Feeding the Future: An Overview of Agrifood Technology
By Francesco Castellano, Riccardo Pignatti and Letizia Ingaldo
John Deere, a company most widely known for making tractors, is getting into the artificial intelligence business. In 2017, John Deere Labs bought Blue River Technology for $305 million, a startup with computer vision and machine learning technology that can identify every individual plant on a farm. This means that herbicide-resistant weeds can easily be distinguished from healthy plants. The net result? Farmers can reduce chemical use by about 95% while improving yields, according to Blue River.
As environmental, social, and demographic factors increasingly put pressure on traditional agrifood production technology, investors and entrepreneurs alike are turning to innovation.
Having set the stage in Feeding the Future: An Overview of the Agrifood Industry, we will now go into further detail on the innovative technologies that are revolutionizing the food production business. We detail promising new technologies in the field as well as interesting startups putting them to work, such as vertical farming, alternative proteins, precision farming, agricultural biotechnology, and other interesting future trends.
1. Vertical Farming for Controllable and Sustainable Production
Vertical farming is the practice of growing crops in vertically stacked layers. This is made possible by using growing shelves suspended on a wall or a fence and implementing hydroponic techniques to nourish the plants. This technique has great potential, as it ensures control over many production variables. It not only reduces the number of inputs consumed but also allows for control over crop pathogens and parasitic insects. This permits significantly shorter crop cycles and year-round production, giving the possibility of:
· Reducing land use for agriculture;
· Responding effectively to urbanization trends, moving the crop inside the town;
· Reducing the need to truck food hundreds of kilometres to the market;
· Maintaining production regardless of the season or the weather;
· Preventing the eventuality of climate change-related hazards.
This, combined with the significant saving in terms of water and inputs, will be a key driver for success in facing increasing food demand and for the success of the agri-food industry. However, scaling up vertical farming could cause difficulties, mainly due to the high energy usage this technique requires, which inevitably has an impact on its carbon footprint.
Vertical farmers are willing to use renewable energy to power their operations, but the industry still has a long way to go.
Most vertical farms have failed as the high costs of robotic equipment and artificial light lost out to the simpler technology of dirt, greenhouses, and the sun. But the concept is now attracting a surge in corporate investment, illustrated by companies such as Spread or Plenty, a US startup backed by $200 million from investors including SoftBank’s Masayoshi Son and Amazon’s Jeff Bezos. According to MarketsandMarkets, this subsect of the agrifood market is growing with a 24.8% CAGR, and it is expected to reach $5.8 billion in 2022.
Hydroponics and aeroponics are the two main technologies applied in this field. The implementation of one of the two involves significant resource savings and a good balance between water usage and the necessary fertilizers/nutrients.
Climate control devices will be the fastest-growing hardware segment in this market, playing a crucial role in increasing yield. To ensure a protected growth environment, several factors that influence the climate need to be controlled at an advanced level.
The vertical farming market in Asia-Pacific is expected to have the largest share by 2022 compared to the other regions.
Vertical Farming Market by Region ($M):
There are numerous farms in Japan, Singapore, Taiwan, and other such technologically advanced countries that are already driving the market in the region. Investments grew significantly from $60 million in 2015 and 2016 to $414 million in 2017 and 2018.
CapEx is high for these firms. A small-scale, low-tech vertical farming business can require about $280,000 to start and as much as $15 million for a second-generation plant.
The most innovative plants include data management, plant management automation, harvesting automation, and post-harvesting automation. On average, this kind of plant yields 55 times more produce per unit than traditional farms. Furthermore, innovation should reduce operating expenses: for example, increasing the efficiency of LED lights used in this technique.
The main players in this market are AeroFarms, a US-based firm that has been in the business for 15 years and has raised $238 million, and Plenty (US), which has raised $226 million.
For the European environment, Infarm (Germany) is a Berlin-based company that has already raised approximately $122 million, Agricool (France) has raised $36 million and its focus is mainly on strawberry production, Agrilution (Germany) has raised $4.6 million, and Sfera Agricola (Italy) has raised $7.5 million and has generated revenues for $4.23 million.
2. Increasing Use of Alternative Proteins
Researchers and startups are putting their efforts into alternative proteins, as feeding the growing population with meat from livestock will most likely become quite difficult due to the continuous growth in meat demand. As a result, 46% of total agricultural products are currently used just to feed livestock. Solutions to increase the efficiency of conventional meat production have been almost exhausted and pursuing them won’t overcome global agricultural and food challenges.
New meat products and market players are thus evolving. Instead of enhancing conventional meat production, several companies are focusing on inventing new products to replace conventional meat. Some of the most promising areas are insect-based meat, novel vegan meat replacements, and cultured meat.
Insect-based meat is made from protein coming mainly from crickets and mealworms. This trend has some advantages, like the superior conversion of energy and protein compared to traditional meat. Insect food has greater potential for feeding livestock instead of humans because of its taste and textural differences versus traditional meat and the negative consumer perception of insects as food in the vast majority of Western countries.
Global Meat Market Forecast:
The two most interesting trends could be novel vegan meat replacement and cultured meat.
The first one does not require animal ingredients, and its sensory profile gets much closer to meat than traditional vegan/vegetarian replacement. The main reason for this is a sophisticated production process that uses haemoglobin and binders extracted via fermentation from the plants. Startups in this field (e.g., Impossible Foods, JUST, Beyond Meat) collected more than $900 million in financing up to 2018, and products are already available both in supermarkets and restaurants.
Cultured meat represents an alternative to meat that is created through exponential cell growth in bioreactors. Meat culturing will represent the greatest opportunity even though it is in a poor development state due to the significant cost associated with it.
The process begins when a cell is extracted from a living animal and grown in a lab to permanently establish a culture (called a cell line). The cells can come from a range of sources: biopsies of living animals, pieces of fresh meat, or cell banks. Cell lines can be based either on primary cells or on stem cells. Once a good cell line has been selected, a sample is introduced into a bioreactor where the cells proliferate exponentially and can be harvested. The result is meat that is nearly indistinguishable from animal meat. No commercial products are sold yet, even if this technique has the potential to disrupt the multi-billion global meat industry.
The most potentially disruptive trends could be novel vegan and cultured meat, which are going to reach—respectively—25% and 35% of the global market value in 2040 thanks to their high commercial potential motivated by their high similarity to real meat. This makes them attractive to venture capital. In particular, cultured meat will win in the long run, but novel vegan meat replacements will be essential in the transition phase.
The most advanced novel vegan meat replacement businesses are US-based. Beyond Meat and Impossible Foods are among the most famous and have already picked up several hundreds of millions of dollars. Impossible Foods raised $300 million in series E in 2019, bringing the total equity value to $700 million. Investors include such prominent names as Bill Gates, GV (formerly Google Ventures), UBS, and Sailing Capital. Beyond Meat has already gone public.
To sum up, the most promising Meat Replacement Companies around the world are:
· Beyond Meat (USA): founded in 2009, with $50-100 million estimated revenue, it raised $122 million;
· Impossible Foods (USA): founded in 2011, with $50-100 million estimated revenue, it raised $688 million;
· Ojah (The Netherlands): founded in 2009, was acquired for more than $25 million by Kerry Group in 2018;
· Moving Mountains (UK): founded in 2016, has ~$19 million estimated revenue;
· The Meatless Farm Company (UK): founded in 2016, the business was launched also in the US and in Canada. The output rose 29-fold since its product launch;
· Foods for Tomorrow (Spain): founded in 2017, the company will be financed with €250.000 for the 2020-2021 period through governmental funding.
These companies come closest to commercializing their products. The plant-based food and beverage alternative market is expected to reach $80.43 billion by 2024, growing at a 13.82% CAGR during the forecast period from 2019 to 2024.
The largest cultured meat businesses are located in the US. Memphis Meats, based in San Francisco, raised $161 million to build a pilot cell-based meat plant. This investment round increases the Californian cell-based meat company’s total funds more than eightfold. Investors include Tyson Food, Richard Branson, and Bill Gates.
Investors have put more than $16 billion into US plant-based and cell-based meat companies in the past 10 years—$13 billion alone in 2017 and 2018, according to two reports released from The Good Food Institute in 2019.
Cultured meat companies:
· Memphis meat (US): founded in 2015, raised 181M$
· Future Meat Technologies (Israel): founded in 2018, raised 14M$
· Mosa Meat (US): founded in 2013, raised 8M$
3. Precision Farming Moving Mainstream
Over the last two decades, precision farming has successfully made the transition from being an academic research topic to a highly beneficial practice in the field of agriculture. By the end of 2030, precision farming is poised to become one of the most influential trends in agriculture.
Precision Farming Market - Growth Rate by Region (2021-2024) :
Precision farming is a farming management concept based on observing, measuring, and responding to inter- and intra-field variability in crops with the goal of defining a decision support system (DSS) for optimizing returns on inputs while preserving resources.
Investments in precision farming reached $661 million across 96 deals in 2015, an increase of 140% versus 2014, according to AgFunder. However, precision farming experienced a decline of $405 million in 2016, mainly due to lower spending on drones. It is possible to identify three main directions of precision farming that will guide the future of this sector: imagery and sensors, robotics and automation, and digitalization and big data.
Imagery and sensors concern the practices of field performance monitoring, soil monitoring, and in-field computer or real-time operation through the employment of satellite, drone imagery, and crop conditions sensors, aiming to provide a system that helps monitor and automate inputs.
Robotics and automation refer to technologies such as machine vision, aerial sensing, and artificial intelligence.
Digitalization and big data employ field maps, augmented reality, and open-data platforms to reach advanced analytics and intelligent machinery design toward business intelligence services.
The market is expected to grow at 12.8% CAGR to reach $5.5 billion by 2021. Currently, the EMEA area dominates the market (41%), followed by APAC (32%) and the Americas (27%). Bayer has set up a team of more than 400 professionals and invested $1.25 billion to drive the development of digital offerings for farmers.
Precision farming is a crowded field due to its high potential. Feeding the world and earning a return while doing it is highly motivating for a lot of different players.
Companies like John Deere, CNH, Kubota, Bosch, Trimble, and Topcon are also focusing on this field, as well as a large number of startups, including:
· Taranis (Israel): founded in 2014 developed an analytics engine that analyzes field data related to the crop production cycle and weather and gives suggestions. With $1-10 million estimated revenue, it raised $30 million;
· Ecorobotix (Switzerland): founded in 2011 developed weeding robots for sustainable agriculture. It raised $10.6 million series A funding;
· Blue River Technology (USA): founded in 2011, developed See & Spray technology for crop protection. It raised $30 million;
· Crop X (Israel): founded in 2013, developed a rechargeable wireless sensor solution for soil moisture monitoring. It raised $23 million
· SeeTree (Israel): founded in 2017, developed machine learning-based data-driven solutions for orchard growers. It raised $15 million;
· Ceres Imaging (USA): founded in 2014, developed sensors for fixed-wing aircraft that capture crop data. With less than $1 million estimated revenue, it raised $35.5 million.
4. Agricultural Biotechnology Is Transforming the Agricultural Business
Another fast-growing niche that employs a relevant number of technological innovations concerns Agricultural Biotech, which includes all the biological or chemical tools and processes used in the farm and also in the post-farming processes. This category involves different types of technology and science, including genetics, breeding, microbiome research, synthetic chemistry, and animal health.
Genetics involves processes that allow the transfer of useful characteristics from one plant to another through the direct manipulation of an organism’s genetic material.
Breeding is the science of changing plant traits to produce desired characteristics.
Microbiome research consists of generating valuable insights into the biology of microbial communities and their impact on their surroundings and their hosts.
Synthetic chemistry is an emergent area of research aimed at the creation of new biological parts, devices, and systems, or at redesigning systems that are already found in nature.
Animal health comprises technologies that improve the quality of animal feed, animal performance, and/or animal health, as well as technologies that create novel animal feeds that serve as a primary or secondary food source.
The global agriculture biotech market is expected to be $33.8 billion by 2024, growing at a 10.9% CAGR (2019-2024). North America is the largest agricultural biotechnology market due to the highest acceptance of GMOs.
The genetic engineering market is a fast-growing one and can have positive impacts on the environment—GMO crops demand fewer chemicals, land, and machinery, which helps to diminish environmental pollution and GHG emissions. Further, the focus of this science is mainly creating new seeds and plants able to resist herbicides, insects, and viruses while they grow - tolerant to environmental stresses (e.g., drought, flooding) and with additional nutrition benefits and improved taste.
There are also some cons of genetic engineering. Generally, pathogens are able to adapt to new genetic profiles, therefore, there might be unexpected negative side effects (e.g., drought-resistant plants can be less tolerant to direct sunlight).
In addition, the use of copyright and patents to protect the Intellectual Property Rights (IPR) is a major advantage in this field, characterized by a low cost of imitation. Some of the startups and SMEs active in agricultural biotech are:
· Kaiima Bio-Agritech (Israel): founded in 2006, has developed plant genetics and breeding technology for modern agricultural systems. It raised $133 million;
· Connecterra (Netherlands): founded in 2014, developed IDA (Intelligent Dairy Farmers Assistant), an artificial intelligence-powered service that uses data collected from cows to detect health issues. With $1-10 million estimated revenue, it raised $9.5 million;
· Terramera (Canada): founded in 2009, developed targeted crop protection technology that increases the efficacy of organic ingredients. With $1-10 million estimated revenue, it raised $83 million;
· Pairwise Plants (USA): founded in 2017, developed new crops and modified existing ones using gene-editing technology such as CRISPR. Monsanto invested $125 million in the company;
· Equinom (Israel): founded in 2012, is breeding new highly strategic varieties with improved characteristics without any geniting manipulation. With $1-10 million estimated revenue, it raised $18 million;
· Biotalys (Belgium): founded in 2013, developed biopesticides from llamas’ antibodies. It raised $68.6 million.
5. Additional Interesting Trends for the Future
Historically, agriculture has undergone a series of revolutions that have driven efficiency, yield, and profitability to previously unimaginable levels.
Market forecasts for the next decade suggest a digital revolution that will likely impact every aspect of the agricultural food chain.
From a climate perspective, there is a growing need to figure out how to produce as much food as possible with the same amount of cropland (if not less). However, as discussed before, climate change is not the only factor threatening the food business in the next few years; there will also be a growing demand for technological solutions applied to agriculture.
Previously, we discussed the future importance of cultured meat, CRISPR and genome editing, precision farming, and vertical farming. But these are not the only available technologies being studied by researchers. A wide range of solutions is being explored in order to face both climate change food-related challenges and the expansion of food demand.
Some examples include:
· Using compounds that prevent fertilizer from converting soil microbes into nitrous oxide, a highly potent greenhouse gas.
· Developing varieties of crops that absorb more nitrogen.
· Reducing the carbon footprint of livestock by feeding them differently—using algae, for example.
· Adopting desert agriculture and seawater farming. Due to the growing lack of resources, the world must turn the desert and the sea into food production facilities.
· Applying 3D printing to food production. Experts believe printers using hydrocolloids could be used to replace the base ingredients of foods with renewables like algae, duckweed, and grass. Now, some scientists are experimenting with algae as a replacement for animal protein.
Unfortunately, a lot of these agrifood technologies are not yet receiving the number of investments they require to be effectively implemented; nonetheless, this field is raising awareness very quickly, and investments are consequently growing.
Article originally published on Toptal at this link.