Why Silicon Valley should take ag tech more seriously

Why Silicon Valley should take ag tech more seriously

Jiri Foltyn

The global agricultural sector consumes 2,600 terrawatt-hours of energy and emits 5.3 billion metric tons of carbon dioxide equivalent every year. That is roughly equal to the emissions from over 1 billion passenger vehicles driven for one year (more than the number of passenger vehicles currently in operation worldwide) or the emissions from 1,300 coal-fired power plants in one year (the same number of coal-fired power plants operating in the United States).

Given that data, it is clear that we cannot combat climate change without considering the agricultural sector more thoughtfully.

As smart and connected devices have become ubiquitous in our daily lives — and the disciplines of data science and artificial intelligence have given us the tools to solve ever more complex problems — the agricultural sector seems to have benefited very little from such advancements.

A 2015 report by McKinsey & Company stated that agriculture and hunting remain the least-digitized industries in the United States. However, farmers long have sought cost-effective tools to increase the efficiency of their fields. Sensors that measure air and soil, livestock biometrics and automated systems that use the internet of things (IoT) to control irrigation are just some tools already available. Precision equipment, geo-positioning systems, big data, unmanned aerial vehicles, drones and even robotics are also leaving their mark on farming.

Despite an abundance of ag-tech startups, however, not many have been able to create a breakthrough technology and revolutionize the farming industry.

One reason is the disconnect that exists between the ag-tech sector and the farm itself. Another reason is Silicon Valley's obsession with technology alone without necessarily a specific end goal in mind. Although drones, blockchains and software solutions can bring several benefits to the farm, they lack the scalability and connectivity needed for a meaningful impact.

Farmers are keen on adopting new technologies but those technologies should be worthy of their investment and not just another solution in search of a problem. Farms are significant users of energy and water, but little has been done to manage those commodities on farms. California soon will start regulating groundwater withdrawals under the Sustainable Groundwater Management Act (SGMA) but farmers, water districts and enforcement agencies are not equipped with the tools necessary to comply with such regulation. Groundwater data are hard to find, hydrological models are complex and pump tests are too costly and time-consuming.

Ag tech is what Silicon Valley should undertake next. According to AgTech Insight's market map, a tremendous amount of activity is in that area. But it is not clear whether the venture capitalists and the tech community take ag tech seriously. Despite the growth of investment in ag tech over the past few years, only $1 billion of venture capital investments went to the ag-tech sector in 2017 — that is 1.7 percent of the total $59 billion of VC investment in the United States for that year.

As entrepreneurs provide software and hardware solutions for the farm of the future, Silicon Valley VCs can complement their efforts by providing more capital to support those activities.

Ag tech is likely to be a critical component to sustainable productivity growth. This will be an absolute necessity if we want to meet our rising food demand, while minimizing its contribution to the global GHG emissions. Ag tech could indeed make farmers smarter and improve processes in the entire value chain so that yields are improved and waste is minimized.

Michael Burry, who predicted the housing crash of 2008, is now focused on food and water. He can’t decouple those two, because food is water. Maybe predicting the housing crash was less trivial, but we have plenty of evidence that is warning us about the food and water crisis that is coming our way.