As we discussed in “Our Investment Thesis," we see a data-fueled revolution sweeping across most industries.
Agriculture, in particular, excites us because it’s a massive—and massively important—industry that’s ripe for technology disruption.
- The size of the market: Agriculture and related industries generate $1 trillion in the U.S. alone—with a single industry like dairy or berries producing tens of billions of dollars per year.
- The size of the challenge: Farmers must simultaneously confront global population growth, labor shortages and climate change—each a monumental societal challenge on its own.
- The size of the opportunity: Agriculture is among the most labor-intensive and least automated industries, and the demand for food is only rising. The combination translates to a significant opportunity for data-driven disruption.
Companies that understand these dynamics can exploit the immense opportunities inherent in them.
Robots and Sensors and Drones, Oh My!
When we visit farms and ranches, we see an opportunity for data-driven disruption all around.
We see it in the air with laser-precision pesticide-spraying drones; on the ground with GPS- and IoT- and LiDAR-equipped automated tractors (did we mention weather satellites?); and even underground with IoT-enabled subterranean drip irrigation systems. We see it on berry orchards with fruit-picking robots with the dexterity of a surgeon and—thanks to the Internet—the horticultural knowledge of Gertrude Jekyll; on ranches with cameraman robots that “fingerprint” identify cows by their spots (yes, this is true). We see it with sensor-covered computers that translate millions of data points about the physical world into new digital worlds; and with ever-cheaper and ever-more-powerful supercomputers that can handle all of this data and more.
These are the building blocks of intelligent data systems that disrupt industries.
Robots Are Coming for Your (Unfilled) Jobs
Let’s set aside technology for a moment and focus our attention on a trend that presents a terrific case for robots and automation: labor shortages.
The U.N. estimates global food production must increase 70 percent over the next several decades to keep up with population growth. Yet, available farm labor continues to dwindle.
As wealth spreads throughout the world, societies are moving away from manual work. People no longer want—nor have to—pluck avocados or squeeze cow udders in 100-degree heat. As a result, farmers are having a very hard time finding people to harvest their crops and care for their animals.
A 2017 survey of California farmers found that more than half of the state’s farmers face labor shortages, most acutely in crops like tree nuts and fruits. And it’s getting more expensive to employ the ones who are available.
These economic factors set up a strong case for automation and the efficiencies that intelligent data systems deliver.
The country witnessed a seismic shift in manufacturing over the past two decades, as the industry shed 5 million jobs while increasing productivity as much as 40 percent by some estimates. Now, it’s agriculture’s turn.
Acres of Opportunity
There is more than just macroeconomics at play. Robots, it turns out, are ideally suited for farming.
As John Stone, SVP of John Deere’s Intelligent Solutions Group, told Forbes earlier this year: “We’re very much pushing into artificial intelligence, computer vision, and machine learning … what’s amazing is how all of this technology is such a hand-in-glove fit for agriculture.”
Agriculture work is labor-intensive, with many repetitive and standardized tasks. This is an ideal scenario for robotics.
Stop by just about any of California’s thousands of farms, orchards and ranches and you will discover ample opportunities for efficiency gains. You’ll find migrant workers filing through rows of crops, picking and placing berries on waist-level tabletop rain-gutters in front of them. You don’t need Elon Musk’s imagination to see the potential for robots to take over this work.
You do need killer technology and a smart business strategy to make it happen—and that’s exactly what Eric Adamson and Tim Brackbill of Tortuga brought to the table when we first met them. Tortuga makes fruit-picking robots that prove adept at this surprisingly intricate task—and can work 24/7 with no health benefits. Best yet, the robots are affordable for many farmers facing worker shortages.
Companies like Tortuga and Abundant Robotics already are delivering on the short-term promise of automation: cutting the cost of production. Others are working to deliver on the long-term promise of intelligent data systems: producing more and better quality food with less impact on the environment.
Shift to Precision Farming
Fast-forward a decade—or maybe five, or maybe less—and where does all of this technology lead us?
It leads to precision farming—a version of farming that’s far more computer-assisted than today. Similar to the journey from the Model T to Tesla, tomorrow’s farming practices will be markedly more efficient, safer and better for the environment.
This transition will happen in a two-step process. First comes the adoption of smart machines—this is well underway across the U.S. and many other countries. Second comes data integration and intelligent data systems—we’re a country mile from this but picking up speed.
Machines have been repeating simple tasks in semi-automated factories for years, but mostly they aren’t capable of deep learning or complicated tasks. Farmers have added automation throughout the production chain—from planting and watering to crop health and harvesting—but there’s still no dashboard giving them a global look at their operations. Robots are not yet predicting things like bug infestations or communicating with each other over local networks. They will.
Ranchers Prepare for (Data) Tsunamis
To make the transition, farms and ranches must be able to process virtual tsunamis of data. They need a system for robots to communicate with each other.
They need an intelligent system, the backbone of the smart farm.
On fully automated farms, sensors will allow farmers to monitor all aspects of their operation with greater precision—collecting data on sunlight, soil conditions, dampness, air quality, etc. This will tell them things like: which plants need attention, when bugs are present and where, and what fields need water. Above them, drones will monitor plant health. Below them, automated irrigation systems will nourish plants while preserving water.
Fleets of robots—some operated by game theory—will plow, plant, prune, pick, steer, milk and shear the spoils of the land.
Harvesting Opportunities in Agtech
So how do startups harvest the opportunities agtech presents?
In earlier articles we offered insights on the qualities that make for outstanding founders and data-driven companies. If you’re considering starting an agtech company, does your team have the requisite passion for—and expertise in—farming? Is your approach to data unique? Are you building a data moat or a technology that allows others to create them? Consider those questions.
Next, consider the deep history of an industry like farming, which predates The Bible by some 20,000 years. Resist the urge to ride in guns blazing with a 100 percent disruption model that assumes Big Ag doesn’t know what it’s doing. Rather, train your focus on an area of the industry you can impact. Be clear about what area you are disrupting and how that can work in the confines of the industry.
Then build from there.
About the Authors
Ash Patel and Mike Marquez are co-founders of Morado Venture Partners, a seed venture capital firm dedicated to capturing investment opportunities in emerging technologies and data-fueled businesses.