Kauffman Foundation’s AgTech White Paper in 600 Words

You might know that the Kauffman Foundation recently released a study analyzing today’s AgTech opportunities. But, you might not have time to read it. We’ve put together a short summary for you, just in case.

The paper opens with some staggering stats:

• Farm income nets around $120 billion, and farm assets about $2 trillion.
• Agriculture demand for is expected to rise by 70 percent by 2050, as global affluence and therefore, meat and food demand increases.
• Biofuel production is estimated to see an 800 percent increase between today and 2050.
• The price of food is expected to increase by about 50 percent between now and 2030.
• And, when considering the restricting effects of climate change on crops, some estimate that the price of food could be 100 percent higher than present prices.

In short, there’s a lot of future demand on an already strained sector.

But fear not! With the American heartland producing about 27 percent of the world’s corn, almost 30 percent of the world’s soybeans, and about 7 percent of both beef and pork, there are opportunities in the states for lucrative and sustainable agriculture. The Kauffman study suggests we work towards the “Evergreen Revolution,” a scenario in which we are able to sustainably produce 70 percent more by 2050. The “goals” of the revolution are:

• Food Production: increase total food production by 70 percent by 2050.
• Climate: turn global agriculture from a net carbon source to a carbon sink.
• Nitrogen: reduce yearly atmospheric N2 converted to fertilizer by 75 percent.
• Water: keep global consumption of freshwater below 4,000 km^3/year. Current consumption is 2,600 km^3/year, leaving 1,400 km^3 remaining.
• Land Use: cropland can only expand from 12 percent to 15 percent of Earth’s surface.
• The Main Takeaway: Sustainable higher yields must be achieved by increasing productivity.

So how do we get there? Agtech.

Listing a few examples of startups cropping up in the field, the study analyzed over 900 AgTech startups from the VC, Cultivian. Of those studied, 82 percent were focused on improving the value chain, focusing on tech inputs, crop production, animal production, processing and/or manufacture and distribution. And, almost 40 percent of the startups looked at are concentrated in the heartland, and 25 percent in the cornbelt. On average,132 new startups cropped up annually over the last six years.

PHOTO: Kauffman White Paper

This many startups means a lot of opportunity. And that opportunity requires investment to make a difference.

The study shows that since the 1980s, public ag R&D financing has slowed, while private funding increases. Over the last decade, private funds have reached $8 billion for crop inputs each year, and $2 billion for animal inputs each year. In conclusion, the study says that its up to private investors to really make a difference in the future of AgTech.

“New sources of capital are emerging that seek environmental and social returns or, at least, having these returns blended with economic returns,” the study said. “As these trends gain momentum, there may be opportunities in the AgTech sector to translate shared social returns to individual economic returns.”

The paper closes with five big recommendations to spur the growth of the AgTech sector:

1. Educate and promote the opportunities provided by AgTech.
2. Build and support regional AgTech innovation support systems with “agripreneur” champions.
3. Enable the transition to new technology around the theme of “Green and Lean Efficiency.”
4. Engage nonpartisan groups.
5. Develop human capital to meet the needs of tomorrow.

If the Kauffman Foundation has anything to say about it, AgTech will save the world.

FEATURED PHOTO: Alpha du centaure/Flickr