AgTech: 4 Reasons it Matters Now More Than Ever
Updated: Jun 10, 2019
Digital technology applied to agriculture; a topic fraught with varying opinions as to its validity and usefulness to the farming community. While the space has plenty of strife, it is still one of my favourite topics to discuss in agriculture today. The reason I’m passionate about it is because I do believe there will be even more value added to the farm and agriculture industry over the coming decade, thanks in large part to agtechnology; sensors, artificial intelligence, variable rate technology, e-business, the internet of things and all of the other digital technology out there – it’s simply in how the technology is applied and leveraged that will determine just how much value there is or isn’t and how fast it takes off. Through better decision making in agronomics or marketing, time and cost savings and more, the average farmer will be better off in the next decade than they were in the previous one.
This has been said since the 1990’s, so why is it different now? What indicates that this time it’s different? Here are 4 reasons I think agtech is here to stay and will positively influence agriculture in the coming decade.
Note: There is other technology outside of just digital that will impact agriculture, for the sake of this post I am just focusing more narrowly on digital technology.
Before diving in I need to digress for a minute: I want to clarify something when it comes to agtech and the aforementioned buzzwords like artificial intelligence, the internet of things etc; these technologies are all tools and should be thought of as such. To put it into context lets take a hammer for example: a very effective tool when used in conjunction with a nail to build various things. But what if we take a hammer and attempt to use the wrong end (hooked end) to impale a screw into a piece of wood to try and build something? Same tool, just used improperly and in conjunction with another tool it wasn’t intended. In this instance, the outcome isn’t going to be what we expected. This is the same for agtech. If we try and apply “machine learning” to an uncalibrated, small, garbage data set what is the outcome going to be? If we work diligently to seek out and obtain sound data, then work to apply machine learning to achieve a desired insight in an area like modelling crop growth and insect stages for example; then machine learning can have a more significant impact.
The framing of these technologies needs to be put into context; machine learning won’t save the world, and neither will blockchain or any other piece of technology; it’s the convergence of these tools used in unison to solve problems and identify solutions in farming that will lead to better outcomes gained for farmers and those that support farmers.
The 4 Reasons It’s Different This Time Around
1. Investment Dollars and Who Is Investing
The amount of investment in a particular industry or technology doesn’t necessarily guarantee success; if it did we would see Segway’s on every street corner. However, increased spending in a particular space does tend to create a virtuous cycle of more companies and more capable people coming in which increases the amount of new ideas/technology and rate of improvement in those ideas/technology. In 2018 alone according to AgFunder $6.9 billion USD in venture capital was invested in companies focused on FarmTech (technology that enhances the farming operation). This was 44% growth over 2017 and over 4.5x the amount invested in 2013, the year Monsanto purchased Climate Corp. for almost $1 billion USD. Lots of money right? This doesn’t even include other forms of investment such as government, companies that bootstrap themselves with self funding, nor does it include in house R&D expenditure of the big ag companies like Bayer CropScience or Corteva just to name a couple! I have been struggling to find the data for what the investment in agtech was from ~1995 to ~2010, but my assumption is that those 15 years pale in comparison to even the last 5 years
Then we have to look at who is investing in the agtech space heavily. Keeping things extremely simple, if we look at the largest seed, crop protection and fertilizer companies they have all made acquisitions, made significant investments in house or strategically aligned with other companies with tech domain expertise. Corteva’s heritage Dupont acquired Granular and had an in house agronomic platform in Encirca, Bayer now has Climate Corp, BASF has xarvio and Syngenta has AgriEdge Excelsior. On the fertilizer end of things Yara has acquired companies and strategically aligned with IBM, a strong artificial intelligence and computing player and Nutrien has acquired numerous companies like Agrible and Echelon and pledged 100's of millions of dollars of investment every year in the tech and e-commerce space. This doesn’t even consider companies like CNH, John Deere and other machinery companies or organizations like Land O Lakes. The list could go on!
But to top that off – Google and Microsoft are investing in the agtech space with Google Ventures invested in Farmers Business Network and Microsoft using their Azure cloud program to power what they call FarmBeats. These organizations don’t need much of an introduction in terms of what they are capable of doing in the tech space.
Organizations of this stature putting significant chunks of resources into an area increases the likelihood of seeing benefits to the farming community.
Now couple all of this with Moore’s Law, the theory that the number of transistors in an integrated circuit doubles about every two years which typically means increased computing power for lower costs, helps make the likelihood that technology is going to come down the pipe in increasingly cost effective fashion even more likely.
2. More Expertise in the AgTech Domain
It takes time for information and expertise to be built up in new areas of any industry. AgTech is no different. If we look back at the early 90’s and early 2000’s, farmers and agronomists didn’t have the same kind of expertise or access to information that there is now, nor were there the kind of experts that are accessible and leading the industry today. For someone interested in precision farming there is opportunities to work with leading organizations in North America like Crop Pro Consulting, Farmers Edge or other organizations to better understand the ins and outs of the precision world and what works or doesn’t work . There is the ability to connect with Terry Griffin on social media, a leader in precision agriculture for those that want to. On top of this there is specific programs in college’s being created to train and develop young professionals coming into the industry and the future leaders of the industry, a great example is what is being done at Olds College in Alberta with their Techagronomy program as well as their Smart Farm initiative. Combining technology and ag doesn’t stop there; I met up with Carl Lippert of FeedX and he actually has degrees in both ag and computer science, something I think that will become increasingly common especially with announcements like those out of Illinois where they are actually beginning to offer computer science and crop science in one program! The ability to tie technology, agronomy and the real life complexity of farming together was a rarer skill set just a decade or two ago – in the next decade this skill set will be the norm for not just young agronomists, but farmers too, driving adoption and overall success with technology in farming operations.
3. Consumer Demand Trends
The trends towards traceability and sustainability (regardless of how one defines it) can’t be ignored. Consumers want to know where their food is coming from, whatever that may look like. While some will look towards blockchain in this point, there is a step before that; it’s simply utilization of technological platforms for basic recording of farm practices and farm inputs being utilized that should see more uptake of database type systems like Agrian or Trimble Ag Software to name a couple. This step to collect information, record it, and store it is a pivotal move for many farmers to begin to see success with any type of other technology within their farm operation. Those working with vertically integrated companies will likely be shifting first, such as those in the potato industry for example. Because I think this consumer trend will increase the uptake of these types of platforms vs. pen and paper or Excel (as well as it does work for many), I think the value delivered to the farms bottom line will start to show through.
4. Comfort with Technology
Technology is becoming ubiquitous in our daily lives. Our comfort with it, and even reliance on it, grows what seems like daily (I would have a panic attack if I left my home without my phone!). Farming is a business and technology needs to show an economic benefit, however I do think with a growing comfort and reliance on various types of technology in general, it increases farmers openness to trying new technology on their farm; something only the savviest farmers were doing a couple decades ago. It is this comfort with technology that will increase openness to try new tech, such as variable rate fertilizer or trusting a model for your soil fertility recommendation, that will open up the understanding of what’s possible, or not possible with certain technologies.
If we start looking at the average age of the farmer we know that over the coming decade there will begin to be transitioning down to younger generations in many cases. These individuals that will be taking over in the next decade are the individuals that are under 40 today and have a familiarity with technology and desire to play with it that just isn’t as typical on average in the older generations.
How Does Ag Stack Up to Other Industries Today?
One other reason I think we will see increased uptake and success with agtech is that we are lagging many other industries today; a sign there is opportunity for increased efficiencies. In 2016 there was some work done by McKinsey actually showing that ag was the least digitally advanced industry there was – regardless of how much stock one puts into the information, I think we can take away that there are some areas we need to be looking at in ag where tech has the ability to enhance what we do day in and day out. See Image 1.1.
What might hold back technology?
I have heard some say tighter margins in the farm industry may increase the demand for technology, while I can see this point of view I think that may be one hindrance to rapid adoption of ag technology, at least in the shorter term. Even if there is a technology that make sense there can be up front costs or capital expenditure needs that just aren’t realistic for some farms in many instances. This is something that could mitigate waves of uptake and use patterns.
Lack of simplicity may also hinder uptake. Today the agtech space is fragmented and not all technology, platforms, apps etc work in unison, causing a less than stellar user experience for many farmers. Many companies want to be the farmers “hub” for data storage and one-stop-shop for everything required from crop scouting data, imagery, inventory in bins and beyond – something that is going to be essential to simplify moving forward. This race will include a lot of “bleeding” for companies, but once the space increases API’s and consolidates we should begin to see more success stories and even more opportunities for agtech to positively impact the farm.
Not all technology out there is going to have a positive impact; we will see many companies and varying products and services be dropped faster than you can say “agtech”. But because of the level of investment being made, the new sources of expertise and comfort with technology there is going to be agtech and specific companies that will evolve the way the ag landscape looks in the next decade.
For farmers, agronomists and retails and everyone in ag – times have changed - it's not about writing these tools off because they haven’t worked in the past, it’s about identifying where they have the best fit on the farm moving forward and leveraging them accordingly.