June 21, 2018
Kenneth Scott Zuckerberg, AIF® AFA®, Wells Fargo Sector Manager, Agrifood Technology and Packaged Foods
The first modern day industrial robot was deployed on a General Motors assembly line in 1961 about 60 miles south of my hometown in New Jersey. Two decades later, robots had become commonplace in U.S. automobile manufacturing as automation was embraced to improve quality, productivity, and efficiency. This did not occur by accident. At that time, Ford and General Motors were losing market share to Japanese and German car makers. While the dynamic from the automotive industry is not perfectly analogous to farming, there are some similarities. Although quality in farming is not the problem per se, the need to become more competitive against foreign competition is, indeed, the same, as underscored by the following:
- U.S. grain farmers are losing market share to Brazil, the Black Sea region, and other low-cost producing regions.
- Physical farm labor is approaching economic scarcity and becoming an increasingly expensive input.
- Domestic crop farmers have endured five years of declining revenues and/or income pressure, and face a challenging outlook.
To gain additional insight on these matters, I had the pleasure of hosting a Wells Fargo-sponsored roundtable webinar with three Ag Tech industry professionals who brought expertise in precision farming, robotics, and satellite imagery. The group included Sebastien Boyer of FarmWise, Carl Vause of Soft Robotics, and Ron Hadar of Vibe Imaging Analytics.
The discussion clarified two fundamental facts. First, automated tools are being developed (e.g., autonomous tractors, weed spraying, and fruit picking robots) that can help replace manual labor in certain aspects of farming. Second, there are complementary technologies, namely artificial intelligence (AI) and machine learning, designed to improve decision making throughout the supply chain that can help to reduce food loss and spoilage.
The panel also addressed the 800 pound gorilla in the room and tackled the question: “What will it truly take for farmers to embrace robotics, automation, and other information technologies?” After much debate and discussion, the group reached a consensus on several points which could increase adoption.
First, the labor issue is already a clear and present danger across the spectrum of labor-intensive agriculture from the standpoint of scarcity and cost, even with the assumption of no changes to U.S. immigration policy or work permits for foreign laborers. As the price of farm robots decreases through greater production and innovation, it should be easier for growers to assess the cost-benefits of adopting robots that help to automate weed picking and vegetable and fruit harvesting.
Second, farmers have long been accustomed to spending money on seed technologies (genetics) and new formulations of crop protection chemicals as a means to generate additional yield. With diminishing returns from bioengineered seeds and crop protection chemicals, farmers can allocate a portion of their ‘innovation investment capital’ to robotics and automation going forward.
Third, as the value chain further consolidates and becomes more vertically integrated, there should be more top-down support for automation as a means to improve operational efficiency, and to more effectively manage risk.
Change can be scary, but complacency presents an even scarier, long-term scenario especially in capital- and labor-intensive industries that have low barriers to entry and that sell commoditized products. While there are no silver bullets to improve the financial-return profile of the entire U.S. farming sector, those technologies proven in other sectors offer promise in agriculture. The recurring message in the movie Field of Dreams1 was that if a sacred baseball field was built, then fans would come to see baseball’s all-time, greatest players. And they did. Robots, powered by artificial intelligence and directed by the professional grower, may prove to be agriculture’s version of Field of Dreams. Time will most certainly yield more data bytes and answers to this debate.
1. Field of Dreams, a 1989 American film directed by Phil Alden Robinson, staring Kevin Costner, Amy Madigan, James Earl Jones, Ray Liotta and Burt Lancaster. Source: Wikipedia 2018.
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