it is still early and there is much that is being built that needs to be completed for me to believe the automation space will have a break- out year in 2024. I do believe that 2024 will be a
FIRA USA 2023 in Salinas
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NOVEMBER | DECEMBER 2023
Western Grower & Shipper | www.wga.com
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