Superheroes not Unicorns: AgTech in 2018

We all eat. Most of us invest. Some of us were raised on farms, like me. Not very many of us, less than 2% in the US, continue to farm.

So AgTech, the digital innovations for food production, should already be on all of our radars. As illustrated in the just published Thrive Top 50 in AgTech, it's not just one thing or one area that needs AgTech innovation. There are many.

I was surprised by how the big the challenges are for today's farmers. It is just these challenges and global trends that will propel AgTech to potentially become one the most important high tech markets in 2018 -- and for decades to come. 

Big business. Big opportunities for AI, Blockchain, IoT and Big Data

To put it in perspective, agriculture is a $3 trillion industry. Today, one US farm feeds 165 people. By the time today's newborns hit their 30th birthdays, farms will need to grow 70% more food to keep up with the global population boom.

While more people need to eat, more food needs to grow on a hotter, drier, more stormy planet.

2017 was the second hottest year on record. We also lived through record-breaking droughtglobally while unprecedented storms and hurricanes caused unprecedented cost and losses.

Not surprisingly, to fund game-changing tech that can handle the evolving needs of agriculture, 2017 also broke records for AgTech investments, surpassing $1.5 billionExits for AgTech entrepreneurs were also significant, with big players like Dupont and Deere & Co. making acquisitions.

Major non-industry insiders like SoftBank also invested $100s of millions in 2017 on indoor farms and tapped its networks of key partners in Asia and the Middle East to expand market reach.

Banks are also entering the fray as evidenced by today's announcement of the first-ever use of blockchain to complete an agriculture commodities exchange.

The loss of tillable acres continues to spur the urbanization of farming. Companies like AeroFarmsBright AgroTech and BrightFarms, with their vertical farms and warehouses stuffed with food growing without sun or soil, are changing how the world envisions a farm.

Farmers are aging, overworked, and farms, understaffed

A primary benefit of AgTech involves lower labor costs and needs, the human capital side of innovation, which is crucial since farm labor is entering a stage of crisis.

As depression rates and suicides amongst farmers jumped to unprecedented numbers in 2017, the world is becoming more aware of just how tough farming can be.

Farmers are also getting older. The average American farmer is now 57 years old – nearly 17 years older than the average American worker. They are also uncommonly steady and experienced: more than 80% have been on the same job for 10 years or more versus the average 4.6 years for other American workers.

Pair these trends with declining profits. More than 50% of US farm operations now lose money. So farm owners typically require second or third non-farm jobs to make up the difference.

Accordingly, farmers are comparatively overworked, working a third more hours than their non-ag neighbors. Agricultural workers average 50+ hours a week. Other industries’ employees average 34.5 hours per week.

Ag labor shortages also hit new levels in 2017. Immigration policies and hard working conditions contribute to shortages as well as typically low wages. To answer the shortages, many farms began resorting to expensive guest worker programs and adding benefits like paid medical insurance and time off to entice more laborers.

Tech is usually a great solution to help lower labor strains and costs. Companies like Farmer's Business NetworkSpensatechElectric ImpClimate Corporation and SWIIM are creating data-driven IoT devices and better operations management platforms that monitor and control pests, weeds and irrigation by combining remote sensors with cloud based analytics.

Whatever the solution, AgTech needs to be low cost, offer great UIs, support secure mobile access and provide realtime customer service during “non-business hours” (aka: when the sun isn’t shining).

Smart AgTech entrepreneurs will also take a lesson from Apple and seek to embed their products in local centers of learning. Most rural communities have some form of career technical education, community college and satellite campuses that need to come up to the 21st century.

Change mitigation and adaptation

2017 set the record for losses from natural disasters, with hurricanes, floods and wildfires exceeding $300 billion in losses globally. Millions of farm and forest acres were impacted. Experts have predicted that with climate change, such "unprecedented" events will only increase in number.

Conversely, agriculture is a major contributor to climate change.

Agriculture and food related industries are estimated to generate 30% to 50% of the world’s greenhouse gas emissions. Up to 70% of all freshwater is used for agriculture.

When it comes to AgTech's role in climate change adaptation and mitigation, a place to start is to expand cross-discipline data sharing. As seen in manufacturing and supply chain industries, systemic, advanced big data analytics creates efficiencies that revolutionize and optimize operations. Examples include Farmers Business NetworkClearLabs, and Mavrx.

Policy and public finance

Ag-tech typically includes biotechnology, predictive data analytics, cloud services/SaaS, connected devices, robotics and automation, and next generation farms, such as vertical and indoor farms. Rarely are technologies for energy efficiency or renewables included in the market -- but probably should.

Food processing and production, for example, remains one of the world’s leading users of electricity.

Floating solar farms that generate electricity while hovering over crops or water storage ponds, helping to lower evaporation of crucial irrigation sources, are now becoming viable alternatives to land-intensive solar farms and coal mining.

Solar technologies can even help the bees. Seriously. A new study in 15 sites across the US is looking at types of crops to grow around solar farms that entice bees and other pollinators.

In other energy innovation, the US’ largest dairy, HP Vernon just went online with new anaerobic digesters. The technology was created by 30 year old Global Water Engineeringand will eliminate up to 99% of organic waste from water and generate energy to power its own facility. 

Along with policies that support innovation, public finance has a huge role to play in expanding use of renewable technologies and efficiency in agriculture. For example, the California Energy Commission just awarded $250,000 to San Francisco State University to work with the state’s food processing industry to cut energy use throughout the supply chain.

Unfortunately, we are also seeing how policy harms innovation. The new 30% tariff on solarimports hurts not only farmers by making it more costly and less accessble, but also costs US jobs.

The Future = AgTech superheroes, not unicorns

Cities become farms. Farms become power plants. Farmers automate and become more profitable. Stress and worries are lowered. And the world is fed.

It’s a lot to ask of AgTech pioneers, policy makers and the investors who back them. Yet there are plenty of great examples now coming to market. AgTech entrepreneurs: the superheroes of the future? Time will tell.

Laura Stadler