Investment in food and agriculture will reach more than $4 billion by the end of the year, according to a recent report from Dutch banking group Rabobank.
Referencing a combination of AgFunder data and proprietary data from the bank, the report called for more investment into the growing agtech sector.
And three areas stand out as needing the most investment and finance according to the bank: technology, big data, and algorithms. Achieving the optimal intersection of these three components could create roughly $10 billion in crop value each year for farms worldwide, says the report.
Entitled “Building a Smarter Food System,” Rabobank presented the report at the recent Expo Milano 2015 conference, where the event’s theme was ‘Feeding the Planet; Energy for Life’. The report concludes that the current food system needs to improve food availability, access to food, balanced nutrition, and system-wide stability.
What does Rabobank’s smarter food system look like? “A smarter food system is more productive, more (globally) integrated, less wasteful and more profitable,” reads the report. “A smarter food system combines technology and (big) data, and uses algorithms to change the way decisions are made and the speed with which decisions are taken—in food production, processing and distribution.”
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The goal of the smart system is to increase the efficiency of resource use to produce and deliver the food consumers need, when they need it and where they need it. This achieves greater sustainability, says Rabobank.
The report identifies three steps to achieving a keener way to produce food: strengthening supply chains, achieving social acceptance, and enabling investment.
In the agtech sector, both new approaches and new technologies create new risks, but they also create new opportunities.
“Investors and financiers need to back new projects, with appropriate mechanisms to manage risk and secure relevant risk-adjusted returns.” Accelerating the speed at which we commercialize new agtech is of particular importance, says Rabobank.
Drones, which may have more than 40 applications for farmers, nanotech, and smart irrigation are already revolutionizing agriculture. They also hold big promise for the future.
Looking more closely at data, Rabobank identifies combining data in a single, anonymous database as the preferred solution, in lieu of farmers providing their data to a number of unconnected databases. The aggregated data would then be used to create data-intensive solutions based on quality algorithms.
One hurdle to achieving data aggregation is farmers’ hesitancy to both share their data and aggregate it with other farmers, including their competition. Specific concerns include fear over data ending up in the hands of commodity futures traders or fear over major companies using data for exploitive marketing purposes.
In response to the tension between farmers’ fears and the growing use—and apparent value—of big data, 12 major farm organizations and agriculture technology providers teamed up to create some ground rules for farm data. The Privacy and Security Principles for Farm Data remain voluntary, but with big names like John Deere, DuPont Pioneer, and The Climate Corporation signing on, farmers have reason to be optimistic.
“Change is inevitable,” the report says. “The combined need to improve resource efficiency and profitability, as well as the need for increased food availability, signals the direction of the change.”
Knowing the direction that change should take and ensuring our food production system evolves toward that end are two very different things, however.
The good news? Both AgFunder’s Midyear Report and Rabobank’ report indicate that investors are becoming increasingly interested in backing agtech ventures and building a smarter food system.
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