Labor costs and availability issues are driving more investment in automation amongst specialty crop growers, according to a new report from US-based Western Growers Association.
Roughly 70% of growers surveyed for the second annual Specialty Crop Automation Report said they had invested in automation in 2022.
The average annual spend on automation was $450,000–$500,000 in 2022, up from $350,000–$400,000 the previous year.
Growers currently spend the bulk of their investments on weeding robots and those that can assist with harvest.
Growers expect labor costs to rise
Growers surveyed for the report say labor typically accounts for more than 50 percent of total production costs. Most expect labor costs to rise 10–30% over the next three to five years.
A shrinking domestic workforce drives this trend in both the US and Europe as the current generation of growers ages and many in the next opt for careers outside of agriculture, Walt Duflock, vice president of innovation at Western Growers, tells AFN.
This has led to “increasing reliance” on foreign workers with temporary visas, which comes with its own set of challenges (more below).
In the US, labor is the second-biggest challenge farmers face (after profitability) according to Western Growers’ survey. As the report notes, “With a tightened US labor market and increasing competition from other sectors, the agriculture industry continuously struggles to find sufficient labor to cultivate and harvest crops.”
The H-2A Temporary Agricultural Program, through which employers can bring foreign nationals to the US for temporary agricultural work, goes some way to alleviate the labor shortage. However, growers surveyed for the report noted that high fixed costs, such as registration fees, housing, and transportation [to and from the farm for work] can complicate the H-2A program; many growers have to rely on third-party contractors for these workers.
In Europe, more than half (54%) of growers cited labor as their number one challenge. Like the US, Europe has seen an increase in its number of migrant agricultural workers over the years. About 85% of European growers surveyed said they expect labor costs to rise in the next three to five years. Most (61%) anticipate a 10–30% increase.
Even with the increase in foreign workers, Duflock says there is “still a gap between what we have and what we need” in terms of adequate resources on the farm. “We can fill that gap with automation,” he adds.
It’s possible that more mechanization in the ag sector will see a decrease in reliance on H-2A in the US. That said, automation won’t happen overnight, and Western Growers expects H-2A to “remain an important component of major farm operations in the foreseeable future.”
Automation: ‘not a big spend’ for large farms, ‘not realistic’ for smaller ones
Investments in automation vary based on the size of the farm, with larger farms spending more. As Duflock points out, for larger operations, $500,000 per year “is not a big spend.”
It’s less realistic for smaller operations, partially because of the “all-in costs of innovation.” Typically when a grower adds a new function to their automation setup, they have to add a new person to the team to manage that function, leading to additional costs for hiring and training.
“There are three groups of buyers: large, medium and small,” says Duflock. “They have different buying criteria and money to spend on automation. In many cases for the small and mediums, it’s not realistic. If they put in a weeding robot, they may not be able to afford a person to run it.”
Automation solutions that prove they can bring economic benefits to farmers is critical for capturing more spend from the small and medium-growing operations.
Weeding leads the charge to automation
Weeding is far and away the most popular activity for employing automation among specialty crop growers, with nearly half (45%) automating the task across crops. Planting was second (33%), followed by thinning (27%).
At its most basic level, weeding is simply an easier task to automate because the machines don’t have to handle delicate fruits like strawberries or lettuces.
“Weeders can just destroy things,” says Duflock. “They do have to identify the right things [to destroy], but they’re getting pretty good at that.”
Startups like Stout, Carbon Robotics, Verdant Robotics and FarmWise are “leading the game,” according to the report, largely because they zap weeds while also meeting growers’ economic targets. [Disclosure: AFN’s parent company, AgFunder, is an investor in Verdant Robotics.]
“The weeders are the ones that have secured venture capital at scale,” says Duflock. “At the same time they’re the ones that have made the economics work for the grower. Investors are hearing and buying the story, and the revenue supports it that we are building machines in weeding that have a value prop for the growers at grower economics that work for the grower.”
“What i’m excited about is in the last 6 to 12 months is we’ve seen a huge uptick in the number of crops these [weeding] machines can support.”