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Collaboration, Health, and the Future Farmer: Key Lessons on the Future of Ag
The food and agriculture industry is changing, and it’s happening faster than many realize. At our event two weeks ago, we covered several topics including agricultural exports, the convergence of food and health, the rise of alternative proteins, and the potential of indoor farming. These are my five key takeaways from the discussions of the week.
The supply chain is hungry for innovation information: The broader food and agriculture community wants to understand the diversity of innovation that is happening in the industry. From field optimization to AI and automation, to the supply chain, and more, start-ups and other disruptors are working in every corner of ag right now, developing exciting new technologies, but too many farmers, executives, and others don’t know about it yet. That disconnect needs to be solved if ag innovation is to thrive.
“Being transparent and being able to disclose and share your supply chain details with other people is one of the bigger challenges that we face,” said Jack Scott, vice president of sustainability at Nestle, on the panel about hyperlocal data. “It’s about being able to dive into the data, being able to actually walk the supply chain back, and get down to the origin. The data only gets us so far.”
New business models can be as disruptive as new technology: The tech industry has a bad habit of falling back on business models that it already knows will work, usually inspired by the typical Silicon Valley software as a service (SaaS) model. But agriculture is different, and it’s time to come up with business models that actually help the industry solve some of the problems it is facing.
“Agriculture has seen a number of really interesting technology companies over the last 10 years that have been constrained by the ecosystem,” said David Perry, CEO of Indigo Agriculture. “But it’s not enough to be a great technology company. You have to solve the business model problem, too, so that you can maximize the value of that technology.”
The good news is that this is an excellent time for start-ups to be solving these problems, thanks to the consolidation of input companies, pushback from consumers on existing technologies, the emergence of new technologies like microbiology and data sciences, and the fact that farming is not very economically attractive right now. It’s all making farmers more willing to experiment. “It seems like an almost optimal time to build something that fundamentally reshapes agriculture,” Perry said.
Collaboration is needed: At the same time, disruptors need to be working more closely with their end customers. Innovation cannot happen in a vacuum. We can’t lose sight of the farmer on one side and the consumer on the other.
“Start-up companies like us have to collaborate with the bigger companies in the industry as well as the farms,” said Allison Kopf, founder and CEO of Agrilyst, a Brooklyn-based start-up working on data-backed tools for indoor farmers. “I think there has to be a neutral party in the middle that deals with collaboration along the supply chain to amplify the farmer’s voice, but also to amplify the things that the CPGs are doing that are great. We do care about sustainability. We do care about the farmer’s voice. We do care about all these different things, but there has to be a trusted standard of transparency from somebody who doesn’t necessarily have skin in the game so that we’re all on the same playing field.”
Inputs are at risk: The size and concentration of the inputs markets — which include improved seeds, fertilizers, chemicals, irrigation systems, and more — make them ripe for disruption. These are tools that nearly the entire industry uses and relies on.
“These technologies used to be controlled by six companies, and that is about to be three or four big input companies,” said Indigo Agriculture’s Perry. “But most agriculture is a commodity and if you’re producing a commodity, you get paid for volume; you don’t typically get paid for sustainability or quality. Reducing chemical use or reducing fertilizer use is certainly worthwhile, as it has some immediate benefit to the farmer because it decreases input costs, but what if by doing that the farmer could also garner a premium for the crop they’re producing? If they got paid more for using less fertilizer or fewer chemicals, that could really help drive adoption.”
The future farmer is an industry-wide concern: The human side of agriculture is changing as well, from the manual laborer who works in the fields to the next generation that will run the farm. How will the farm of the future address these HR concerns in the face of automation and changing markets? What new doors will this open?
“There’s a lot of excess capacity with equipment right now, so it sits idle a lot of the time,” said agricultural economic Renée Vassilos, the founder of Banyan Innovation Group. “What autonomy will really light up is 24-hour-a-day farming. If you are removing the operators and the fatigue element, that really lightens things up in terms of efficiency gains and the potential to leverage equipment across different operations. Perhaps there’s more opportunity to share equipment.”
And this is all just getting started.
We are still in our infancy of truly understanding the role of food and agriculture in human and animal health, and there is much more work to be done in that area. Steps are being taken, but we still don’t know what we don’t know, and there is a lot of growth to come over the next few decades that was only hinted at during Davos on the Delta. What happens next is up to the industry — the entire industry, including farmers, start-ups, business leaders, investors, and more — but whatever it is, it will lay the groundwork for the next 50 years of food and agriculture.
Editor's Note: The author of this article is Craig Herron. He is vice president at iSelect Fund, a venture capital management group focused on a variety of sectors including agriculture that recently organized an event called Davos on the Delta for entrepreneurs, investors, farmers, and agrifood corporates. This story originally appeared in AgFunderNews.
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