AgriFoodTech Alchemy Issue 11 — Transition, full speed ahead on harvest automation.
By: Walt Duflock
Tags: Agtech, Robots, Agriculture

Issue 11 is going to be different, and so are future issues of AgriFoodTech Alchemy. I joined Western Growers as VP of Innovation on October 19. Transitioning from consulting for SVG-THRIVE and AgriFoodTech startups to full-time executive status at WGA driving Innovation is a great opportunity for me to take a lot of my experience and expertise and help accelerate innovation across multiple agriculture problems. It also means the time I have available for research and analysis of AgriFoodTech Alchemy will be reduced. I am excited about the opportunity at WGA. I’m also pragmatic enough to realize that my time commitments are changing in real time.

I plan to continue publishing the Newsletter, but it will change in format. I will be moving to shorter pieces focused on the “so what” piece with more thought content than data analytics. So look for 5–10 minute pieces, still on single topics and with analysis, but less front-end data content. It’s also not clear how many of these pieces I will be able to fit into the schedule. I am making the decision to prioritize quality over quantity, so it may or may not be on a weekly basis (and with travel commitments it is looking very likely that most will not be weekly). The first few weeks at WGA have been great. The team is full of great people, we have some really solid partners, and everyone understands the challenges facing growers (and grower-shippers) as well as the opportunity that driving innovation faster presents.

Before I discuss the opportunity, let me review how my experience provides me with a relatively unique perspective. First, as a fifth generation family farmer, I understand the problems growers face. Our ranch has 1,400 acres of wine grapes, 3,000 acres of specialty crops, and a 300 head cow-calf operation. When I write that labor, water, and food safety are the top problems growers face, I know first-hand what an impact these problems can have and that the top problems have been the same for decades. I know the costs involved with all 3 problems, and how they have changed over time. I am familiar with the regulatory framework that impacts all 3 problems, as well as the costs involved with compliance.

In addition to the ranch, I have over 25 years of startup experience in Silicon Valley at multiple startups, including eBay and two others that were acquired. This operator experience has given me experience with scaling startups, building products, and setting strategy and executing go-to market plans at scale. The last few years have been focused on the intersection of these two areas, helping grow and build the #1 AgriFoodTech Accelerator at THRIVE and working with the startup cohorts on strategy, fundraising, product, and sales/marketing execution. The combination of agriculture, technology startup, and AgriFoodTech experience provides me with a somewhat unique perspective.

The Western Grower role is focused on accelerating innovation. At a high level, this means potentially working to accelerate commercialization from the earliest stages of University research to the stages beyond that around IP, licensing, and team formation to the later stages around launching and scaling the company. It can also involve efforts to create innovation if that is the best strategic path forward. My role is going to focus on two of the three key ag problems — labor and food safety. The labor solutions will be focused on harvest activity for fresh field produce and the food safety solutions will be focused on identifying and fixing food problem challenges such as e.coli (not just testing and identifying problems — solving is a lot more valuable).

The first step for both of these items is to set the baseline. How big is the harvest labor problem for specialty crops? Which crops use the most labor, and how much do they use, what does it cost, and what’s going to happen to that cost over time? Once we understand that, we have the total addressable market for solving the labor problem for all specialty crops. As you can guess, given increased regulatory costs and decreased availability, labor costs are going up the next several years for every specialty crop. This baseline analysis will develop an overall financial framework for sizing the labor problem. Similarly, for food safety how much are outbreaks and recalls costing the industry on an annual basis, and what is happening to those costs over time?

The second step is to identify existing innovators that are already in the market place with labor and food safety solutions. This means taking inventory on a lot of startups at various stages of product development, sales and marketing, and fundraising. It also means identifying the most promising and coming up with programs that can help them scale. The good news is this plays to one of WGA’s greatest strengths — our members. The growers and grower-shippers that are WGA members will be directly involved with working with the most promising startups in each of these areas. They will help with testing product, providing feedback, evaluating financial and economic models, and many times becoming a customer.

This is important for two reasons. First, there is nothing that can replace a test on a live farming environment. Startups can do all the work in the lab they want, but real field tests have significantly more impact. Second, farmers listen to one information source over all others — other farmers. They value input from pest control advisors, crop advisors, and equipment dealers. But for startups, the best thing you can provide a sales team with is a case study from another farmer that got value from your product.

The third step is evaluating the overall innovation ecosystem in these two areas. This is particularly important for harvest automation. The current consensus among many in the agriculture and AgTech segments is that the technology is closer to scale for activities like weeding and thinning to happen at large scale, but capital, manufacturing expertise, and execution are required to make it happen.

Harvest, on the other hand, does not seem as positive in terms of results or acceleration. For example, with strawberries there have been dozens of startups and well over $100M raised, and yet on an annual basis a very small percentage of strawberries are picked by robots (<1–2% industry wide). So the current pace and cost metrics do not bode well for a global adoption of robot harvesters any time soon. A new approach is needed. This is why the ecosystem must be re-examined.

Think about the harvest solutions in the market. In most cases, they build an entire technology stack as part of their solution, including the tractor mechanism for moving the harvester, visioning technology to help the harvest mechanism know which plants to harvest, AI/ML technology to determine “plant or weed” and “ready to harvest v not ready”, and the actual harvesting mechanism. The resulting machine often takes 5–10 years to get to market and routinely costs $250,000 or more. This is a big capital commitment and a long time frame for getting to market.

So there are a lot of factors that make the current harvest automation solutions challenging — high cost, long development cycles, lots of capital, and low market penetration. At this trajectory, it would take hundreds of millions of investment dollars and 10–20 years to make a meaningful impact on just the amount of strawberries harvested. Remember that strawberries are just one of many specialty crops. There is a consensus among many in agriculture and AgTech that there is some good technology and some smart people in the startups, but the model is going to be hard to scale. Especially because each almost all of the harvesters can only work on one crop type because the harvesting processes are so different from crop to crop.

So clearly there is a need to fundamentally alter the trajectory the startups are operating and scaling. Building the whole machine once and manufacturing each new machine with all of the components being built by the startup engineering team creates no efficiencies and requires massive amounts of capital. It seems possible to build a common platform for some of the key elements so startups can leverage standard components and really focus their effort on key IP efforts around the harvesting process — visioning, AI/ML, and harvest mechanism. It also seems possible that open source can be used to share development efforts on items that are commoditized so startups can focus on the really hard stuff that has the largest impact. We are going to consider a wide range of options.

So now to the so what part — why is it so important that we solve harvest labor?

It’s the largest problem facing agriculture at the moment — with rising costs and decreasing availability while the work force ages. We need to prove that this can be solved before we solve others. It has a direct impact on the food supply chain and food waste. Without adequate labor or an automation solution, food goes unharvested and food waste increases. Agriculture will need more investment for innovators and founders that launch startups and hope to scale. These investments will be easier to get and investors will view the space much more favorably with some successful startups and some exits. These exits will only happen if we can help existing and future startups solve harvest labor and get to scale. There are some serious other agricultural challenges — food safety and water at the top of the list. The collective agriculture industry’s ability to solve the others accelerates once we begin to effectively solve harvest labor. I believe the playbook we are working on for harvest labor will work equally well for other ag problems.

So that is the so what — solve harvest labor and we help solve food supply and food waste challenges, help startups scale to potential exits, and can begin to develop solutions more quickly for other agriculture challenges. Fail to solve harvest labor and funding and startup activity will slow down, making it much harder for startups to develop solutions and scale to solve the problems.

The effort will take more than a small village to pull off. Many future newsletters will be focused on the details of how and who we will be working with to solve the labor challenge. I am excited about the opportunity and look forward to sharing the results as we make progress.