Cash crop farmer Rick Willemse started collecting data on his fields back in the mid-’90s, strictly to satisfy his own curiosity. Over the years, information on yield, moisture and fertilizer piled up in a file on his computer. Then, in 2008, the price of potash, a key fertilizer, spiked more than 400%. At a cost of $280 an acre, up from $160, Willemse couldn’t afford to feed his crops. The returns at harvest time, he calculated, wouldn’t cover the fertilizer. Faced with letting his fields go to seed, Willemse dug out 15 years of data and got creative. “I decided, come hell or high water, I’m going to do this for only $185 [per acre],” says the Parkhill, Ont., farmer. Using historic yield and fertilizer data, he created an algorithm that prescribed the optimal level of potash for each 40- by 40-foot zone in his fields. It saved him $100 per acre, and his crops flourished.
Willemse was a pioneer in what’s now known as precision agriculture, and which may be the biggest advance in farming since tractors replaced horses. Broadly speaking, the practice involves taking one large field and managing it as if it were dozens or even hundreds of smaller ones, in order to address the wild variability—in soil, topography and exposure to the elements—that exists across large swaths of land. When done properly, the result is lower input costs and higher yields. While progressive farmers like Willemse have been dabbling in “precision ag” (also known as agri-tech) for nearly a decade, the past few years have seen scores of companies, old and new, blitz the sector. Investors poured US$4.6 billion into agri-tech startups last year, a nearly tenfold increase from 2012. Meanwhile, the first half of 2016 saw the number of precision ag venture capital deals climb 7% from the same period in 2015, with the number of new investors in the space up 52%.
The timing is right. By 2050, the global population will reach 9.1 billion, at which point food production will need to increase by 70% to stave off widespread famine. “There are only so many arable acres globally,” says Joseph Regan, managing partner at Guelph, Ont., VC firm Bioenterprise Capital. “When you look at that equation, innovation is really the only way to increase yield.”
While ending world hunger is a laudable ambition for agri-tech, another driver is the simpler goal of making the business more profitable for farmers, many of whom are struggling to manage larger farms with fewer hands. “The family farm is going away,” says Mike Duncan, a Natural Sciences and Engineering Research Council research chair in precision agriculture at Niagara College. Duncan, whose work involves developing new precision ag tools in partnership with farming communities, predicts the farm of the not-so-distant future will be entirely remote-controlled.
That means bright prospects for companies like Winnipeg-based Farmers Edge, which uses proprietary software to collect and analyze crop data, and offers field management consultation and technical assistance to help farmers get the most out of their land. Co-founder Wade Barnes, an agronomist by trade, says advances in geo-mapping and analytics technology have transformed a once cumbersome and unreliable process—early attempts by such ag giants as John Deere and Trimble to market monitors and GPS systems were met with a tepid response—into something intuitive and, crucially, effective. “We’re seeing the industry change from being very hardware focused to being service focused,” he says. Some big brains believe Barnes is right: Farmers Edge recently raised nearly $60 million in equity investments to help support aggressive international expansion, and the company has recruited former Monsanto, DuPont and Canadian Wheat Board executives into its fold.
It’s an ambitious ramp-up, but the demand is growing, and Barnes is convinced precision agriculture is set to move from a leading-edge practice to a mainstream pursuit. And since agriculture is a sticky business—farmers can be a tough sell, but once they start seeing value from a product or service, they tend to stay loyal to it—it’s essential for burgeoning players to establish market share now. “The companies that have adapted quickly, they’ll survive; the ones that are late to the game, they won’t make it,” says Barnes. “It’s truly a race for an acre.”
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