AgTech Grows Into A Fruitful Investment

The fertile AgTech sector is maturing

Like all legacy industries, agriculture is undergoing a digital shift. The availability of innovative technology has led to the expansion of sensor driven methods collectively known as precision farming. The uptake of technological techniques has been hesitant due to largely uncontrollable environments and lack of computing power. However, the gradual application of new ideas to farming has proven that naturally unpredictable conditions can become easier to handle. Last year, AgTech funding reached $700m, exceeding the combined investment total of the previous two years. AgTech is attracting big money, but what have farmers got to show for it?

Revolutionising an age old industry

AgTech applications have been driven forward by a myriad of technological advancements. The evolution of the Internet of Things has delivered precise management solutions that offer insights across entire supply chains. Matching supply with demand is a constant challenge for farmers. IoT connectivity can also help them to monitor resources like water. Irrigation is vitally important when growing crops. Real time visibility into water reservoirs, soil humidity and water cost can help farmers make effective, data rich decisions. Advanced robotics have facilitated the integration of automation and intelligent machinery within agricultural processes. This is nothing new – tractors, for example, were one of the earliest beneficiaries of autonomous drive technology, and drones are now regarded as a low cost surveying solution. What’s changed is accessibility. Third world farms can now apply methods and machinery that were previously off limits due to cost and lack of usability. This has been made possible by farming as-a-service (FaaS). Startups like India’s EM3 AgriServices are promoting sharing economy values to maximise resources and bridge the divide between large and small farmers.

Aquaculture, the farming of aquatic life forms, has also experienced a flood of funding. Fish are six times more efficient at converting feed than cattle, so increasing fish yields with precision farming could create more economic food production. Research into the properties of algae could also be useful for healthcare and energy. Preserving aquatic environments is particularly important because they provide the foundations for entire ecosystems. Maritime Allotments is an organisation working to achieve this aim, bringing aquaculture to urban environments and raising awareness.

Sowing the seeds of disruption

AgTech funding is likely to increase, backed by venture capitalists as well as ‘big ag’ companies like Dupont and Monsanto. These agricultural giants appear to be moving towards market domination by chasing acquisitions. Last year, Deer and Co. (John Deere) bought AgTech company Blue River Technology for $305m, tapping into their machine learning expertise. Forging partnerships will remain a priority of incumbents and AgTech companies as they seek to combine expertise. Thanks to Farming-as-a-Service (FaaS), disruptive technology will experience wider distribution between farmers, making resources go further and to the advantage of more people. The agricultural sphere is also beginning to see increased convergence – especially when it comes to FinTech. These trends all appear to be largely positive for the farming industry, which has undoubtedly had its struggles. But although innovative technology is clearly making farmers’ lives easier, it’s also forcing incumbents to rethink their business models. The emergence of dominant FoodTech companies and their competing meatless meats has spooked livestock farmers, and while the market for plant based alternatives may be tiny, its potential is quite the opposite.

Agricultural companies that use disruptive technology to their advantage are fast becoming the cream of the crop. Many farms still lag behind due to infrastructural issues, though, and this division could deteriorate as big ag firms snap up the most promising startups. On the other hand, sharing economy values and open innovation are introducing underprivileged farmers to entirely new methods. Currently, AgTech is experiencing a fortuitous cycle in which development attracts investment, investment enables development, and development encourages more investment. In the shadow of an inevitable population boom, it’s just as well.

What other technologies are playing a critical role within the expansion of AgTech and precision farming? Are big ag companies moving to dominate the market? How will FoodTech startups disrupt traditional producers? Comment below with your thoughts.