The following insights and opinions are from Pete Nelson, president and executive director for the Memphis-based AgLaunch Initiative.
As you have been reading in farm magazines or heard at conferences over the last couple of years, there is an increasing interest and investment in the development of new agricultural technologies and the creation of new “startup” companies to bring innovations to market. This interest is driven by the need to feed a growing population, changing food consumption patterns, increased pressure on natural resources, and the dramatic reduction of the cost of technologies such as genomic sequencing and data. There is no doubt there are changes and that farming is being confronted with thousands of new technologies from all sides.
Farmers have always been at the forefront of developing new innovations and technologies since the beginning of agriculture. These innovations addressed direct needs on the farm and created solutions that could work economically and efficiently. Now there is a huge increase in the amount of new technology (much of it unproven) that gets pitched to you, and there is also on an increasing disconnect between those creating new innovations and you the farmer. We all have stories of seeing a new idea presented from an excited entrepreneur that we know at first glance won’t work for very practical reasons.
The disconnect between those who are creating new innovations and the farm is dramatically lowering the probability of success for new agricultural ventures, which is in turn giving investors pause and is certainly not accelerating adoption quickly. There is a new way – the Farm Centric Innovation model will change the entire agricultural investment thesis into new ventures. And most excitedly, this means an increasing role for farmers in the creation and refining of new ideas, and not just being the customer. It's a full-circle return to how it used to be with a modern twist.
One of the biggest issues with this divide between innovation creation and the farmer is that often the new technology is not tried in real farm conditions, nor is it tried early enough to contribute towards make-or-break decisions on whether or not to continue to invest in the new idea. This means a lot of investor capital is being deployed for too long on dead ends. In fact, this problem is so bad the many who are developing new technologies, even those working within traditional agricultural research institutions, increasingly view the farmer as a “first customer” but not as an innovation partner.
This must change. To approach a farmer as a first customer with a half-baked product is always a bad idea. As everyone who is reading this knows, farmers are a well-networked group and word travels fast about snake oil or things that are promises or not delivered to bring forward an idea that’s not been properly validated in the field.
Trying to sell a farmer as a first customer on an idea that has not been field validated is not a good idea. However, farmers will continue to prove willing partners in helping take an idea and turning it into a fully functioning product if given the chance. Within the Farm Centric Innovation model, your role in new innovation development includes trying a new technology in the field at farm scale and providing feedback on common sense observations on how to improve the product. For example, does a new harvesting robot have enough ground clearance, or if it’s a new voice recognition technology, will it be accurate even when being used on a loud combine? This on-farm work provide meaningful feedback to continue to optimize solutions, which is both good for the startup innovator as well as for the investors and ultimately ensuring a product is ready to actually go to market.
Another key role for farmers is helping originate new ideas. You are on the front lines of experiencing the world’s largest problems such as the effects of herbicide-resistant weeds, nitrogen inefficiencies, and a long list of additional issues. Farmers have done and can continue to do a great job in helping identify these problems and working with innovators that have solutions to address them.
Still, the majority of groups working in the agricultural innovation space are at least one step removed from being able to work directly with farmers in the field. You can go to agricultural investment conferences and meetings where the latest technologies in the pipeline are discussed and investors make decisions on where to invest and never find a farmer. You can spend time with a big multinational seed and chemical companies talking about the farmers without farmers being in the room. This disconnect remains the standard, which is driving much slower adoption rates and probability of success. The Farm Centric Model is driving the common goal of incorporating farmers in the innovation ecosystem early and its full participants (not just first customers).
Thankfully, there are some good examples emerging, such as the Western Growers Association, which has partnered with Taylor Farms to build an incubator and coworker space, participated in accelerators, and worked with venture-capital firms to support startups in addressing real-world problems in the vegetable and specialty crop production arena. Another great example is the Iowa Corn Opportunities Fund, which is a venture capital fund started by the Iowa Corn Growers. This fund has repositioned Iowa Corn’s farmer members as partners in the innovation development with other venture capital sources.
Probably most exciting are the farmers and farm organizations that are being set up to partner with startup accelerators and incubators to take a key role in developing technology. These “farmer networks” have many models, but include groups such as Fall Line Capital, Indigo Partners, Oxbow Agriculture, Lawrence Group, Ritter Agribusiness, and Mid-South Family Farms to name a few. These organizations are set up to partner with an early-stage idea or innovation, keep the cost of field trials low by trading for equity and/or future rights to invest, and the farmers receive other benefits from spending time and energy working with a technology early. The start-up receives a willing and able partner, visibility, data collection and third-party validation that can be used to raise investment money, attract additional partners and first customers.
There are many examples of how this is already working. One example is start-up called AgVoice, which has a voice recognition technology for agriculture that simplifies crop scouting and other recordkeeping efforts. This technology was validated in fields in Mississippi, Tennessee and Arkansas in 2016 working with Ritter Agribusiness and Mid-South Family Farms. The validation included a lot of really basic concepts. For example, will the technology work in the cab of a tractor or combine when it gets noisy, will the ear piece stay on your ear when you’re in the middle of scouting a hot cotton field, and will the lexicon be robust enough to record all the farm practices necessary and will the records be accurate? The results of this real-world field trial were excellent with the feedback incorporated by AgVoice. A report was generated that has been used to raise further investment and attract additional customers. This is just one example of many in which new technologies are being field validated.
We believe in this role for the farmer as a partner in innovation, not just a first customer will change the entire agricultural investment thesis. This will bring forward more successful startups change the probability of success in a positive direction and bring forward solutions that more efficiently address real-world agricultural problems. There’s a lot more that needs to be communicated, but we invite farmers and those who work directly with farmers into this Farm Centric Model we’re developing to help change the role of farmers in innovation.