Welcome to the fourth agricultural revolution. The first was concerned with the transition from hunting and gathering to settled agriculture, the second saw a commercialization of farming, and the third agricultural revolution, also known as the green revolution, involved a surge in genetic engineering and the use of chemical pesticides. This fourth agricultural revolution will be driven by the integration of technology, data collection and analytics with agriculture.
Digitization will pave the way for profitability, efficiency and sustainability in the farming sector. The global agriculture IoT market is estimated to grow from $11.4 billion in 2021 to $18.1 billion by 2026 and advances in IoT have the potential to produce a 70 percent increase in agricultural productivity by 2025. Precision agriculture enabled by agtech can substantially improve environmental outcomes. For example, one recent study found that innovation in technology and agricultural practices could reduce GHG emissions from grain production by up to 70 percent within the next 15 years. Cutting edge agricultural technologies will bring about a new standard for farming that will meet our human and planetary needs, now and in the future.
Drivers of Growth
Agtech has seen an incredible spike in innovation, investment and adoption over the last decade with the total market value for the sector expected to skyrocket to $22.5 billion by 2025. This growth has been spurred by a number of trends such as improved quality and availability of a number of technologies, consumer driven demand, and emerging policy action.
Advancements in technology and availability of agtech is a major driver of adoption. The efficacy of edge computing and IoT performance have improved markedly and the cost of sensors has fallen 100x in the past ten years while their capabilities have improved by orders of magnitude. The proliferation of broadband connectivity and data storage is enabling a much higher volume of data capture as well as the improvement and increased adoption of digital decision making tools.
Demand for agtech is also consumer driven with health and environmental concerns spurring interest in increased safety, transparency, and sustainability. CPGs looking to meet consumer demands for low carbon products need the technology to quantify upstream activity. Additionally, the growing market demand for carbon credits requires underlying digital agriculture technology to measure and track carbon levels and quantify sequestration.
From a policy standpoint, groundwater and nitrogen are becoming more heavily regulated, requiring farmers to find ways to carefully track inputs and outputs. Policy is also encouraging new markets. For example, the Growing Climate Solutions Act could accelerate the development of carbon and ecosystem markets whose success would depend on agtech solutions.
While there are numerous opportunities for innovation in the agtech sector there are a few areas which show the most promise.
Agriculture, a sector which has traditionally been relatively data poor is now seeing dramatic improvements in the availability, timeliness and quality of data. Consequently, data has become a key input to help producers with critical decision making. The need to monitor agricultural inputs such as fertilizer, chemicals and water both for market purposes as well as to ensure compliance with new regulations is becoming increasingly urgent. Interest in monitoring capabilities to control pests, manage weather changes and improve crop growth are also amplifying demand for decision agriculture capabilities.
Technologies that capitalize on the increasingly robust availability of data captured from sensors and other hardware by applying advancements in machine learning and AI can deliver an incredibly detailed level of visibility into farm operations and actionable insights to growers.
S2G platform company, Arable, is developing unique IoT sensors and models that can capture granular levels of on farm data and distill it into useful analytics and prescriptions. One example of how Arable uses data to enable informed decision making is in water management optimization. The platform combines data on rainfall, irrigation and crop water demand (ETc) to calculate the net water balance and overlays that with the growth stage of the crop. This helps farmers figure out how to respond to different water balance scenarios by showing how they are impacting crop health. This same model is applied to other decisions around fertilization, harvest timing, disease management and supply chain visibility, enabling Arable to deliver returns of over $170 an acre from improved yield and crop quality as well as reductions in energy and water use (40 percent reduction in water use). These types of technologies that utilize advanced data collection and analysis can generate measurable value for farmers and environmental outcomes.
Technologies that enable precision applications of crop protection, fertilizer and other inputs will become essential for enabling farmers to meet regulations, remain profitable and support environmental objectives. Using real time data and sensors, drones and satellites to ensure that inputs are used exactly when and where they’re needed is crucial during this time.
To this end, maps have become one of the most useful tools for producers since they allow an accurate and targeted approach to inputs. S2G portfolio company, EarthOptics, uses soil samples, sensors, and machine learning techniques to map the physical and chemical composition of soils more precisely, faster and much more affordably than traditional methods. The company’s first product, TillMapper, creates field maps that show compaction at different depths and provide tillage prescriptions to prevent excessive tillage which costs farmers time and money and damages the soil. They have also premiered a carbon mapping product and are working on soil moisture mapping and soil nutrient fertility mapping which will provide farmers with a single source for multiple levels of field data and enable them to make informed input decisions.
Labor laws such as minimum wage and hour restrictions are improving conditions for farm workers but limit hiring capacity for many farm owners. Technologies such as automation and robotics allow producers to run operations more efficiently and overcome any risks associated with labor availability. The need for improved accuracy and traceability in agricultural settings and the ability of robots to work around the clock and in adverse weather conditions are making them more attractive for farm owners. Recent improvements in AI and sensing as well as reductions in computing costs have made automation in agriculture more of a reality. The increasing prevalence of automation in agriculture will lead to productivity gains and improved margins which will reduce production costs for farmers.
Burro is an autonomous farming company working on a robot, Burro, that boosts profitability and mitigates labor shortages today by working collaboratively alongside farm workers, while building the foundation for more comprehensive automation tomorrow. Burros are currently deployed in grape fields enabling farm workers to stand in the shade and pick/pack with a continuous flow instead of each farmworker walking several miles a day with a 250 pound wheelbarrow in the scorching heat. These robots are already transforming worker productivity with one Burro enabling six-plus people to harvest up to 48 percent more fruit per day for a less than two month ROI. Technologies like Burro also mean that farmworker jobs will become more profitable and less strenuous since workers will be able to harvest more with less effort.
Connecting Growers to End Users
More than ever consumers want to know where and how their food was grown and this trend will continue to become more influential in the food sector. Consumers today are used to having unprecedented amounts of information at their fingertips and are steadily becoming more health and environmentally conscious. According to a report from The Food Industry Association and Label Insights, transparency is important or extremely important to 81 percent of food shoppers, up from 69 percent in 2018. Innova Market Insights listed transparency as the number one trend to keep an eye on in 2021 for the food and beverage industry.
Technologies that enable farmers and companies along the supply chain to provide verifiable health and sustainability data and give consumers that visibility into the source of their food will become increasingly desirable. Much of the information presented on food labels today relies on consumers trusting companies to make honest claims. But measurement and verifying technologies can make these claims more factual, reliable and believable and will help consumers make more informed decisions.
S2G portfolio company, Trace Genomics, is giving farmers a comprehensive view of their soils using soil science, genomics and machine learning. The company measures both harmful and beneficial bacteria and fungi in the soil and combines these measurements with soil chemical characteristics to provide farmers with a window into the health and productivity of their soils.
With the ability to effectively gauge soil health, carbon sequestration and sustainable agricultural production the company can revolutionize how we measure sustainable and regenerative farming practices, transforming what are currently fairly vague terms and labels and backing them up with measurements, data and standards that customers can access and compare. Trace Genomic’s technology can help food companies meet their climate goals by providing a way to quantify these efforts. The soil microbiome also plays an important role in transferring nutrients to plants which influences the nutritional content of the food we eat. Understanding and quantifying this process will enable customers to access much more precise nutrition information.
Scalability of Agtech
While the opportunities for agtech to impact the farming sector are many and diverse, any technology will need to scale to truly make inroads. There are a few common strategies or characteristics that will enable these technologies to become widespread.
Completeness. These systems have to be integrated and intuitive if they are going to be adopted at a large scale.
Quality, high fidelity data. As the amount of data that is collected and accessible increases profoundly it will also have to be accurate and reliable for these technologies to be effective. Ensuring agricultural data quality and addressing issues related to measurement error, coverage or relevance is increasingly essential as these problems significantly constrain the credibility of new agricultural technologies.
Simplicity. Farmers are overextended as it is. For this sector to adopt any technology it has to limit manual entry, be easy to deploy and require minimal or no maintenance.
ROI. Willingness to pay will ultimately depend on solution efficacy and ROI; growers are likely seeking an ROI of at least 4:1 based on our observations.
We are excited to be working with a number of companies shaping the agtech space and look forward to witnessing and being a part of the innovation in this field.