- November 8, 2018
- Posted by: matt
- Category: Newsletter
Agriculture: The Next Big Thing?
Given its eons-long role in the rise of human civilization, it’s pretty tough to speak of agriculture as “the next big thing.” But, there is a fascinating and transformative revolution underway in the world of food and agriculture. At the broadest level, it’s likely to change everything about how we live, but it will also create lots of interesting market trends and business opportunities in the process. Smart communities and smart economic developers can and should try to understand what’s on the way. This issue of EntreWorks Insights attempts to provide my own take on what’s happening. I’m no expert on agriculture, but I’ve been in the midst of a learning adventure in recent months—thanks in part to some ongoing work on behalf of AgriNovus Indiana, the state’s lead advocate for the agbiosciences. The good folks at AgriNovus deserve no blame for any errors I might present below, but they have inspired me about the exciting potential that surrounds the agbiosciences.
Agbiosciences is a somewhat awkward term, but it accurately captures what seems to be happening in food and agriculture-related industries where we’re seeing a convergence of innovations across several industry sectors, such as plant science, animal and human health, and high-tech agriculture or agtech. These innovations also encompass many critical enabling technologies such as data-enabled agriculture, automation and robotics, supply chain and logistics related to food security, and biofuels and bio-based energy.
A couple of cool business concepts and technologies should further elucidate what we mean when we talk about the agbiosciences. How about using blockchain to track beef (and other products) to ensure that it is grass-fed, organic, or comes from a certain location? Or using data analytics to determine how much water, fertilizer, and other inputs to provide for each specific plant on a farm? Or tapping into the Internet of Things (IoT) to provide farmers with real-time and historical data on how their equipment, their crops, and their fields are performing. Or using gene editing to develop healthier and more sustainable plants? These ideas and more are now out in the marketplace thanks to emeriging companies like BeefChain, Advanced Agrilytics, FarmMobile, and Pairwise Plants. In addition to these new firms, larger corporations, are investing in startups and fostering their own innovations too.
Three big historical trends are at work here. First, booming populations mean a boom in demand for food and nutrition. Feeding a planet of nearly 10 billion people (as projected by 2050) will not happen with business as usual. We’ll need new ways to grow and manage our food resources. These inexorable population pressures are accompanied by new consumer demands for more sustainable products and production techniques, and a host of new products, including new forms of protein (such as insects or manufactured meat), organics, and the like. Finally, a host of new technologies, such as IoT, artificial intelligence, and genome editing, are also transforming the industry. It’s a complicated, but exciting, period.
The potential for the agbiosciences is no secret. Since 2012, venture capital investments in the agbiosciences have jumped by a whopping 80 percent, leading the Boston Consulting Group to predict a new “green revolution” based on “a wave of start-up activity in agricultural technology.” This growth is impressive, but other observers suggest that more is on the way. For example, the 2018 Global Startup Genome report notes that agtech and food companies account for less than 2% of all global venture investments, and that food and agriculture still remains one of the world’s least digitized industries.
This combination of growing market demand and exciting new technology developments means that the agbiosciences sectors are in the midst of revolutionary changes that will transform companies, communities, and our individual lives as well. How can your region and your community capitalize? What can you do as an economic developer to help your region become a hot-spot for agtech and the agbiosciences? Success in these endeavors requires a deep understanding of the industry’s unique current futures.
- What do producers (i.e. farmers) want and need?
- What opportunities exist for local companies and new entrepreneurs?
- What can your organization and your community do to connect producers, agtech entrepreneurs, and more established industry players?
What do Producers Want?
When it comes to supporting agbioscience clusters, job 1 involves understanding what farmers want and need. Basic strategies of customer discovery and development matter for this task, but economic developers can help by working to better connect farmers to new innovations, new technologies, and potential new suppliers.
Contrary to some claims, farmers are not necessarily risk-averse. They are willing to invest and try new technologies, but they can ill afford to take a chance on a minimal viable product with a limited track record. New firms will need to develop real partnerships with farmers where they can test new products and share the benefits of technological improvements and cost reductions. One-time customer transactions won’t work; mutually beneficial partnerships are needed.
What New Opportunities Exist?
The current marketplace is very noisy. It’s tough for startups to identify what farmers want and need, and farmers aren’t sure which technologies, products, or services will work best for them. Producers need more information on new technologies, and how these new technologies can improve their operations. At the same time, potential entrepreneurs need a better understanding of current industry pain points and where innovations from other fields, such as Big Data, can converge with ag-focused market solutions. Better information and better networks to connect the industry are needed. Economic developers can help cut through the noise by embracing our roles as partnership builders and network connectors.
How to Build Better Networks?
Both of these fundamental market challenges can and should be addressed by economic developers and their community partners. By becoming a champion for the agbiosciences, you help spread the word about new business opportunities and new industry developments. The role of translator becomes critical as you advise new entrepreneurs on how to work with farmers, and help farmers to better understand the benefits of new technologies. These connections help reduce barriers to entry for both customers and suppliers. Farmers better understand the benefits of new technology solutions, while entrepreneurs better understand customer needs and pain points.
The actual policies and programs that seem to work best in agbiosciences support are similar to many other cluster-development initiatives. Lots of interesting work is already underway. America’s Midwest is an important player in the field, with a strong concentration of both public and private organizations focused on the potential for massive growth in agbioscience-related business and innovation opportunities. Agribusinesses, large public and private universities and catalysts for economic development all recognize the importance of this sector. The Midwest is very competitive because of these organizations, as well as its well-established supply chains for agriculture. The Midwest, after all, is one of the most fertile crop production areas in the world, with unique advantages in transportation, processing, human capital and research and development. However, the region also suffers from a lack of equity capital and a limited base of home-grown technology companies. These factors can create real challenges for new agtech start-ups.
A few states and regions are doing this well. Indiana is a leader with AgriNovus Indiana, but other state and local programs are also gaining traction. A number of promising local and regional efforts are underway, including:
- Iowa: Cultivation Corridor
- Kansas City: KC Animal Health Corridor
- North Carolina: Numerous initiatives including NC Biotech Center, NC State, and others.
- St. Louis: Numerous initiatives around Danforth Science Center and other partners.
- Salinas California AgTech Hub
Most of these programs operate in a similar fashion. They typically promote events and networking opportunities, and also serve as their local champion for the agbiosciences. Some programs offer investment funds, and others manage accelerators to support new start-up ventures. Workforce training and outreach to education partners are also part of the program mix.
Current efforts in St. Louis offer a glimpse of what many regions are attempting to do. It is home to world-class research talent and facilities, thanks to the presence of the Danforth Center, major Bayer (formerly Monsanto) facilities, and the new 39 North agtech innovation district. In Indiana, similar synergies are emerging thanks to Purdue University’s world-class research capacity, major firms like Corteva and Elanco, and future innovation districts planned at Purdue Discovery Park and Indianapolis’ 16Tech.
To date, successful regions are embracing a number of strategies that include championing the industry, connecting producers and innovators, grooming new generations of researchers and entrepreneurs, and training a new workforce for new industries. Agriculture may be an ancient industry, but this new agbioscience revolution is going to require new approaches to industry support, development, and promotion.
If you’re interested in learning more about the coming boom in the agbiosciences, please check out the links noted above. In addition, here are a few more worthwhile resources:
- AgFunder News: Great news sources for latest agtech industry trends.
- Boston Consulting Group, “Lessons from the Frontlines of the Agtech Revolution,” October 2016.
- Ryan Donahue, “Rethinking Cluster Initiatives: St. Louis Agriculture Technology,” Brookings Institution, July 2018.
- Suren Dutia, “Agtech: Challenges and Opportunities for Sustainable Growth,” Kauffman Foundation Research Paper, 2014.
- Katherine Schulman, “Agtech In the Midwest: Creating Fertile Ground for the Next Unicorn,” M25VC, November 2017.
- Yield Lab: Industry accelerator with offices in St. Louis. Produces a useful Agtech Action e-newsletter.
If you know of other good resources, please share them by sending an email to us at info (at) entreworks.net. We’ll share them in future blog and newsletter posts.
What’s New at EntreWorks Consulting?
We’re winding down from a busy and rewarding 2018 and looking forward to new challenges in 2019. We’ve added several new items to the EntreWorks library:
- Entrepreneurial Ecosystems In Appalachia: A series of reports and data tools related to entrepreneurship in the 13 state region served by the Appalachian Regional Commission. All project materials can be accessed at www.arc.gov/ecocystems.
- A Comprehensive Assessment of Military Installations and Impacts in Pennsylvania: A deep dive into the economic impacts of Pennsylvania’s thirteen major military installations.
- “Igniting Rural Entrepreneurship: Where do Workforce Development Programs Fit In:” Erik Pages of EntreWorks Consulting contributed this chapter to a new book series entitled Investing in America’s Workforce.