The turning of a new year provides lift to the projectionists, futurists and soothsayers. It always makes me smile when I see headlines like the “Future of Everything”. We are all on the endless road towards the future, and like a desert mirage, just when it looks like we’ve arrived at the promised oasis, there is another bend in the road.
Thankfully, for the businesses that put the bounty of food and value-added packaged food on our tables, the future is delivered every day. Innovation was in style last year, and will remain in fashion for the future, since industry players utilize a range of new ideas, processes, products, and technology to address ongoing challenges, and opportunities. With some editorial freedom to an old adage, I truly believe, “if you are not changing, you are going backwards.” This resonates for farmers, processors, and food manufacturers – in other words, innovation is a standing imperative.
I was glad to see the USDA choose “The Innovation Imperative: Shaping the Future of Agriculture” for their February Outlook Forum. This is the USDA’s largest annual meeting, attracting over 1,600 attendees from the U.S. and abroad.1 A keynote speaker, aside from the U.S. Secretary of Agriculture Sonny Perdue, is John Hartnett, the CEO and founder of SVG Ventures, a platform of corporations, universities, and investors driving technology to enhance the future of ag. Indeed, I appreciate SVG’s recognition that public-private partnership is crucial to the advancement of technology. And the practical testing and application of new products and processes is key to driving profitable market adoption.
As an example of public funds supporting agtech, the Economic Research Service recently published a review of USDA programs (2008-2018) focused on the $64.7 billion specialty crop sector.2 Six programs in the Agricultural Marketing Service (AMS), the Agricultural Research Service (ARS), and the National Institute of Food and Agriculture (NIFA), in coordination with digital infrastructure spends with Rural Development (RD), are putting nearly $3.7 billion in public funds to work. Table 1 shows the types of programs at agency level. Table 2 outlines the type of projects that are being supported by $288 million in funds. The larger enabling digital infrastructure spend is at the Rural Development level, with $3.4 billion funded in 280 projects to address the barriers of insufficient broadband in low population-density geographies.
For the private funding side, the numbers for 2019 have not been completely tallied, but the emergence and full subscription of several very large funds focused in food and agtech suggest that investment appetite remains. According to Finistere3 in November 2019, year-to-date numbers show investments in agricultural technology were on pace to match 2018 with some $2.3 billion invested. Food tech played a prominent role in the public consciousness, of course, as plant-based proteins with names like ‘Impossible’ and ‘Beyond’ challenged meat eaters to try alternatives at American multinational burger franchises. Finistere goes on to note that investment in food tech, including unique ingredients and formulations, amongst food safety, and supply chain efficiencies has outpaced agtech investments for the past several years. In 2018, nearly $9 billion of total invested capital and exits were recorded for food related investment.
What are the hot and new topics that 2020 will contribute to the future? Surely, margin compression in all areas of production agriculture, even with strong demand, but challenged by rising costs for labor, regulatory compliance, transportation, in addition to volatility driven by politicized trade environment make cost-savings more important than ever. At the other end of the value chain, demographics and consumer preferences continue to drive food entrepreneurs to focus on clean-label ingredients, environmentally friendly packaging, and functional foods. The digitization of everything gives players and end-users better opportunities to know each other, and drive efficiencies, from manufacturing, distribution, and of course, safety and traceability. Distribution and retail strategies in the Amazon-era are in the midst of historical disruption, and others are finding resilience, adopting new technology-enabled improvements for end-users.
The future of everything in agribusiness is unfolding in front of us. My belief is that the future of U.S. agribusiness will be a response to how we emphasize innovation today. The future of food, from production to consumption, will look different than it does today. The commonality, however, is my optimism in the U.S. agribusiness sectors providing for an abundant, nutritious, and delicious 2020 and beyond.
- USDA Press Release 0125.20
- Mechanization for Specialty Crops: A Review of U.S. Department of Agriculture Programs: A Report to Congress, AP-082 USDA,
Economic Research Service.