DISRUPTION ON THE FARM AgTech Balances Tradition and Technology
By Stephanie Metzinger F armers are tasked with the critical job of feeding billions more people while simultaneously battling challenges around stricter regulations, new consumer preferences, and environmental sustainability. With the rapid development of technology, they can now fight this arduous battle with more tools in their toolbox. Agriculture has always had a relationship with technology, but it wasn’t until about six years ago that the intersection between ag and tech blossomed into a game-changing movement. Investment in agtech was relatively flat prior to 2013, and if there was interest, it centered on biotechnology and seed genetics. However, there was a significant shift that year. Agtech grew 75 percent to reach $860 million of investment across 119 deals. Agtech has continued to soar, receiving $16.9 billion in 2018—a 43 percent year-over-year increase, according to AgFunder. “When I imagine agriculture in 20-30 years, I envision an incredibly high tech industry that would make a Semiconductor foundry look like a blacksmiths shop,” said Rob Leclerc, cofounder/ founding partner of AgFunder. “Working backwards, we’re not going to get there in a stepwise fashion but rather through this wonderful and terrifying process of creative destruction.” Adoption of agtech still lags among fresh produce farmers Despite the fact that investment continues to increase,
adoption within the U.S.-specialty crop sector remains slow. This is especially true with fruits and vegetables. “We see technologies that, if given the chance, would add precision and reduce costs within an operation but they are not readily picked up because they come with an implementation costs related to integration with existing systems,” said Hank Giclas, senior vice president, strategic planning, science & technology at Western Growers. “Yes, this can be difficult. But in the long run, the implementation and deployment will pay off.” Even crippling issues, such as the increase in labor costs and decrease in labor availability, have yet to move the needle on significant market adoption of labor management technologies, automation and mechanization. Seana Day, partner at Better Food Ventures and The Mixing Bowl, creates an agtech landscape map annually to guide the industry on the latest technologies being developed. Through her research, she has noticed that there has not been a significant market adoption of labor management, savings technologies or precision irrigation. “I think a lot of the reluctance to adopt has to do with the difficulty in showing ROI in a new system and equally, the existing infrastructure isn’t designed for the new technologies to do all they promise,” she said. However, other ag sectors have seen significant success in the adoption of technology. Take, for example, grains and oil seeds. Cost-saving technology delivering herbicide tolerance in canola and insect resistance in corn have provided farmers with productivity improvements through a combination of yield improvements and cost reductions. “When I look at successes in other commodities, I think the big manufacturers and input companies have done a better job of integrating new tech and playing a collaborative role in the agtech ecosystem,” said Day. “This has resulted in more acquisitions of innovative startups, more pilots and better distribution of tech through their channels and demonstrated business value.” Consumer experience top of mind for startups Challenges with agtech adoption can also be attributed to direction of investment. In 2018, $10 billion was invested in downstream food tech companies that focus on improving the consumer experience. Upstream companies received $6.9 billion, with most of that capital going into vertical farming, alternative proteins, genetics and biotechnology. Only a small amount of capital has gone into solving problems on the farm or
WG hosts numerous events to connect startups to specialty crop growers.
12 Western Grower & Shipper | www.wga.com JULY | AUGUST 2019
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