By Roger Royse
Royse Law Firm, P.C.
Palo Alto, San Francisco, & Los Angeles, U.S.
According to the United Nations’ Food and Agriculture Organization, food production must increase by 60% to feed the Earth’s growing population which is expected to hit 9 billion by 20501. Ninety percent of the growth in crop production is expected to come from higher yields on existing farm land requiring farmers to gain additional efficiencies from their land.
The agriculture industry is already highly dependent on technology and is not slow to adopt new hardware and software if it can help improve yields. Current forms of agriculture technology, often referred to as “precision agriculture,” help farmers determine where and what to plant on their land with a level of accuracy that was not possible ten years ago. The next step is to move from precision agriculture to predictive agriculture and “Big Data” will be the main driver of this change.
Farmers want to be at the forefront of technology, however they face regulatory concerns on issues such as privacy and data ownership that must be overcome before the full potential of modern-day technology can be fully utilized. This paper discusses: (1) the present day use of precision technology on farms; (2) the trend towards Big Data and drone technology; and (3) the availability of funding for agriculture technology companies.
I. PRESENT DAY: PRECISION AGRICULTURE
Location is everything in agriculture. A seed, fertilizer, or planting technique that works on one patch of land may not work on another with different soil or weather. Historically, farmers have learned what works when and where the hard way and then passed this knowledge on to the next generation. Precision agriculture technology reduces the need for this personal knowledge by providing satellite guidance, monitoring and mapping yields, and giving access to live soil information through built-in soil sensors in vehicles.
Satellite guidance, or GPS, is now installed on most new farming vehicles and provides a number of benefits to farmers. Navigation aids help track what land has already been covered, reducing skipped land and overlaps. Auto-guidance technology can steer the vehicle for the farmer enhancing accuracy and reducing operator fatigue. Crops planted with this technology can later be harvested with optimal precision.
Yield mapping has existed in various forms since the 1990s and is capable of monitoring crop yield and soil moisture content. The information gathered can be displayed on a map and, when combined with the GPS technology discussed above, allows for seed planting that can vary by the square foot to take advantage of the most appropriate soil conditions and minimize waste. Farming is not immune to the mobile age and most of the data generated can now be viewed on mobile phone applications, allowing farmers to make quick decisions on the go.
II. THE FUTURE: BIG DATA AND DRONE TECHNOLOGY
Precision agriculture involves collecting vast amounts of data and companies are now combining this data and using it to enhance knowledge and predict trends. The increased use of drone technology will complement this drive towards Big Data, by allowing farmers to collect data on their farms without needing to drive a vehicle over the land.
A. Big Data
Big Data complements and improves upon precision agriculture, but also has the potential to predict farming needs on a mass scale. However, farmers must overcome a number of legal and regulatory challenges before Big Data is able to realize its full potential. This section discusses the benefits of Big Data and then the issues of data ownership and data protection.
1. Benefits of Big Data
Data can now be collected and uploaded to the cloud in real-time providing farmers with instant information on their land and crops. When combined with the precision agriculture techniques described above, this sort of information could take the guesswork out of farming and substantially improve yields.
Big Data is even used to help farmers create custom made insurance to protect themselves against the weather. Monsanto Company captured the headlines in 2013 with its $930 million acquisition of Climate Corp, a company founded by early Google employees who created a service whereby people can state what type of weather they want to insure against and receive a quote within seconds. Climate Corp initially offered services to all business that depended on the weather, but soon realized that agriculture was by far the biggest and focused its activities on that sector. Before the Monsanto Company acquisition Climate Corp raised over $100 million from Silicon Valley venture capital funds.
Climate Corp acts as an underwriter and pays out immediately should the insured against weather conditions occur. To price the insurance, Climate Corp considers weather measurements from 2.5 million locations and 150 billion soil observations to generate 10 trillion weather simulation data points2. The Climate Corp algorithm can divide the U.S. into nearly half a million plots and then develop ten thousand daily weather scenarios for each of them.
The system offered by Climate Corp is a big improvement over what was previously available to farmers. The Federal Crop Insurance Program only covers about 60% of a farmer’s crop based on a farm’s average yield. If a farmer tries and fails to increase production then the payout will be on the average yield and not the amount the farmer attempted to grow. This system is seen as discouraging increased production and innovation3.
The significance of real-time data is not limited to farmers. Currently, traders in agriculture futures rely on private surveys and yield data from the Department of Agriculture for information. Access to real-time data would result in more informed pricing for these securities. Also, as Big Data replaces local knowledge, there could be a correction in the price of farm land if buyers get access to the same information as the farmer.
Big Data may not benefit everyone. While many farmers will benefit from access to shared information, those that currently have a competitive edge over the competition may want to keep that information in-house for as long as possible.
2. Data Ownership and Privacy
With all the data being collected, a big concern is who owns the information and how to protect the privacy of those who generate it. A farmer’s data is likely to be far more valuable than that of the average consumer. Given the right information, advertisements could be sent to a farmer’s phone when a need for different fertilizer is detected. Access to the information held by the companies in charge of collecting it could prove valuable. If the company collecting the data does not want to, or cannot, sell the information then the farmers may consider doing so if the price is right.
Some companies aggregate the data they collect and make that available to those who provide it, however the American Farm Bureau Federation (AFBF) has warned that there is no policy in place to prevent those companies using the information to their advantage in other ways. The AFBF has advised farmers to consider data ownership, use of data, and its value when signing up with services that collect real-time information.
Side-by-side with data ownership concerns are fears over privacy. Where data is aggregated the risk to an individual farmer might be minimal, however farmers need to consider whether their own data might be used for other purposes. For example, farmers may not want their pesticide use to be made public, even if within legal limits, because of the potential harm to their public image.
The more information a farmer has stored in the cloud, the more there is available to those with the appropriate legal authority to access it. In 2012, the Environmental Protection Agency (EPA) released personal information on 80,000 livestock facilities in twenty-nine states in response to a Freedom of Information Act request from environmental groups4. The information released included names, addresses, GPA coordinates, and contact information. In July 2013, the AFBF took legal action to stop the EPA releasing information about farmers and their ranches for other states, however for many farms the damage had already been done.
With environmental activist groups targeting farms, concerns over data protection and privacy are not trivial for farmers and it is understandable that some are still reluctant to fully commit to the cloud.
Unmanned Aerial Vehicles, or drones, have captured a lot of media headlines in the last few years for reasons as varied as their use in war zones to their potential to deliver online shopping to consumers. Drone technology has huge potential in the agriculture technology space, allowing for mass data collection, planting seeds, and even delivering spare parts to a tractor broken down in the field. Drones could be used to survey land and cut down on time spent travelling to the far corners of a farm only to find that the conditions are not suitable for work.
Drones are already used in agriculture in countries such as Brazil and Japan, however in the U.S. the Federal Aviation Administration (FAA) does not allow them for commercial use, for the time being at least. Congress has directed the FAA to allow drones access to U.S. skies from 2015. Some farmers are already using drones legally by building their own and essentially treating them as model airplanes which are legal when below 400 feet.
Despite Amazon grabbing most of the headlines for its plans to deliver packages via drones, farms could be the industry where drone technology takes off fastest. Some of the concerns about drones in other industries, such as privacy and safety, are less likely to apply on large farms. In theory, a drone flying over a farmer’s own land should not be an invasion of privacy and the safety issues are a smaller concern over farm land when compared to urban areas.
Drones could revolutionize farming by allowing surgical use of pesticides, fertilizer, and water, while improving environmental efficiency in the process. Against that, some farmers are concerned that drones will be used by environmental groups to spy on their land, with People for the Ethical Treatment of Animals (PETA) already announcing plans to use drones to monitor factory farms5.
In 2012, agriculture technology companies raised just over $100 million of venture capital funding from around 40 deals. Although this may seem a lot, it is a small fraction of the estimated $27 billion of venture capital investment in the U.S. in 20126. This demonstrates that the agriculture technology market is still immature and most deals are at the seed stage. While Silicon Valley is home to the vast majority of venture capital investment within the U.S., only around 20% of the agriculture technology deals originated in Silicon Valley, with the majority taking place nearer agriculture markets.
There are signs that investors are waking up to the potential of agriculture technology as an industry to invest in. 2013 saw the advent of agfunder.com which seeks to be a type of Kickstarter for agriculture. The site seeks to raise funds for interesting new ideas in the agriculture technology field and then negotiate a convertible note with participating companies. In addition, the group Silicon Valley Ag Tech hosts meetings, webinars, and conferences to bring together the farming and tech communities to work on solutions that will solve actual problems7.
Fig. 1: Agriculture Technology Funding in 2012 (from CB Insights)8
Many people still hold images of farmers as old fashioned, clinging on to the old way of doing things, however this is not representative of the industry. Farmers that fail to keep up with the latest technical advances fall behind.
There still needs to be more communication between technology start-ups and farmers, and venture capital firms could do more to support agriculture technology start-ups, however the growth in this area is promising.
There are real challenges ahead to feed Earth’s ever increasing population, however the advances in Big Data and drone technology could provide farmers with the resources they need to increase supply to the required levels.
1 “How to Feed the World: High-Level Expert Forum,” United Nations Food and Agriculture Organization, October 12-13, 2009, available at http://www.fao.org/fileadmin/templates/wsfs/docs/Issues_papers/HLEF2050_Global_Agriculture.pdf
2“Climate by Numbers: Can a Tech Firm Help Farmers Survive Global Warming?” by Michael Specter, The New Yorker, Nov. 11, 2013, available at http://www.newyorker.com/reporting/2013/11/11/131111fa_fact_specter
3 “Climate by Numbers,” by Michael Specter
4 Letter from U.S. Senators to the EPA, available at http://www.blunt.senate.gov/public/_cache/files/010ba920-d3c8-41b2-8ea7-721786d0fdd8/6-6-13%20Letter%20to%20EPA%20re%20Info%20Release.pdf
5 “PETA Eyes Drones to Watch Hunters, Farmers,” CNN, April 12, 2013, available at http://www.cnn.com/2013/04/11/us/animal-rights-drones/
6 “Annual Venture Investment Dollars Decline for First Time in Three Years, According to the MoneyTree Report,” PWC, January 18, 2013, available at http://www.pwc.com/us/en/press-releases/2013/annual-venture-investment-dollars.jhtml.
7For more information on the Silicon Valley Ag Tech group, of which the author is a member, please see the website at http://www.meetup.com/Silicon-Valley-AgTech/, the LinkedIn group at http://www.linkedin.com/groups/Silicon-Valley-AgTech-4726672?trk=my_groups-b-grp-v, or the Facebook page at https://www.facebook.com/TheSiliconValleyAgtech.
8 “The Farmer in the Dell – Ag Tech Investment Tops $100m in the Last Year,” CB Insights Blog, May 9, 2013, data from CB Insights Industry Analytics, available at http://www.cbinsights.com/blog/trends/agriculture-tech-venture-capital-financing.
Roger Royse Biography
Roger Royse, founder of the Royse Law Firm, works with companies ranging from newly formed tech startups to publicly traded multinationals in a variety of industries, including technology, entertainment and new media, sports, real estate and agri-business. Roger regularly advises on complex tax structuring, high stakes business negotiations and large international financial transactions. Practicing business and tax law since 1984, Roger’s background includes work with prominent San Francisco Bay area law firms as well as Milbank, Tweed, Hadley and McCloy in New York City.
Roger’s work in the Agriculture Technology field includes membership with Silicon Valley Ag Tech and he is the founder of AgTech, S.V., a company that seeks to bring Silicon Valley innovation to agriculture technology.
Roger is a participating instructor of corporate law for the Center for International Studies (Salzburg Austria) and has been an adjunct Professor of Taxation (Property Transactions and International Taxation) for Golden Gate University. Roger is the founder of the philanthropic organization “Team Motion to Dismiss Cancer” which conducted high profile auctions of meetings with venture capitalists to raise money for charity and has been recognized for his efforts on behalf of The Leukemia & Lymphoma Society by being named the 2012 San Francisco Bay Area Chapter Man of the Year.
Roger is the author of the recently published Dead on Arrival: How to Avoid the Legal Mistakes That Could Kill Your Startup, sits on the boards of advisors and mentors to several funds, accelerators and tech companies and takes an active role in the strategic planning decisions of his clients. Roger also acts as trusted advisor to a national and international clientele of high net worth individuals.
Roger is a Northern California Super Lawyer, is AV Peer-Rated by Martindale Hubbell, has a “Superb” rating from Avvo and is a recipient of the Intercontinental Finance 2013 500 Leading Lawyers Award.
• J.D., B.S. (Accounting), University of North Dakota
• LL.M. (Taxation) New York University School of Law
Admitted To Practice:
• Nevada, California, New York, Minnesota, South Dakota and North Dakota
• U.S. Tax Court
• United States District Court, Northern District of California
• American Bar Association
• Santa Clara County Bar Association
• State Bar of California
• Palo Alto Area Bar Association
• ND Society of Certified Public Accountants
For more information on Roger Royse, please email to: email@example.com