A lack of reliable information is among the most frustrating obstacles to unlocking the potential of agriculture. But as investment in AgTech heats up, what value does big data offer small-scale farmers at the end of dirt roads in the hardest-to-serve markets on earth?
These days, farms throughout the American Midwest are flooded with new technology. From self-driving tractors and drones to advanced sensors and software, farming looks much different than it did when I was growing up in Missouri. It’s all part of a trend to help farmers become more efficient, productive, and profitable — replacing the guesswork and gut instincts of farming with data and diagrams.
Just how high-tech are we talking? Imagine remote sensors sending data to a digital dashboard that shows real-time analytics on soil temperature and moisture levels; drones flying overhead capturing high-resolution thermal and visual images that show yield variation row-by-row; iPhone notifications telling you the optimal time to apply fertilizer, where it’s most needed, and its estimated effect on this season’s harvest and on your bottom line. This is 21st century precision agriculture in the United States, where one of the world’s oldest industries continues to evolve.
“Everything that a farmer once was and once thought about his business has completely transformed in the last 10 years,” said David Friedberg in a recent interview about the digitization of farms. Friedberg is the founder of the San Francisco-based Climate Corporation, which combines hyper-local weather data with agronomic models to help farmers make better informed decisions. In 2013, his company was acquired by Monsanto.
To many observers, that roughly $1 billion deal set the stage for what has since become a flurry of investment activity in the rapidly evolving and fertile field of agricultural technology, with funding rounds happening at a dizzying pace. For instance, Google Ventures recently announced investments in both Granular, a company that provides farm management software, and Farmers Business Network, an online service that allows farmers to compare the effectiveness of seeds and inputs.
Other well-known Silicon Valley firms like Andreessen Horowitz, Khosla Ventures, and Kleiner Perkins Caufield & Byers are also embracing AgTech start-ups and increasingly looking to the Farm Belt to find the next unicorn. According to a report released by AgFunder, an equity crowdfunding platform, a record $4.6 billion of investment flowed into AgTech ventures last year, up from $2.4 billion invested in 2014 and outpacing growth in the broader venture capital market. Meanwhile, a number of AgTech conferences and specialized consulting firms have popped up alongside accelerators and incubators, like The Yield Lab and Farm2050.
Financiers and farmers have many reasons to be so optimistic about the potential of AgTech. With the right technologies delivering the right data at the right time, farmers can optimize their use of inputs, reduce their environmental impact, and boost their productivity at a time when these efficiency gains are needed most. Estimates suggest that population growth, combined with rising incomes and changing diets, will require us to produce around 60 percent more food by 2050. Yet looming resource constraints and extreme weather events, like droughts and floods, mean that farmers must grow more with less at a time when climate change fuels uncertainty in an already risky business.
This is where producers could really reap the benefits offered by data and technology, but the AgTech movement will only be successful if these benefits extend to all the world’s farmers.
As we search for ways to feed a growing population (over 9 billion people by 2050), opportunities to support agricultural innovation in places like Kansas are just as compelling as those in, say, Kenya, where smallholder farming is the predominant form of agriculture and crop yields are a fraction of those in the United States. Improving productivity on these farms is critical to meeting future food demands.
But what value does big data provide small-scale farmers in developing countries? After all, technological solutions are not one-size-fits-all. The hardware and software used by farmers in United States — where the mean farm size is 180 hectares — are not necessarily suited for smallholder farmers in sub-Saharan Africa, where the average farm size is just 2 hectares.
One trend we’re noticing is that farmers increasingly rely on a relatively low-tech but more ubiquitous device: mobile phones. In fact, there are now nearly 700 million mobile phone accounts throughout the African continent — more than in the U.S. and Europe combined. In addition to the many mobile-based banking services, new platforms — such as Esoko, Farmerline, and MFarm – are now connecting smallholder farmers with information and advice about weather, commodity prices, and production practices.
In Nigeria, for instance, the government created an eWallet system so that it could offer input subsidies directly to farmers. In its first year alone, the program enabled 1.7 million farmers to produce an additional 8.1 million metric tons of food, according to Agnes Kalibata, president of the Alliance for a Green Revolution in Africa. These innovations weren’t born in Silicon Valley but in places closer to the farm gate, like Kenya’s Silicon Savannah.
But hang on a minute. It’s easy to be enthralled by agrarian-inspired apps and algorithms, yet digital technology alone is not a panacea. “Technology simply serves as a vehicle for providing the data, the analysis, the communication,” explains Ertharin Cousin, executive director of UN World Food Programme, in a recent issue of Foreign Affairs. She’s right. It’s important not to overstate its importance nor inflate its potential. After all, many farmers still lack access to some of the most basic agronomic practices, inputs and technologies. And as Ory Okolloh, one of Kenya’s best-known tech investors, recently argued, it’s difficult to innovate your way out of inadequate infrastructure. (In this case, the trucks, roads, and storage facilities that are critical, yet often overlooked, parts of a food system).
From my vantage point, the widespread adoption of mobile phones has undoubtedly laid the groundwork for addressing quotidian challenges faced by smallholder farmers. However, most existing technology providers have not delivered adequate enterprise-level solutions that are right-sized to rural realities.
Last year, my organization, Root Capital, provided over $150 million in loans to more than 270 small and medium-sized agricultural enterprises in sub-Saharan Africa, Latin America and Southeast Asia. These businesses connected 550,000 rural producers to domestic and international markets. Despite their more than $1 billion in combined annual sales to global food and beverage companies like Starbucks, General Mills, and Whole Foods Market, they face a common set of challenges around how to better gather, analyze, and disseminate data to inform decision making.
For example, how does a farmer cooperative manage its financial accounts when making cash payments to thousands of small-scale producers simultaneously? How does it design and implement an effective inventory management system with ten different remote collection centers disbursed across a vast network of potholed and unreliable dirt roads? And how do these businesses monitor volume and quality of production each season?
These are just a few of the questions being asked by the entrepreneurs with whom we work. As leaders of farmer cooperatives and agri-processing enterprises, they too are optimistic about the potential of AgTech to streamline and propel their businesses. They seek to learn what types of systems are available, which ones are most appropriate for their needs, how much they cost, and how to actually introduce them into their existing processes, which are often only paper ledgers.
Today, there’s an unprecedented opportunity to bring new technologies to agricultural businesses located at the end of dirt roads in farming communities around the world. These are the hardest-to-serve markets on earth, where 70 percent of the world’s poor reside. By assisting best-in-class businesses with the design, selection, and implementation of appropriate technology, we can facilitate their transition from inefficient, paper-based management to 21st century processes that save time and money and allow them to deliver more benefits to smallholder farmers — creating value far beyond your normal ROI.
Medieval statistics still haunt the modern world. Recent data from the UN Food and Agricultural Organization show that 800 million people suffer from chronic food insecurity, with children being the most visible victims of severe undernutrition (nearly 200 million children under five years old suffer from stunted growth).
It’s time for technology visionaries to look beyond the Farm Belt and invest in supporting the other 90 percent of the world’s farmers.
This article was written by Willy Foote from Forbes and was legally licensed through the NewsCred publisher network.