AgTech Series

“Without technological advancements, traditional agriculture can’t keep up with the demands of today’s world.”  This one statement from Alice Wainwright-Stewart, CEO of Lakeland College as they opened their new Agriculture Technology Lab, says a lot about agriculture and its future (Source: Alberta Express, October 18, 2021).

The application of modern technology – particularly computer hardware and software – to farming is known as AgTech and it’s in full swing.  Join us every Tuesday for the next several weeks as we explore interesting AgTech topics and open the conversation.

You might wonder why I’m interested in this topic. After all, I’m a city kid and rarely get out to a farm.  I’m also a lawyer and consultant, so I spend most of my days at a desk.  The reasons are pretty simple, actually.

First, I pride myself on having a varied legal and consulting practice.  In Winnipeg, this inevitably leads to agriculture. I have many clients in the ag world and have learned the business during a time of significant change.  Growers, retailers, and manufacturers are all feeling the pressure that technological change brings and I’ve been fortunate to get a first-hand look.

Second, my spouse has worked in agriculture in one context or another for many years and I have learned a lot from her expertise, and as her plus-one.

Third, I love technology.  Even if I didn’t, I know it can’t be escaped.  It has an impact on every aspect of our lives so we have to either embrace it or be left behind.  Watching the collision of technology – marked by its fast-pace and constant change – and agriculture – marked by its traditions and methodical thinking – is must-see TV and a bit of a metaphor for our world right now.

Fourth, I’m intrigued by the food- and supply-chain.  From field to plate, we now have the ability to know so much more about our food and how to feed the world around us.

There is a lot to uncover so we’ll post it here in easy-to-digest bits and pieces.  The series will explore what AgTech can do, if it’s good for farmers, and how it’ll change the culture of agriculture. They’ll be some amazing contributors to the series too.  They’ll add some industry experience and insight along the way. 

What can AgTech do?

Enhance sustainability.  Perhaps AgTech’s biggest impact will be on sustainability in the face of the world’s climate crisis and population growth.  The demand for food continues to grow but some of the resources used to grow that food are becoming increasingly scarce, expensive, and environmentally harmful.  AgTech could help farmers use fewer inputs for higher yield while also reducing their carbon footprint.  On top of that, farmers who are able to use technology to develop sustainable practices may be able to increase revenue if they’re permitted to sell carbon offsets to those who haven’t developed sustainable practices.

Alleviate labour shortages.  Many farmers make up for labour shortages by putting in longer hours themselves, which means time away form their family and a greater potential for injury.  The work has to get done so if no a farmer can’t find someone to help, he/she has no choice but to just do it.  Technology could help pick up the slack by doing a lot of the heavy-lifting that once took many people and many hours to do.  This could leave more time for farmers to manage their operations, spend time with family or address more strategic aspects of their business. Marty Fisher of Sherpa Marketing suggests one new technology – autonomous tractor combines and trucks – might help lighten the load.

Improve transparency.  If done right, the application of blockchain to the agricultural supply chain could bring greater transparency and traceability of food, carbon footprints, and delays.  We’ve all heard about the supply-chain issues in recent years, as they are often cited as a prime reason for inflation. It’s not always clear, however, where in the supply-chain the problem lies.  Blockchain and social media are making it both possible and unavoidable for consumers to know exactly where their food came from and, therefore, what supply chain issues are occurring.  It will also make it possible for end-consumers to know more about the practices of growers.  This kind of transparency could, in turn, put greater pressure on farmers to ensure a high level of consumer satisfaction and improve supply-chain issues.  But it’s not all downside.  Those who get it right can potentially create a competitive advantage for themselves.

Data Boom but Now What? Special contribution from IN10T Inc. exploring the data boom in AgTech.

Big data has impacted us as consumers for years. You don’t have to look far to find consumer applications for big data. Spotify uses our listening data, as well as crowd-sourced data collection, to recommend playlists customized to each user. These suggestions appear automatic and completely customized. Similarly, streaming TV providers use data to recommend what to watch and to decide where to spend production dollars. Similar apps are taking hold throughout various industries. Big data is everywhere and agriculture is no exception.

Agriculture 4.0 is upon us and the data boom is being driven in part by increased sensing capabilities, autonomous machines, imagery, automated data collection and improved connectivity. The breadth of data and depth of each collection point leads to a richness of geo-spatial data. Big data will impact our entire industry, from innovators to farmers.

AgTech investment continues to increase with venture capital investment rising to $3.3 billion globally in the first quarter of 2022 - a 15.5% year-over-year increase (Source: PitchBook). The innovations from these companies will help us do more with less, increase production on the farm and address sustainability/environmental concerns.

How do we use big data to commercialize these new technologies with increased speed and precision?

One possibility is automation, which utilizes tech innovations to automate processes. The goal is to save time and streamline tasks. Farm automation technology includes autonomous tractors, robotic harvesters, see-and-spray technology, and analytical and monitoring tools, to name a few. Farmers are just beginning to crack the surface of what this data can do for their operations.

Unlike the farm, we see limited automation in the work of innovators where it relates to big data. Too many of us are still using traditional methods to collect and analyze data from small plot research trials, through to commercial-scale testing programs. We must move past the days of manual collection and into an era of automation. This includes gathering machine data as it is generated in the field and instantly running comparative data analyses across a range of conditions and years. This provides innovators the data they need to act with clarity when it comes to new AgTech investments and market adoption.

This is the problem IN10T is working to address. Building the architecture needed for innovators to collect and analyze data, with speed, accuracy and precision. Bringing automation to the delivery of product insights, providing a greater degree of certainty over multiple years, conditions and regions, has the power to vastly improve decision-making on product fit and advancement.  

Is AgTech good for farmers?

The jury is still out on whether all this new technology will actually be good for farmers. Adopting new technology is a mixed-bag. 

On the one hand, farmers have been embracing change in equipment and inputs for years, so change in and of itself is nothing new. A newer and younger general of farmers is also more technologically-savvy and applying their pre-existing familiarity with tech to the farm isn’t much of a leap of faith. Finally, many companies and consultants are more than willing to provide all kinds of guidance and training for the right price, so all the tools are there. 

On the other hand, some change, such as working with big data and new software tools, aren’t intuitive so adoption has been slower. Being an early adopter of new technology in the consumer space has pretty low risk. Being an early adopter in the AgTech space can have big consequences if the tech doesn’t live up to the hype. 

Moreover, all this change comes at a cost. The ongoing financial and opportunity cost to learn, relearn and update constantly changing technologies is not to be taken lightly.
 
Even though the technology can be difficult and expensive to adopt, it has the potential to make a farmer’s life better. If done well, it can provide a degree of flexibility and work-life balance that may be missing for farmers who put so much of their own labour into their operation. Essentially, the technology could change the role of the farmer from labour to management. According to Daniel Badiou of UKKÖ Robotics, farmers could rely on automation and AI to do a lot of the labour while assuming a greater role in managing and maintaining operations and making strategic decisions. This could actually mitigate some of the tech’s price tag by reducing labour costs.

Finally, AgTech could allow farmers to capitalize on two significant trends. The first is blockchain, which could allow a farmer to show end-consumers the source of their food and thus increase demand for it. Consumers have an interest in this level of transparency and AgTech could help farmers capture their imagination – and dollars. The second trend is with respect to climate change. Farmers are at the front line of both environmental stewardship and catastrophic weather events. Farmers can use AgTech to reduce their carbon footprint. Multiplied over thousands of farmers, it could make a real difference in mitigating some of the climate change that is causing more frequent and severe weather events like drought, floods and wildfires. 

Is AgTech a safe haven for investors? Special contribution from Agro.Club delving into Ag Tech investing around the world.

The Food and Agriculture Organization of the United Nations (FAO) estimated the global value generated by agriculture, forestry and fishing as $3.5 trillion in 2019. It also provides employment for 874 million people (in 2020), totaling 27% of the global workforce. That makes agriculture an important and significant part of the global economy. 

As the world population grows, we need more food and water so the demand to increase productivity is essential. Anything beyond basic, incremental increases in productivity and yields seems impossible without the use of new technologies and solutions.

To prove the demand for such advanced tools, look at the data. According to Research Informatic, the global AgTech market was valued at USD 9.11 billion in 2020 and is expected to reach USD 32.50 billion in 2027. 

Many investors are opting for AgTech because they believe:

- It has a profoundly positive impact for the planet;
- It’s one of the fastest-growing industries;
- The demand is generally stable so the industry is not as volatile as others;
- It is highly scalable;
- It offers long term growth.

With that in mind, investing in AgTech seems relatively safe and future-proof. 

Moreover, AgTech offers a high return with opportunities for growth across all levels - from an individual farmer to large multinationals looking to make a difference through their products or services. It can benefit farmers, Ag-retailers and input manufacturers by gaining access to better data, innovation and higher quality products, while startups create new markets and business opportunities.

Agro.Club Chief Financial Officer Ravi Kaushik comments: “AgTech is not only recession-proof, but continues to grow. Ag is truly the final frontier in tech disruption and we are seeing an increasing number of companies and high quality teams building new age technology solutions. They are solving some of the most complex problems in the sector, and this is creating a virtuous flywheel of investors looking for attractive opportunities and an increasing volume and value of investments which in turn is attracting some of the best founders to the ecosystem.”

Will AgTech change the culture of agriculture? Will there be new players?

Technology and agriculture have a culture of constant iteration and improvement. The pace of technology change, however, is staggering while the ag industry is typically more pensive, thoughtful and deliberative. 

iPhones didn’t exist 15 years ago and now they help farmers figure out seeding rates, soil quality, weather patterns, and the amount of herbicide needed in different parts of the field. 

The two cultures are coming together – with the net effect still to be determined. It may end up slowing down technology change slightly while also speeding up agricultural change.  

The way one gets into ag is also changing, which will itself change its culture. Access to information about farm practices is easy. There is a heightened interest in the world’s food supply and supply chain. The climate crisis is causing a near-urgent focus on ways to reduce carbon emissions while increasing yield. AgTech schools are in high demand. It all screams out for technological advancement and adoption, which means farmers will explore new ways of growing. 

Data experts like Alex Sévigny, PhD, APR can envision a scenario where old commercial buildings in downtowns vacated during the pandemic could become multi-use vertical urban farming centres run by tech-savvy urban dwellers. Think CubicFarm Systems Corp.

No question they’ll be new players that will change the culture too. New consultants have already entered the market to help farmers and other players make sense of big data and teach them about new technology. New tech ventures are applying their know-how to agriculture to provide farmers, retailers and manufacturers with more options. Companies like Agro.Club are already providing online platforms to buy inputs. Companies like IN10T Inc. are taking large amounts of farm data and putting it into a web-based interface for farmers to use. UKKÖ Robotics already has self-moving, automated barns in the field that are transforming traditional pasture-based farming into efficient, accessible, ethical, sustainable practice that can be monitored and controlled through and app on a phone. The list will go on and on.

All that said, the culture of farming is, according to Marty Fisher, pride. “Pride in farming, pride in providing nutrition for humans and animals, and pride in doing it the right way, independently. Tech will help preserve this culture.”

There is really no doubt that farmers will need to embrace technological change and constantly educate and re-educate themselves to keep reaping the rewards and control the disruption. It won’t be easy to adopt and keep up with the change but it could lead to benefits to their bottom line, work-life balance and our environment. 

Is there risk in being late to the AgTech party?  Special contribution from Canadian agriculture industry executive Collin Phillip.
  
Innovation has always been a core aspect of agriculture. From mechanization, to the improvements in genetics and biotechnology traits. The most recent innovation frontier is the abundance of digital tools ranging from satellite imagery to predictive analytics or retail portals. By 2025, this wave of technology will have the industry no longer asking, “why would I need digital,” but wondering, “how do I operate without it?” 

The significant changes that the industry saw from technological advances in machinery, genetics, and chemical innovations have mostly run their course. The days of 10-bushel yield advances from these technologies are over. Growers, retailers and manufacturers can no longer bet on their competitive advantage coming from crop inputs. Rather they must find their profit, differentiation, and competitive edge by utilizing digital tools to help improve and optimize the management decisions they make as to how to use these inputs.

As the industry increasingly adopts digital tools it will unlock further value for those already on board. Consider Google Maps as an analogy. While primarily used to find the best way to a particular location, as more people engaged with the tool it created the ability to offer unique user driven insights such how busy a location is on average or even in real time. Those familiar with and using the tool benefited first from these new features and functionality. There will be unimagined ways that digital tools will impact the industry as the industry fully embraces digital tools.

To fully unlock the potential for digital agriculture, user adoption will be key and those at the party first will realize the greatest benefit. Not just growers but also suppliers and retailers. Initially slow but then rapid adoption has been typical in agriculture for decades. Whether it be modern equipment, new biotech traits or even cell phones and smartphones, those adopting technology early tend to reap the most benefit as they stay ahead of the majority. Those able to maximize their efficiency and profitability are the ones able to acquire that next piece of land or equipment, develop the next great product, or attract and retain the best staff – all of which further accelerates their lead on their neighbours or competitors. 

The question most industry players need to be asking is not “should we embrace digital agriculture” but rather, “What is the risk of NOT doing so?” More importantly, the key question industry growers, suppliers, and retailers should be asking themselves is whether they are willing to take the risk of being late to the AgTech party. Those at the forefront of digital adoption will lead the change and shape the transformation to best suit their needs thereby reaping the greatest share of the benefits.