Consumer tech is cool, but agriculture tech could save the world
I might peg myself as a nerd by saying this -- or win some friends? -- but I’m a sucker for companies at the intersection of farming and the Internet of Things. It may seem dryer to think about on the surface than speculation about Apple’s smart home plans, but companies using connected sensors and nodes to more efficiently allocate physical resources might help change the world. Conversely, that connected doohicky you love so much is a consumer convenience. You could live without it.
AgSmarts CEO Brett Norman is about as unassuming an executive as you’ll find. When I ran into him at a bar in Nashville, where the company was part of the startup village at Southland, he was dressed in a tucked in company polo shirt. The Memphis-based company is getting right out into the countryside in order to sell its vision of connecting up America’s farmland with smart sensors. So far out there, that when I reach Norman and his CTO and co-founder Clayton Plymill to talk more, they have to change phones because the cell reception is shit good in rural Tennessee.
As the founders explain to me, the rub of it is this: AgSmarts has made a small three inch sensor that goes into the ground, connected up to an eight-foot spring mounted base that radios information back to the mother ship. Depending on the variability of the terrain, the sensors can be placed every 25 to 50 acres to be effective. Farmers program in the water needs of each individual crop and the sensors monitor for soil moisture and control irrigation. Crop yield is maximized. Water is saved. Or that's the plan.
“Farmers can know where they need to water, when they need to water and how much water is needed,” Norman says.
Lets pause for a second. If you think that this is dull, think about the implications of what this technology could do. Norman thinks that AgSmarts can cut down water use on a farm by 25 percent and improve energy efficiency by a similar amount. Per acre, he says that right now irrigation costs farmers between $150 and $250 per acre. AgSmarts can cut $87 off that bill, Norman thinks. The system will retail for a $31 per acre fee, costing a minuscule slice of the gains that Norman hopes it brings, with the company running all of the installation and maintenance.
Whether or not AgSmarts wins the day with this technology, on a macro level it is essential technology. Part of the company's pitch is that 70 percent of the world’s water goes into agriculture; 40 percent of the world’s water is wasted in agriculture. Norman thinks that over irrigation is one of the greatest issues facing farmers. Prices and margins are declining and the only solution to match this economic pressure is to improve yield. The only way to guarantee good return is to dump in water. Which is a pressure that is only going to get worse. By 2050, if the world’s population hits 9 billion as projected food production is going to need to double.
The space is exploding. Venture capital investment in this space has risen at a steady rate over the past five years, almost doubling between 2009 and 2013 to $277 million. Norman says that they have this space somewhat to themselves -- Fresno’s OnFarm does something very similar -- but companies everywhere are connecting up many of the precise functions of the farm. Monsanto has predicted publicly that this could be a $20 billion market by 2020 and people think it will make a major move in the market soon. GE has made its own catchphrase, "Industrial Internet," out of this sort of massive scale IoT application and you wouldn't be surprised to see it offering AgSmarts-type technology soon.
Despite this boom, Norman says the hardest part is getting investors educated about the agriculture space. He says the company has investment from VCs in Boston and Los Angeles, as well as "non-traditional" backers that have come in. But teaching them why this matters is the hard part.
AgSmarts is a year old. The opportunity is large -- 400,000 farms in the USA, millions across the world. But the promise of big dollars will bring big competition. So the company has a fight on its hands. That said, it's a technology that should be applauded, a reminder that these modern tools can be big solutions, not major distractions.