Ag Tech, Ag Investing, and Doubling Food Production
According to a United Nations panel discussion, we will have to double our global food production by 2050 to feed the world’s population. (1) We have 28 years. So, how are we going to get there? To begin with, Ag Investing will play a big role in expanding our food systems.
Shane Stiles, President of Gate 39 Media, clearly stated our collective global mission at this year’s Morningstar Ag Fintech Symposium:
“We need to fund operations and create efficiencies for the farmers who are the backbone of the world.”
One of the ways we can accomplish such a monumental task in our agricultural system is by taking existing business models, increasing their efficiency, investing funds, and perfecting weather prediction systems.
Stiles connected with industry leaders at this year’s Symposium on April 4th to discuss innovations in Weather and Climate Forecasting, Agriculture Investment, and Ag Tech platforms.
Esteemed faculty and panelists included:
- Shane Stiles, President- Gate 39 Media and Anthem Ag
- Alex Baldassano, Head of Energy Transition- Climavision
- Michael Iseman, Director of Operations- Acre Trader
- Fernando Adler, VP of Gradable Commercial Services and Crop Marketing –Farmers Business Network
Climate and Weather Forecasting
One of the ways that farmers and growers can hedge loss to food systems and ensure successful annual crop output is by having accurate weather data to plan, pivot in advance, and stay steps ahead of the weather.
According to Climavision, fundamental gaps in weather knowledge and data sets result in a lack of baseline truth. Climavision’s goal is to fill those gaps with:
- High Technology to Predictive Weather Forecasting and Analytics
- Novel and Proprietary Data Sets
- Machine Learning and Data AI to Processing
The United States currently has 200 weather radars throughout the country yet is missing about 70% of the country’s potential weather data.
Climavision has created strategic partnerships to put radars where gaps exist and implement a threefold system of enhanced data collection with the following objectives:
- First, enhance the Mosaic of Ground-Based Observation.
- Second, Partner with GPS RO Satellites to Provide Ocean Data Added to AI Machine Learning in the Weather Prediction Model.
The problem isn’t that current government-based models are wholly incorrect so much as incomplete. They only tell part of the story.
“What is happening over oceans is what’s happening inland in a week to 11 days. We are getting 500 million terrestrial weather readings per day globally, over land and sea.
You take Radar, Satellite, and Government Data Sets…and put it through our AI software, and we can produce precise weather forecasts for over 120 different weather parameters” explains Climavision’s Alex Baldassano.
Investing In Agricultural
Doubling food supply output requires consistent scaling in production, manufacturing, and distribution models. The quickest route to scale sustainably is through investment opportunities in farming production models and the farmland itself.
This creates tremendous opportunities for existing Ag Tech companies and agriculture technology investment.
Michael Iseman, COO of Acre Trader, explained,
“Agriculture is a $3 Trillion asset class in the United States with no way to make investments other than buying and managing it yourself.
Acre Trader is a platform that allows people to make passive investments in working farms. Farmland has performed well as an asset class, but up to now, it’s been difficult to participate in.”
Acre Trader combines the ability to provide venture capital for farmers to scale and grow, at the same time providing a way for passive investors to invest in farmland and growing farms.
Farmland and Sponsor Investing
Acre Trader solved the problem of how to invest in sustainable agriculture by creating 2 working investment models.
An LLC acquires the deed to the land. Anywhere from 20 to 200 investors have partial ownership of that entity. A farmer rents that land for an annual cash rent of around $400 per acre, which is distributed among the investors. After a 5–10-year investment horizon, the farm would be sold, and investors receive their share of principle + appreciation.
20% of Acre Traders’ investments utilize a Sponsor Model, particularly with Orchards and Vineyards, which is a yield-focused investment in the operation’s profitability. This model uses a fixed asset (permanent crop method) with a 20 to 100-year horizon.
Unified AG Tech Platforms
The Farmers Business Network was developed in 2014 “by farmers for farmers” as a platform for Ag-driven information sharing. Using a transparency model, farmers could share raw data to make more informed decisions to impact output and profitability.
FBN operates as an anonymous, insight-driven platform where individual farm statistics are kept private. Farmers join and add their data to the aggregate database, which analyzes millions of acres of farm data such as seed performance, performance benchmarking, crop & market trends, and input prices.
Commercial Services Platform
According to Fernando Adler, VP of Gradable Commercial Services and Crop Marketing for The Farmers Business Network, every large company has its technology, but consolidation is coming.
Why? Tech is expensive. Many companies spend a lot of money building a platform only to find it doesn’t meet their needs within a couple of years. FBN raised 4 billion last year from some of the largest financial investors in the world, giving them the leverage to build ambitious programming.
Fernando Adler explains:
“We already had a platform aimed at the farmer, so they had a way to take out loans, afford chemicals and seeds, and crop insurance.
Many commercials are trying to scale and modernize at the same time. They want a comprehensive platform. We had to help these commercials be on one unified platform with one service provider if possible.
They also needed the flexibility to select which aspects of the platform they needed most.”
FBM found that end-users also wanted the ability to run a supply chain program within their origination mechanisms. Therefore, the ability to run supply chain programs is one of the critical characteristics of the FBN commercial platform.
In addition to Weather Prediction Systems and Capital Investments, Agricultural Technology completes the first trifecta of levers we can pull to create a more agile, profitable, and robust global farm system.
Contact Gate 39 Media or set up a call to learn more.
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