As American farmers struggle through the fourth year of a historic dip in world grain prices, they’re increasingly looking to urban tech geeks in places like the Silicon Valley for answers. Last week at the Cleantech Forum, agtech leaders gathered to consider what solutions will rise on the 21st Century farm: Wade Barnes from Farmers Edge and Chris Paterson from Bayer Crop Science joined Analog Devices blockchain project lead Rob O’Reilly and Chuck Templeton from S2G Ventures.
Innovations in sensors, communications, and AI are bringing Internet-of-Things (IoT) solutions that were first developed for sophisticated manufacturing to precision agriculture.
Data and communications technologies give farmers access to a flood of data about their farms. Hyperlocal data on moisture, soil, and temperature can help growers increase yield, minimize the use of costly fertilizers and pesticides while giving them the agility to respond to unpredictable weather. The largest and the most sophisticated farms are showing that agricultural technologies raise farm yields and profitability. Retailers and specialty food producers are paying premiums to monitor the status of crops before they are delivered. With these early successes, venture investment in agtech is rising. More money went into funding agricultural technology start-ups last year than the previous two combined, but they continue to be cautious about the potential for selling technology to farmers like those in the US. How many of the 2 million US farms will join the 21st-century agtech revolution?
The battle for the hearts and minds of US farmers will center around helping them get beyond data collection and analysis into action. How can they get beyond a sea of data and get out to their fields? How can they lock in profitable crop sales with data without compromising their operations? According to the latest US census, the largest 10 percent of US farms own more than 70 percent of cropland in the United States; the top 2.2 percent alone takes up more than a third. The tiny three percent of the 2.04 million US farms that are considered large account for 42 percent of the production. Experts estimate that today large farms can extract nearly four times the value of production of major arable crops or principal livestock breeds per acre that small farmers can. Although 75 percent of farms do not generate enough revenue to cover costs, more than 60 percent of the largest farms can boast margins of more than 20 percent.
As agtech companies grow beyond early adopters, their success will depend on how they can help the 97% of farmers battling to survive consolidation. Farmers are looking for data management solutions that seem to match the DNA of Silicon Valley start-ups, bringing complex data streams to streamlined consumer applications like Google Maps, Zillow, Mint or Venmo.
“We’ve created a scalable solution that works for our global network of growers and one that can be tailored to support the needs of individual fields, from grain production in Brazil to variant weather in Australia. Predictive forecasting models are the next step towards achieving higher global crop yields, sustainably,” notes Barnes from Farmers Edge.
For agtech start-ups to succeed, they need to reach beyond the farms with multi-million dollar combines and tractors.
What would be the value of a technology that would provide a single dashboard to help growers get out of the office and into the cab of their tractors? What would it take to bring a mass migration of growers to adopt that platform? Would that opportunity provide the 10x returns on investment that define the sweet spot for venture capital investment?