June 25, 2020

AgTech's Turning Point: The Future of Farming is Both Smart and Bright

by Sara Wensley

Director, Growth and Marketing

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AgTech's Turning Point: The Future of Farming is Both Smart and Bright
FarmTogether's Sierra Foothills Pistachio Orchard - Crowdfunding Property
Whereas technology in agriculture was once deployed almost exclusively for productivity and economies of scale, it is suddenly positioned to be a key driver of our sustainable future.

The last several months have kick-started sweeping changes across our economy. We’ve seen a huge spike in interest in farmland investing, coinciding with a rise in investors’ interest in sustainability overall and, notably, an acceleration in both investor and industry buzz around regenerative agriculture.

Meanwhile, we have also been keeping our eyes closely on the resilience of the AgTech sector amid the economic fallout of the pandemic. In fact, the coincidence of AgTech’s resilience to our changing economy and rising investor interest in sustainability sends an important signal about the future of farming in this country, and around the world. Whereas it was once deployed almost exclusively for productivity and economies of scale, technology in agriculture is suddenly positioned to be a key driver of our sustainable future.

This is a monumental shift, and is one that merits a deep-dive to explain its historical significance as well as key areas of innovation that will shape farms and farmland value, going forward.

Farmers vs. Environmentalists: A Brief History

For decades, agriculture and conservation have been at odds with each other in the US. Especially in the regulatory arena, farmers, conservation advocates, and policy makers have been in conflict over the last half-century on issues related to changing land use, water use, and water quality, among others, as society has reckoned with the competing needs of the modern world for accelerated food production and avoiding environmental destruction.

Technology’s role in farming has traditionally been at odds with conservation as well, in that it was primarily deployed to increase productivity of farms. This was especially true of the Green Revolution period, which ultimately shaped modern farming as we know it.

Catalyzed by Norman Bourlaug’s Nobel-winning development of higher-yielding dwarf wheat varieties in Mexico, the late 1960’s saw the introduction of game-changing innovations including synthetic chemical fertilizers and pesticides, additional “biotech” crop varieties designed for higher yields and disease hardiness, and a broadening use of mechanization. These practices allowed for rapid increases in scale and profitability of farms and quickly spread around the globe, but often came at a heavy cost to the environment. Soil erosion, water overuse, pollution, and habitat destruction from expanding monocultures can all be attributed to these Green Revolution changes.

It wasn’t until the late 1980’s that the rhetoric of “organic”, “sustainable” agriculture emerged in the global conversation. The 1990 US Farm Bill loosely defined sustainable agriculture as an “integrated system” of plant and animal production that would not compromise the needs of future generations. But while the farming and scientific communities gradually realized that our future could be compromised by short-term emphasis on productivity and extractive use of resources, investments in productivity and economies of scale in farming persisted, often at the expense of longer-term interests.

Recently, however, the advent of AgTech has begun to show the world that farmers’ and conservationists’ agendas are most powerful when shared. In fact, developments in AgTech over the last decade have shown us that there are three major avenues by which technology can be deployed specifically to make farming more sustainable:

  1. Detailed Monitoring of crops and livestock
  2. Mitigation of environmental damage and the effects of climate change
  3. Regeneration of degraded farm landscapes and ecosystems

Much of the language around sustainable agriculture, until very recently, had been focused mostly on “doing no harm” - minimizing destructive environmental impact. Now, however, we are seeing that the latest advances in AgTech can go above and beyond do-no-harm approaches, accelerating geologic-time-scale environmental processes and reversing environmental damage, all while enabling humans to monitor and control these processes as we go.

Drones and Crop Monitoring

The combination of remote sensing imagery from drones and satellites, smart machinery, and IoT sensors monitoring moisture, temperature, plant and soil health, have put more information in farmers’ hands than ever before. At this point, there are few aspects of agronomy and farm operations that aren’t measureable. With respect to sustainability, the insight into environmental processes - and the capability for a farmer to influence them - that these technologies bring are undeniable.

Crop monitoring, threat detection and yield forecasting at the field level with cutting-edge technology has accelerated rapidly over the last decade. The success of startups like Granular, The Climate Corporation, Drone Deploy, and others, along with the evolution of machine data from both new and established companies like John Deere, is all excellent evidence of this. More recently, these technologies have been extended to new use cases outside of their original domain of row-cropped grains, including orchard and pasture management and other production systems.

Meanwhile, there has been rapid development of sensor technology for farm monitoring at much finer levels of detail, including within a particular row of crops or for a specific farm animal. Startups like Arable Labs have developed highly capable, flexible-use sensors for detailed monitoring of a variety of crops that pair weather and microclimate data with plant measurements and location-specific disease detection. Meanwhile, dairy startups like Connecterra have developed what some are calling “the Fitbit for Cows” - biometric sensors that give live readouts of any particular animal’s vitals, including related to grazing behavior, breeding, lameness, heat stress and more.

All of these startups pair their data with advanced AI to provide farmers with “Precision Agriculture” capabilities - if they notice anything about the environment of their farm that seems out of place, or that is affecting production, they are informed and able to adjust responsively.

Mitigating Environmental Impacts Through AgTech

There are opportunities to mitigate and minimize environmental impact in every aspect of farm operations. Some things a farmer may choose to adjust could include: what varieties to plant, when to plant, how to rotate crops, whether or not to till fields, how much to irrigate, fertilize or spray, and how to deal with extreme weather.

Each of these decisions involves making environmental sustainability considerations, but it can be difficult to weigh the impact of certain decisions on the environment in the absence of data indicating how they will also affect a farmer’s bottom line. Thanks to other new advances and industry initiatives in technology, this is beginning to change as well.

Sprayer drones, for example, allow crop spraying to be done much more precisely and efficiently than it can with a center-pivot sprayer or a manned aircraft, or even a tractor. Beyond automating routes and optimizing timing of spraying, drones can ensure uniform distribution over a whole field as well as vertically over each individual plant. They avoid wasteful over-spraying that is often a consequence of less-precise methods, saving the farmer the cost of purchasing additional inputs as well as avoiding excess agrochemicals ending up in runoff from farm fields. Furthermore, as a substitute for a backpack sprayer worn by a human, they also save the farmer a great deal on labor costs and avoid humans being exposed to potentially harmful chemicals.

As with the Green Revolution, the power of plant breeding and genetics continues to allow farmers to plant varieties that have been tested for disease hardiness and resilience to extreme weather conditions. Advances in this field are accelerating thanks to the advent of genomics - or the ability of scientists to map entire genomes of organisms and work with a much greater volume of data in studying how to make both crops and even livestock more resilient.

Genomics is even being applied to better understanding soils. A startup called Trace Genomics is working on turning soil samples into rich insight on the spectrum of microbial life and activity in the soil, mapping those characteristics over fields and bioregions and using this insight to advise farmers on soil health management.

Agriculture Technology & Soil Regeneration

Fittingly, the movement of AgTech into better understanding and managing soils has also coincided with the accelerating adoption of regenerative agriculture. As a discipline, regenerative agriculture focuses on revitalizing entire “living systems” that have been degraded through the use of industrial monoculture farming practices. Crucially, the primary place to start with implementing regenerative practices is to rebuild a healthy soil.

Globally, soils are home to 25% of biodiversity, and they are a hugely important “carbon sink”. As plants photosynthesize, they convert water and atmospheric carbon dioxide into glucose - which fuels the plant’s growth - and oxygen, which is released back into the atmosphere. The carbon sequestered from the atmosphere is fixed into the plant itself, and when plants die and decompose, that carbon becomes a hugely important part of the soil.

Soil organic carbon is critical to soil structure, nutrient and water retention, and overall fertility. However, conventional agricultural practices like monocultures and tillage have been accelerating the rate at which soils erode, and have also been preventing the uptake of carbon plant residues from previous harvests by the soil itself. Regenerative agriculture therefore describes soil management practices like using cover crops, rotating crops among fields between seasons, converting to “no-till” or “low-till” production, and even integrating livestock, all as methods of returning as much carbon from the atmosphere to the soil as possible.

As recognition of the benefits of these practices has grown, so has the development of new technology and industry initiatives geared toward adoption. Perhaps the leader in this field over the last year has been Indigo Agriculture’s launch of the Terraton Initiative and the accompanying Terraton Challenge - for which FarmTogether was recently named a semi-finalist.

Indigo’s suite of products includes seed coatings enhancing the natural soil microbiome, as well as systems for farmers to convert to regenerative practices and sell carbon credits based on their performance. Indigo is also one of various companies proving that, especially after a few years, regenerative farming can actually deliver increases in yield and other bottom-line benefits to farmers from cost savings on their use of synthetic inputs.

We are extremely excited to be involved in the Terraton Challenge, and we’re equally excited that Indigo is not alone in this movement across agriculture. Danone and General Mills have both made major commitments of their own to regenerative agriculture, and other AgTech companies like Midwestern BioAg are incentivizing farmers to adopt these practices as well as developing technologies that monitor their performance in the field.

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Disclaimer: FarmTogether is not a registered broker-dealer, investment advisor or investment manager. FarmTogether does not provide tax, legal or investment advice. This material has been prepared for informational and educational purposes only. You should consult your own tax, legal and investment advisors before engaging in any transaction.

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