Likened to the old adage about not letting a good crisis go to waste, agrifood tech is showcasing a surge of activity. Measured by both investment and stage of development, agrifood tech is gaining material traction, with at least some of this lift provided by tough lessons delivered by a tough year. The challenges of 2020 gifted us with a renewed focus on vulnerabilities, whether it was societal, business, or personal. Generally speaking, both federal and state guidance during the height of the pandemic recognized the essential nature of agricultural and food workers, putting rules into place to keep complex farming, processing, and delivery systems open for business. Supply chain disruptions and/or susceptibility to labor shortages still plagued operations, yet businesses stepped up to keep farms producing and processing, manufacturing facilities productive, and food delivered.
The investment community continues to bet on technology in this space. In aggregate, according to AgFunder’s analysis of Crunchbase data, the tally of agrifood financings hit $26.1 billion in 2020, and counting. While this is a 15.5% year-over-year increase over 2019, the AgFunder team believes that yet-to-be-counted 2020 deals will represent a nearly 34.5% growth over 2019. See projected annual financings below. It’s obvious that during shelter-in-place orders, technology to deliver solutions for distanced shopping and food delivery got additional attention, but I’ve been particularly enthused to see that AgFunder reports upstream investment increased 68% year-over-year to $15.8 billion, surpassing downstream investment ($14.3 billion) for the first time on record.
Downstream financings really started outweighing more basic food production innovations when the alternative or novel-food related activity burst on to the scene. As AgFunder includes financings for this category, large placements contribute to large category growth in such. In 2020, two rounds of funding for Impossible Foods, which produces plant-based substitutes for meat products, dominated this category, and heavily weighted the category with nearly 40% of the sum of the rounds that AgFunder listed.
While efficiencies and automation are cornerstones to production ag, another key component of upstream innovation continues to evolve around tracing, measuring, and improving environmental impact. In an early March interview with Bloomberg News, Agriculture Secretary Tom Vilsack talked about an array of approaches that his department is examining to change existing conservation programs and structure a carbon market. Land O’Lakes, Bayer, Smithfield, and Microsoft, amongst others, announced new digital tools and tech alliances to not only address farm efficiencies but minimize environmental footprint. My previous blogs reveal my advocacy and respect for the stewardship of American farmers; as science and regulation marches forward, U.S. agrifood business continues to seek and adopt technology and practices that improve these outcomes. Indigo Ag’s estimates of adoption practices are both encouraging, and highlight areas of greater opportunity; Indigo’s sampling techniques estimate that over 47% of total farmed acres tested/applied one practice of cover cropping, no-till, or extended crop rotations.
Regional View of Average Regenerative Farming Adoption Rates by Practice (2017-2019)
No-Till, Cover Crops, Crop Rotation – Soil Conservation Practices
This view of these adoption practices really struck me, because the convergence of readiness, regulation, and revenue creates a true tipping point of incentives. The technology toolbox to assist with generating better profitability while addressing environmental sustainability continues to grow, whether in ag biotech, farm management, on-farm robotics, or food safety. 2020 may have been a tough year, but agrifood tech is playing an even greater role in the essential nature of agribusinesses going forward.
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Sources: AgriFoodTech Investment Report, AgFunder, 2021
Regeneration on the American Farm, Progress Report, Indigo Ag, July 2020