ESG looms large at the 2022 Silicon Valley AgTech Conference
The 2022 Silicon Valley AgTech Conference saw a standing room only crowd at the Santa Clara Convention Center on October 11, 2022. As in past events, the day consisted of panels, which explored emerging trends, and startup pitches that showcased the latest up and coming agtech startups. The one theme that came up in every panel was ESG — environmental, social and governance.
AgTech Insight’s Aaron Magenheim summed up the experience by stating “I have been to hundreds of AgTech events around the globe, but his year’s Silicon Valley AgTech Conference brought together the highest caliber of speakers and attendees I have seen at an AgTech event with real experience solving big problems. It was a great success!”
The day started with the always popular investor panel which featured a mix of venture capital, angel and private equity participants. The investors provided some insights on what they find interesting in a potential investment. One panelist stressed that he looks for new models that unlock capital and make better use of resources. Another stressed environmental technologies such as green ammonia, decarbonization and reducing the carbon footprint. Sustainability was a big topic and included technologies that reduce inputs such as robotics. Reducing inputs also may improve margins for growers and farmers, which is an important consideration for an investor.
According to Jaleh Daie of Aurora Equity, “VCs can move the needle by funding mission critical technology, mostly upstream AgTech with greatest impact on ESG footprint.”
The genomics and biologicals panel also emphasized the need to remove carbon from the atmosphere and the importance of soil health. Agriculture is at the intersection of climate, security and sustainability. Some technologies that were discussed include plant stress scouting tools, which let the farmer take early action to respond to an issue (such as pests or fungus), lower input costs and increase yields.
Controlled environment agriculture (including urban agriculture and vertical farming) is a hot area since it reduces transportation costs, which is a major cost factor in the food supply chain. A big problem in the industry is a lack of data sharing; consequently, vertical farms do not resemble each other and the models are not easily replicable. The next generation of controlled environment agriculture may see both micro farms (200 square feet) and very large indoor farms within ten years. Panelist Jennifer Ong, Executive Vice President at AEssence stated “Vertical farms are not perfect but have excellent potential for profitability and sustainability, complementing advancements in traditional field agriculture. We see some of the technology may be driven by the legal cannabis boom as it starts to transfer into biopharming and fresh produce.”
There was a time when farm management solutions were hard to finance, but it is currently a growing area. IoT (internet of things) technology is being adopted much more quickly and many machines and devices now use machine learning and AI (artificial intelligence) to gather data. The challenge is to make that data actionable. The shrinking labor market is also a factor in the increase in farm automation.
One of the larger panels discussed the state of autonomous machines, such as self-driving tractors. One panelist described farming as a logistics problem and noted that farmers have been lukewarm towards pure info or data plays. AV (autonomous vehicles) can leverage AI to automate critical business processes. One challenge is that capital costs in agriculture are high as is the penalty for failure, since farmers may have only one or two crops a year. Another challenge is getting farmers to trust their AI. Nevertheless, AV is a growth area given the vacuum created by the shortage of farm labor. We are still in the first inning and the farm of the future may have fleets of machines farming thousands of acres.
The commercialization of farm data has come up repeatedly throughout the panels and was itself the subject of an entire panel. The data driven farm will use data from many sources such as drones, sensors, and satellites to make key decisions. Ganesh Harinath, founder and CEO of Fiducia AI noted that “Low cost and easy to use AI solutions in agriculture is not a want but a need to improve efficiency and help meet United Nations Sustainable Development Goals.” Whether famers are using, or will use, the data is not yet clear.
Farm data is also useful to other participants in the supply chain. For example, grocers want traceability and crop insurers want to confirm losses. The supply chain includes many participants with differing KPIs (key performance indicators) who are focused on different pieces of data. To be marketable, data must be accessible, shareable and cost effective.
Our last panel of the day was focused on ESG. One panelist stressed the importance of brining trust and transparency to ESG reporting in forestry, utilities and carbon markets. The panelists agreed that private/public partnerships are needed for more ESG awareness and effectiveness. ESG is a new type of risk and a metric that impacts and measures the long term viability or a business. The panelists also discussed the challenge of gathering ESG data from farmers and note they must have an incentive, such as improved operations or better decision making.
The conference closed with our annual pitch event where several startups pitched their companies to a panel of VC and angel investors. Each year startups meet partners, customers and investors the conference and the pitch event may be the most useful and popular part of the day.