Takeaways From GAI AgTech Week 2017 – Adoption
June 30, 2017
There is a universal imperative for global agricultural production – it must produce more with less. Population growth means the industry must produce more food, however, urbanization and pollution mean that it must achieve this goal with less land. Meanwhile, consumers and environmentalists are pushing for the reduction or elimination of the use of pesticides and many agrochemicals that have been a key component to the industry being able to increase output by 17 percent over the past 30 years, according to Oxfam.
Agriculture represents 10 percent of global GDP, but is the least digitized industry in the world, according to the MGI Industry Digitization Index launched by the McKinsey Global Institute. Despite this, it is agtech solutions that will be called upon to see the world fed by 2050.
When polled at GAI NY 2017 in April, conference attendees were asked, “In the next five to 10 years, how will agtech and data influence your decision making?
Sixty-eight percent of attendees responded: “It is the future and those who are not on board are behind.” Clearly reflecting that a vast majority of investors rank data driven agtech innovation as at least “important,” with nearly 70 percent seeing the space as “the future.” This sentiment is reflected in the dollar amounts being seen deployed to the space and the number of deals being made.
Investment dollars into food and agtech startups reached a record $4.6 billion in 2015 – double that of the previous year, according to AgFunder. In 2016, although investment dollars fell back to $3.2 billion, the number of deals increased by 10 percent, reaching a record 580.
The will is there. There were more than 500 global agtech companies competing for funds as of 2015, however, it is a very noisy and fragmented space.
When attendees at GAI AgTech Week 2017 were surveyed last week in Boston, they were asked, “What is the biggest challenge being faced in agtech today?” “Customer adoption” was the top concern for 43 percent of respondents. Thirty five percent responded with “ideas that scale”, followed by 19 percent that said, “access to capital”, and 4 percent responded that “talent” was a concern.
Jonah Kolb, managing member at Moore & Warner Ag Group, said that agtech and agtech adoption is a long game given the dynamics of the space and the customer, and that certain factors are at the fore when it comes to hindering farmer adoption of agtech solutions.
In-field benefit vs theoretical value:
“Companies operate in a world of problem-based decision making,” said Kolb. “But any farmer is thinking about this season – and that they only have 40 seasons over a lifetime. Meaning, if at the end of the day a farmer can’t say a certain outcome happened because of a technology – then it’s not a good value.” What works in the conference room, doesn’t always work in the machine shed, noted Kolb.
This sentiment was echoed during another panel discussion titled, “What can agtech stakeholders learn from other sectors?” by Ara Nefian, cofounder and CTO of Intelinair, who said, “Tech has to make a visible impact with a farmer within six months.”
Kolb noted that “from an adoption standpoint – companies make a mistake viewing sales reps as just resellers”.
However, often, companies that are removed from the rural areas in which they are trying to gain customers must remember that sales reps live among the farmers they are selling to – and there needs to be a high level of mutual trust. Sales teams need to be seen as farming-partners.
Cash versus value:
There must be a hard dollar valuation received by the farmer. One of the biggest propositions from agtech development is time savings, but this doesn’t translate to farmers the same way it does to other customers.
Another question to consider is, do farmers even have the cash on hand? Many don’t have discretionary dollars to dedicate at the time of sale. Working lines of capital are already negotiated with the bank – farmers won’t go back and refinance, so they don’t always have liquidity.
The commodity cycle:
Agtech ideas will see different adoption rates at different points in the commodity cycle.
Can your execs or sales guys understand their customer and the market? Can they interpret the difference between what farmers say and what they mean? Often a farmer will say that a technology is interesting – but what is meant between the lines is that they like the idea, but won’t pay for it. Can your team decipher when “yes” means “no”?
Despite these challenges, which can be steep, the investment class is a positive one, and one that is striving to help not only farmers to see better yields, but the world see a more secure food supply.
Geoff Kneen, R&D licensing & new ventures manager with Crop Science, a Division of Bayer, said, “I think everyone in the agtech space is bringing innovation and we have to pick the best tech to move forward. That’s something I see as a great positive – there’s so many minds addressing the need.”
Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at firstname.lastname@example.org
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