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Tech innovation, practical thinking can help meet growing demand for farm fresh food

Tech innovation, practical thinking can help meet growing demand for farm fresh food
Feeding a growing world population in a safe, sustainable environment is necessary, whether it comes about through advanced technology or just a more practical use of land.

December, 1811 saw the start of the most devastating series of earthquakes and seismic activity to ever hit the United States geography. More powerful & more widespread than the 1906 San Francisco earthquake, the New Madrid Earthquake literally and figuratively changed America's landscape. Named for a town on the Mississippi River, the earthquakes rocked the Missouri Territory and Southern Illinois and continued well into 1812. The result was an upheaval of the earth, river flooding and seismic geysers that left the frontier with a rich, healthy topsoil.

Settlers flocked to the Missouri Territory, and with them brought the question of states’ rights and slavery into the political discussion, resulting in the Missouri Compromise of 1820. By 1837, a blacksmith in Southern Illinois recognized that the iron and wood plows the settlers brought with them from the east did not work well in the Midwest's rich soil. The plows required constant cleaning, slowing down the farmers. The blacksmith built a plow from a Scottish steel saw blade that was almost self cleaning. Demand grew for the blacksmith's plow and he was suddenly an entrepreneur! His company grew to offer farmers all kinds of tools and technology. The entrepreneur probably never thought that almost 180 years later millions of American males, most of whom never stepped in a cow pie, would walk around wearing his name – John Deere - emblazoned on a green and yellow baseball cap!

For today's investor and consumer, farming has moved well past just better plows, combines, reapers, tractors and genetically altered seeds. As consumer demand moves from Frankenfood toward eating healthier, fresher, more organic and less processed food, farming productivity, based on a ratio of yield to cost of production, is critical.

Right now, nearly 58 cents of every dollar in produce is lost to waste, damage and spoiling during transportation, storage and handling. Also, the demand for organic produce outstrips the supply. But an increase in organic farming with lower input costs, that's closer to the end consumer and uses technology, will increase yield to cost and bring about a cost structure with a higher gross margin and a lower price to the consumer.

As investors look at agriculture and farming, they have several options. They can invest in:

  • The technology itself,
  • Service providers who use the technology to help farmers, or
  • The farmers and companies that use the technology to increase their production and sell to consumers

So let’s take a brief look at what is growing in the field of agriculture technology.

How does your garden grow?

There are cost-effective technologies that enable companies to grow produce under controlled conditions. The ability to control temperature, lighting, soil and water has led to greenhouse farming in all geographies and climates. Even in urban settings, on rooftops or in empty parking lots, greenhouses are being constructed.

But it is not just traditional greenhouses. Controlling the lighting, temperature and other variables allow vegetables to be grown in abandoned warehouses or even old empty semi trailers! And dirt or compost is not required, as hydroponic and "mist-o-ponic" technology allow waterborne nutrients to be transferred to growing plants.

I wanna be…close to you

The ability to grow almost anywhere certainly reduces the high waste factor in transportation and handling. Yes, there is an offsetting cost of both the technology itself and controlling the climate factors. But bringing produce closer to the consumer by selling at actual urban greenhouse stores reduces the waste and increases the freshness and nutrient value. Through CSAs and farm-to-table delivery services, consumers can get their fresh produce straight from the farm. Also, before a "greenhouse" is built, a preferred produce provider arrangement can be put in place between the greenhouse and regional grocers to assure a mutual profitable relationship.

The Sixth Sense

Besides greenhouse technology, there are a variety of other agriculture technologies that the investor can find. First, sensors can determine soil composition, sunlight or water needs, and even which crop should be grown under prevailing conditions.

Next, digital and infrared imaging — land-based and drone-based — can help to determine crop health, potential yield and other issues in the geography, soil or crop. Technology such as this allows farmers to determine not just overall crop health and yield but also the health of a single tree in an orchard.

Then, robotics, or ‘mobots’ (moving robots), using the information from sensors and imaging, can be used to properly and selectively irrigate or fertilize to the exact amounts needed. Unhealthy crops can be marked or removed. Special attention can be paid to single plants or specific fields. While the ability to more selectively use fertilizers or pesticides does not produce an organic crop, it can certainly reduce the impact of the negative footprint and the overall cost.

Finally, software companies are emerging that can use all the data gathered above to help farmers understand yield, growth, cost, market potential, end pricing, crop health, etc., and bring product to market more efficiently and at a lower cost.

It's the land, Scarlett!

If organic demand is outstripping organic supply, creating more organic farmland will reduce cost and get more organic product to the market. REITs and LLPs are forming to buy farmland and gain organic certification, and lease back land to farmers with infrastructure assistance, or sell land to producers who want control of their supply sources.

Yet, there are those who still see a return to basic organic farming: producing high nutritional yield crops in a simple, sustainable way. Last fall The Litchfield Fund was privileged to visit Creekview Ridge Farm in Minerva, Ohio. There, a centuries old farm is being converted to organic farming. Ponds are being dug in the natural swell of the land to create irrigation for crops and orchards. Chickens and rabbits winter in hoop houses to create fertilizer before spring planting. Can hogs really be kept with chickens to keep the foxes away? A CSA provides cash flow while the farm reaches its full potential.

The focus is on high nutritional yield perennial crops (nuts, berries, fruits), some of which have grown on the farm unattended for decades. In one of the harshest climates humankind could choose to live and farm, where summertime temperatures soar well past 90 degrees with even higher humidity and fierce daily storms drop inches of rain in minutes, and winter lows run below minus 20 degrees, with high winds and ‘feets’ of snow in an hour, these untouched nut trees and berry plants have survived. At this farm, a process called STUN – Sheer Total Utter Neglect - is invoked. (Those who have worked in big corporate America know STUN as a version of employee engagement and motivation similar to the Mushroom Theory.)

At Creekview Ridge, crops are over-planted and given minimal attention, and only the strongest strains survive. Root stock from these plants can then be propagated — not just on the farm, but sold or donated to other farmers in that region, where climate and growing conditions are similar. Far from high-tech farming, this process can be repeated across the world and on a small-scale to produce high nutritional yield crops at a low cost.

Feeding a growing world population in a safe, sustainable environment is necessary whether it comes about through advanced technology or just a more practical use of the land. Investors have many options to be part of farming’s future while seeing a healthy return on their investment.

How else can investors and industry support efforts to grow our healthy food supply?

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