188 Connie Bowen – Instead of replacing farmworkers, let’s design agtech to help the ones doing the back breaking work in the field

A conversation with Connie Bowen, co-founder of Farmhand Ventures, a venture studio redesigning the future of work in agriculture, about the labour issue and building collaborative automation agtech.
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Transcript

SPEAKER_02 0:00

Hardly ever talked about in agriculture, let alone in regenerative agriculture circles. The labor challenges. Around the world, millions of people are exploited to pick our table grapes, tomatoes, lettuces, peaches, etc, etc. We don't like to think about it, but unless we, quote unquote, fix the labor issue, we will never have enough skilled people working on regenerative diversified farms. We can simply say, don't worry about it, robots will take care of it. Because, spoiler alert, they won't, and especially not in specialty crops like fruit trees and anything perennial. Learn more about this hidden issue and more importantly, the potential of a venture studio in this space, building companies, building collaborative automation ag tech, not to replace farm workers, but to make their jobs less heavy. This is the Investing in Regenerative Agriculture and Food podcast, Investing as if the planet mattered, where we talk to the pioneers in the regenerative food and agriculture space to learn more on how to put our money to work to regenerate soil, people, local communities and ecosystems while making an appropriate and fair return. Why my focus on soil and regeneration? Because so many of the pressing issues we face today have their roots in how we treat our land and our sea, grow our food, what we eat, wear and consume. And it's time that we as investors, big and small, and consumers start paying much more attention to the dirt slash soil underneath our feet. To make it easy for fans to support our work, we launched our membership community. And so many of you have joined us as a member. Thank you. If our work created value for you, and if you have the means, and only if you have the means, consider joining us. Find out more on gumroad.com slash investing in RegenAg. That is gumroad.com slash investing in RegenAg. Or find the link below. Welcome to another episode today with the co-founder of Farmhand Ventures, a venture studio building companies, redesigning the future of work in agriculture. Welcome Connie.

SPEAKER_00 2:03

Thank you. Thanks for having me.

Why are you doing what you are doing? Why Soil?

SPEAKER_02 2:07

There's a lot to unpack already in that little title or little subtitle, but I always like to start with the question, you know, because you're a regular listener of the show. What brought you to soil? And then, of course, what brought you specific to the labor issue in soil and in agriculture? But let's say, what brought you to agriculture and food to begin with?

SPEAKER_00 2:26

Sure. Okay, I'll step all the way back on this. And I'm going to talk maybe less about soil than most of your guests, because my assumption is that almost everyone listening to this gets it, gets that soil really matters. If you

SPEAKER_02 2:40

don't, we have like 180 plus episodes to listen to. 185, I think we're now. Yeah, there are some great books and documentaries. But let's all agree we're in this room now and we know soil matters.

SPEAKER_00 2:53

It does, definitely. And yeah, so for me, I got into ag because I love food. So I actually worked in restaurants. I debated doing the kind of culinary career trajectory instead of college, university. But you know, grew up in the New York City suburbs. My family has farmland in Iowa that we very much absentee landowners. But yeah, grew up in the burbs, so went to college, was always good at math as a kid, so studied engineering. And I think that, and have also always been very motivated by conservation. I'm a big fan of the Bronx Zoo. I just like was so super nerdy about all that stuff as a young person. And so I think the intersection of those things, right, caring about planetary confines, caring about food, both the quality of it and accessibility. And part of the reason I also didn't go into the just working in restaurants is as much fun as it is and as valuable as I think it is societally, I didn't want to just serve rich people all day. And so that intersect that with engineering and boom, you get ag tech actually. So I also, I basically, I took a series of kind of loosely thought out things that landed me early in the kind of ag tech venture capital movement. So I did this entrepreneurial fellowship program after graduating college called Venture for America. And that is how I ended up working, moving to St. Louis So moving to the Midwest of the US, which if you had told me as a kid that I would ever live anywhere but like the Northeast or maybe Bay Area, I would have laughed at you. And I am now a pretty big advocate for, yeah, everywhere else. Actually, almost everywhere is pretty darn interesting. And so I ended up moving to St. Louis and being one of the early employees at the Yield Lab, which at the time was one of the first ag tech accelerators. It was an experiment at the time and it's really grown and turned into an international family of impact venture capital funds investing exclusively in agri-food technology. So, you know, building that straight from the deep end has been super influential and shaped how I've looked at things. But another really key thing that, so I came into agriculture really thinking about the sustainability side of food and specifically as it relates to environmental stuff. I hadn't had at that time very much exposure to poverty, racism, all of these kind of socio-economical, socio-political issues that are really, really real and actually that are super intertwined in our our food system. Right. And so now I've arrived. So, so still looking at the, okay, soil really matters scientifically. I'm a super science geek. I'm the kind of person who is going to read all of the long form peer reviewed articles and critique the methodology and those. So that's why soil matters, right? It does. But again, How do you actually make that fit into the reality that is political and economic? you have to integrate people into that system. So I have kind of shifted my mindset into thinking about, wait, why do we have an agri-food system? We have it to serve people.

SPEAKER_02 6:53

Why do we have one that doesn't lead to great soil health, if you want to take the

SPEAKER_00 6:58

geeky outcome? Well, sure, but okay, but then let's explore that a little bit further, because I came into this thinking, okay, Monsanto, agribusiness, big corporates are the bad guys. But they're actually, it's much more nuance than that. I don't know that I believe that at all. I can see arguments for it, but I don't know that I believe it at all. There's really big challenges right now. I live in St. Louis still. Down the street from me, specifically across the street, and we have different redline neighborhoods, the food desert issue is extremely real. The access to fresh produce, nutrition, even to a dozen of eggs that is affordable, that challenge is not even close to being sort of addressed. And it's obviously tied to our agricultural systems, but less directly than you might think, actually. The other side of that, that I have been exposed to through working on farms, so I have done a fair bit of woofing in France and in Oregon, but then more industrially, I've worked with a farmland investment fund in Oregon, actually managing crews of about 100 seasonal workers during blueberry and hemp harvest season. And actually working with those people alongside them and supervising them and understanding the economic constraints that they face in their everyday life. And also like having done the labor, like it's, I've worked in restaurants, that's hard, right? Working in farms, way harder, way harder.

SPEAKER_02 8:43

Physically, it's-

SPEAKER_00 8:44

Yeah, it's physically draining. It's mentally challenging. It's like the unskilled workers thing is total nonsense because no one moves faster than farm workers and it's totally skill-based. You feel like it's very hard to pick lettuce very quickly, actually, without hurting yourself in the long run. So all of this kind of exposure has shifted my thinking on... So soil matters, yes, but what matters more than soil, actually, is the people who are involved in the system and why does soil soil matter. And to me, people are just another animal on this kind of planet Earth, right? And so soil matters because it matters for us, actually. It matters for us to have biodiversity for all of the good reasons associated with that. Again, listen to a bunch of former episodes. But in order to address that issue, we have to look at people first. And we have to look at the people who are affected by agri-food systems, which are both the people we working in that system from farm workers to landowners and farmers and everyone in between. And we have to look at the people who are served or not served by that system. And so that is how I kind of arose at labor. So I've been trying to kind of figure out how do you address the people element of the system in such a way that works for kind of everyone involved in this like regenerative ag movement, so to speak. and i think the answer is by focusing on the labor element which i would make a strong case for uh it being the single biggest bottleneck to actually changing agricultural systems to be more regenerative diverse etc

The issues with farm labour

SPEAKER_02 10:41

why why is that is that like is that blocking because We hear this constant move, okay, we do much more with less. We have better, bigger machines. There's only 2% of the population or whatever percentage is involved directly in agriculture. We know that's partly not true because there are massive labor forces needed to pick a lot of things. And like you mentioned before, in brutal circumstances, very badly paid on their very, let's say, high doses of the chemicals, the sun, everything we throw at them because we want this very, very cheap food. So it seems like an incredible, difficult issue to unpack. You said, let's start there. But then why is that a limiting factor for Regeneric or for the things we have discussed in all the other episodes? Why is labor a limiting factor to diversify or to change soil practices at the end or to change how we manage our land?

SPEAKER_00 11:42

A good question. A couple of answers. I'll start practice and then I'll go farther out into like a more radical vision. So practically, so from like more of a sustainable ag tech, almost everyone in the agricultural industry, no matter where you sit on the spectrum can get on board with side. Adoption is not happening of novel agriculture technology as quickly as it needs to be happening if we want all the invested dollars to result in positive outcomes, right? Why is that? I am fairly certain that a big component of that is because the technology is not being designed for the user. It's kind of that simple. And also, there's a lack of appreciation for various incentives, often perverse incentives, that the customer faces. So if you're selling to a farmer, you got to think about the landowner. And also, if you're selling to a farmer a product that makes the farm worker's job easier, you need to realize that probably that farmer might be thinking about retaining that farm worker. But because of various structures that are in place, so I'll... talk about the US specifically here, but this is actually true in most countries. When you look at the history of labor and agriculture, starts with slavery. So that's not good. And that's still happening in other places in the world, by the way. So it's, and then it evolves into sharecropping and it evolves. And it has, it's like current iteration is largely employing, but on a, on a contract basis. So without benefits, employing folks who have typically less than full citizenship rights, probably have some language barriers, probably are different ethnicities than the majority in that region and are therefore very easily exploited. And so, that is the group of people who gets the fresh food and the weeds and the prune, like gets all of the stuff done on farms. And that group of people has a very limited voice in what we're actually designing to make that farm system more efficient.

SPEAKER_02 14:44

Especially from a technology perspective. I don't think anybody building I would say almost any ag tech maybe 99 out of 100 has ever taken a farm worker like already you did really well if you did long interviews with farmers but if you or maybe landowners maybe to understand that kind of incentive structure and what is needed etc but I've yet to hear somebody says no I really I went in the field first of all I went to to harvest these melons and then we figured out this is this technology to to help or to and even what does help there mean so you're saying unless we like a acknowledge that there is a massive, extremely exploited, in most cases, extremely easily exploited labor force underpinning this ag system, we're never going to design solutions, let alone technologies that actually serve or fix something.

SPEAKER_00 15:35

Yeah, exactly. And then if you get, then take it a step further and say, okay, in regenerative agriculture, what do we want to see? We want to see fewer chemicals. What's the alternative to herbicides? Manual weeding, more labor. We want to see greater diversity of crops, so more rotation, less monoculture. How do you mechanize something that's constantly changing? How do you fully automate that? It's technically very difficult and expensive. We want to see more, like all of these things that we want to see more of in regenerative systems require more hands on the job. And so I think that, you know, in my utopic future i yeah because it's a

SPEAKER_02 16:22

question like how would that be then is there a space let's let's say or have you seen farms at scale that sort of provide that year-round job first of all enough benefits etc that you can actually hire somebody properly retain somebody train etc and like do these system provide that kind of um margins or returns or whatever we want to call it to to provide that and make sure somebody like this large labor force is not moving constantly from one region to another to pick x and then y and z and then rotates back sort of like a big migration but a very bad one

SPEAKER_00 16:59

yeah i mean well the other element of this of course is economics right like you need that and i want it like this is a very the reason people don't pay a lot of attention to ag labor is it's such a political hot button issue and it gets messy and it's human based so it's hard but which is also the reason i want to try to do what i can in it. But thinking about the farmer, right? Because I I have spent a lot of time trying to work with and learn from farmers. And there is a very wide spectrum in terms of farmer quality. And yeah, without getting into all sorts of like land inheritance issues there, there are a lot of really good farmers, right? Farms need to be sustainable businesses. And by sustainable, I mean, economically sustainable businesses. And the challenge that's happening right now I'm like, this is why I'm doing what I'm doing right now. The cost of labor is increasing faster than the inflation, you know, food costs is trickling down to farmer's revenue, right? So bottom line is increasing, top line is barely increasing. And that creates a problem. And so you've got situations where today, it no longer makes economic sense to harvest certain crops, like you have Look at asparagus in the UK. Strawberries are getting a lot of attention right now. But the other part of that The other part of that is the waste side of things. So it doesn't make sense to harvest slightly lower quality crops or, and this becomes the challenge with having hyper concentrated single crop systems in one region, what you end up having is a maturity and ripe, you know, everything is, all the blueberries are ripe the same couple of weeks, right? And so that packer who all those farmers have to sell those blueberries to can drive down the price during those weeks when they're actually in season. And so there's all these really complex pricing dynamics at play. So it makes it really hard actually in my mind to get to a lot of these idealistic regenerative kind of even permaculture incorporating type agricultural systems. I think that the only way to do that is through integrating some component of automation. But when I say automation, to be very clear, I don't mean a human-free system. Robotics take over everything. But that's

SPEAKER_02 19:44

the solution, right? We just unleash the drones and we'll

SPEAKER_00 19:48

be fine. Yeah, right. Just let the robots take over. WALL-E will do it. But no, I mean, that's not going to... Also, I'm not a great engineer. I only studied engineering academically. I've been in finance most of the time. But I know enough to be like, yeah, when systems are completely economically infeasible, That's cool. That's a fun problem to solve. That is not a good investment for anyone. And so what I think we're starting to see, actually, as people are starting to realize that this labor crisis is in fact a crisis. It's not going

SPEAKER_02 20:24

away. It's getting worse. It's getting worse. It's a thing. It's a thing. It's not magically next year.

An example of collaborative automation agtech

SPEAKER_00 20:30

Yeah. And it's only going to get worse. I can do a whole kind of seminar on all of the macroeconomic trends that are changing and this is going to, you know, it ends up, it is geographically specific. Like if you look at the US context, Mexico birth rates are declining. So immigration rates are declining. That matters because the majority of the agricultural workforce in the US, seasonal workforce in the US is Mexican at this moment. But you look at like what we're trying to do in terms of workforce modernization and some things seem to be stuck from a legislative standpoint. And And yeah, so there's no relief in sight. And the other really big challenge here is this is where like often I think in these regenerative conversations, we talk about increasing food prices, right? If we increase food prices, the people who pick our food can't afford food. And they

SPEAKER_02 21:32

probably already can't.

SPEAKER_00 21:33

They already can't

SPEAKER_02 21:34

actually. A big chunk of it, yeah.

SPEAKER_00 21:36

Yeah,

SPEAKER_02 21:36

right. And so what kind of, when you say automation collaborators automation what is that what are examples like walk us through visually because of course we're in an audio podcast like what what would what are what are things out there already that would make some people let's say think differently about ag tech and robotics because i know many people were cringed listening to this and listening to like technology is going to save us but there there's a very important role there but what do you mean when you say collaborative automation

SPEAKER_00 22:07

so i actually mostly right now think for the next five years or so mean the stupid kind of technology. And I'll explain what I mean by that. So one of our studio portfolio companies is a company called Future Acres. And what Future Acres does is it mechanizes fresh crop transport. So what does that really mean? Today, if you're harvesting table grapes, right, the workers will pick table grapes manually, clip them, put them in the wagon, When the wagon is full, they take the wagon to the central weigh station, then they go back into the row, keep picking. You waste 30 to 40% of your time walking back and forth with loads of grapes. With Future Acres product carry, the wheelbarrow says, hey, I'm getting kind of heavy over here, please come pick up the grapes. And so a little wagon comes over, worker just has to load the grapes onto that wagon, wagon goes back to central way station. That becomes very interesting also from a data capture future opportunities perspective. But from a, like in this moment, solve a problem now perspective, you are not displacing the people doing the heart. Like it is, it's actually technically very difficult to pick table grapes in particular. Like that's a really complicated geometry to deal with, right?

SPEAKER_02 23:37

No robotic arm will do that very soon. at any kind of scale or level we can imagine.

SPEAKER_00 23:42

Yeah, well, maybe. Maybe, maybe. But the challenge really becomes vision. And again, it becomes the diversity of fields because I, so I mentioned table grapes for that example because Future Acres is, that's their first kind of addressable market. But what's interesting about that Future Acres model is it scales across crops which is something that is really unusual in the world of agricultural automation. And even when you look at, U.S. table grapes are interesting. They're relatively uniform as a crop, but I know blueberries very well, right? So when I look, I can tell you why we had different management practices across three different farms, essentially, within two different counties in the same region in Oregon. And even Each field was slightly different and those differences present a challenge and an additional cost for scaling any kind of vision solution, right? And so this is a problem that's important to point out in the context of agricultural robotics because, and this gets into the whole kind of capital stack side of everything, It is very expensive because it's technically difficult to scale most very specific automated solutions across different crop types. It's expensive even to do it across regions and different fields. And it just gets even worse when you try to do it across different crops. And that's a really big problem in my mind, because I usually sit on the capital allocation side of things in the venture capital world, right? And... You

SPEAKER_02 25:35

need that scale. You need that applicability, because otherwise you're limited to a very small crop and does a very small

SPEAKER_00 25:42

time of year. A very small crop, very across a long time period actually and you end up with a situation where everyone's harvesting at the same time so you can't you know effectively ship your robots to be used at different points in time in the year um and how do

SPEAKER_02 25:57

you how do you get over that like why if that's such a specific

SPEAKER_00 26:02

issue and this is where farmhand ventures is interested so there's two different ways to do simple

SPEAKER_02 26:06

solutions stupid simple solutions

SPEAKER_00 26:09

but there's two ways to do it there's either actually it's not either it's both both stupid, simple solutions. Those are the things that will scale across crops, multiple types of crops, and being pragmatic and realistic. And so what I think we need is to invest in many solutions that are 95 to 99% technically identical, but with that one to 5% on top that makes it crop specific. And that one to 5% might be pretty costly. And so that's where it's very important very important to really understand the total addressable market that that technology realistically can address. And so at Farmhand Ventures, that's kind of what we're thinking about when we build companies. We are looking for opportunities that are crop specific, actually. And we realize that in doing so, we are actually limiting our total addressable market for some of these solutions. And that can actually be okay, because that's Then if you step back outside of robotics even and you say, okay, again, from a venture capital standpoint, what do exits look like in ag tech right now? They're generally, they're very few billion dollar exits. There aren't many unicorns. They're generally acquisitions. And in fact, they're generally under a hundred million in terms of successful exits even. You could say like the Blue River 305 million is like the top most for like agrobotics probably that has happened. And like arguably that probably won't happen again for some time. That was pretty high valuation for that. And so then I sit back again as a fund manager type person who likes math and say, all right, well, how can I deliver effective, how can we as an investment community even deliver Put capital towards solutions that will have a positive impact and make money off of them. And we totally can. But one thing that's really important to do in doing that is being realistic and pragmatic about what the likely end scenario is because then you have to reverse engineer and say, okay, how can I structure an investment entity such that I either have a large enough ownership percentage or I am doing alternative mechanisms for investment, such as revenue-based investment as opposed to pure equity-based. And that is something I can talk all day about because we need so much more of that to invest in the things that actually solve the problems in agri-food systems.

SPEAKER_02 28:59

And to just double-click, I mean, there's a lot to unpack there on the studio model, obviously, but to double-click on this stupid solution for table grapes, how does that trajectory look like? Is it going to be then other types of grapes is it going to be really specific is the table grape industry big enough to support a good exit company let's say or is it going to go to I just mentioned the blueberry side or the peaches side like how have you planned obviously we have to look how that actually plays out but how have you planned that trajectory for for that for that company

SPEAKER_00 29:34

okay I'm going to do a weird thing and give kind of like a shout out to competitors to that company because like burrow is arguably is the first mover in the US in this space. They have a sort of similar platform. It's a bit different technically. But And I mentioned them, and there's a couple of newcomers, actually a bunch in the EU right now who are very early stage, that are, again, addressing the crop transport problem. In the field. Right, in the field. And that's a problem across every crop. I think that there is space for multiple solutions to generate substantial revenue across multiple crops. One question I think that all of these companies, and Future Acres is an early stage company, so I will see where we go on this, but One question is, do you focus on verticalizing kind of within one crop and actually saying, okay, we can do these things for table grape growers. We can, we are in a very, we're very well positioned to capture this extra data that can then enable us to do these other things kind of further down the supply chain of the table grape or up. Um, do you focus on that and do you expand your, uh, revenue opportunity revenue base just within table grapes or do you say okay actually we can just dump a fleet of these robots with a very minor adjustment into stone fruit into pinot so the some some some wine grapes not most most are mechanically harvested already um and and into blueberries and other soft fruits. And that's a question, and I don't really know what the answer is yet, and we're deciding on that approach right now.

SPEAKER_02 31:40

And from a studio model, why did you choose the studio model to, instead of, quote unquote, raising an ag tech focused on the labor problem fund and just do seed and precede and go with that? What's the reasoning behind that, apart from but we have to see way more experimentation also on the how to deploy capital and how to build company sites. I'm very happy with that. But what's the reasoning behind it from your side, from the operating side?

SPEAKER_00 32:12

A couple of things. So one on a purely values basis, right? I want to see more diversity. I want to see a better spread of wealth. And I think one pathway to that is having greater socioeconomic diversity, on an equity owner basis, right? And right now, it is incredibly difficult for someone who's not rich to afford to be able to take the risk of starting a company or being one of the first five employees at a fast growth company, right? That's just not feasible for someone who doesn't have a cushion for the most part. Of course, there are some exceptions. The studio model enables us to pay someone to work on a high-risk venture and to actually bring them back in if and when that high-risk venture fails, which is part of the reality of startups, and to allocate them to another venture. So it is worth trying from a values basis just on that premise to me.

SPEAKER_02 33:20

Way more inclusive. Way more inclusive. Way more accessible.

SPEAKER_00 33:23

Exactly. Make startups accessible is a concise way to say that. And also, as when we look specifically at hardware in agriculture, I mean, that's tough. That's not a fit for most venture capital when you're saying it's a fit for some kind of deep tech models. But when you say I'm a venture capital fund and you have the option to invest in fintech software for ag versus agri-robotics software for specialty crops, there's no way that as a VC fund manager, with a set number of dollars to invest, I don't know how you justify investing in that collaborative robotics investment that's going to take longer, need more capital to bring to market, and have a limited addressable market, relatively speaking. And also societally, we really, really need to invest in that stuff. But I think that by having a very thesis-specific studio and by creating a portfolio of companies that is actually somewhat collaborative, so I think that most people will look at farmhand venture, most people outside of agriculture will look at farmhand venture's portfolio and say, what the heck, they're invested in a bunch of competitors. But that's not at all, because we'll We'll have a blueberry company and a grape company and an apple company. And

SPEAKER_02 34:57

they're so different.

SPEAKER_00 34:59

And they're so vastly different. But at the same time, the engineering is very similar. And so we will be able to leverage substantial efficiencies there, right? Except for

SPEAKER_02 35:11

that last one to 5%. Exactly. The pieces on top. But yeah, that's very interesting. The basis, a lot of that can be just in a venture studio. You share part of the accounting. You share a lot of the backend stuff. You can actually share a lot of the engineering stuff as well. I never thought about

SPEAKER_00 35:43

that. And like, yeah, a big part of it is like the way I look at kind of everything is like, all right, like this is an experiment. We're going to try to create the next generation of ag equipment companies. And we might sprinkle in a couple of software companies in there, but for the most part, our focus is on accomplishing that. And the model just follows that goal, right?

SPEAKER_02 36:09

And... So how many are you targeting? How many are you planning to build? And where are you now? Let's say we're at the end of the summer in the Northern Hemisphere in 2022, the end of August. What is the current status?

SPEAKER_00 36:25

So we're super early stage. I'm also going to be somewhat vague here to avoid any SEC challenges. But we have basically one company that is transferred in into the portfolio. We are... building the rest of the project here and we'll have more announcements to follow hopefully later this year but you know realistically possibly in early 2023 and

SPEAKER_02 36:57

what are like exciting sectors like what is like having been building one and getting close to some others what are some very overlooked pieces like table grapes for sure probably it's the first time we ever discussed it on this this podcast but what are other um let's even say subsectors but other pieces you really get excited about and almost wish there would be more if you're building a company in that space more competitors like what are you excited about in that um collaborative automation space

SPEAKER_00 37:29

um i think honestly there's not very the other i guess this is the other reason why the studio i don't see that many early stage companies right now externally that are super exciting um because everyone is chasing venture to because that's what's available for the most part. There are exceptions. Like you look at like Gus Spraying. I think that's a really cool company.

SPEAKER_02 37:55

How are they called?

SPEAKER_00 37:56

Gus Automation, I believe. Like Gus Spraying or Gus Automation. But basically they built autonomous spraying robots for specialty crops. I believe they're based in Central Valley, California. And I don't know them really beyond watching a lot of videos on YouTube. But they were born out of a sprayer. services provider right so they just solve their own problem and it turns out that now instead of having to have people drive tractors with sprayers on the back they can watch their robot do it um so

SPEAKER_02 38:31

so you're saying the model of investing the vc model is actually prohibiting to see more innovation more in especially the specialty crops because the address of market like what we discussed before like it's easier to invest somewhere else is that what you're It's missing innovation there because the funding isn't there.

SPEAKER_00 38:50

Yeah, the funding's kind of not there. And I think... Yeah, because when you go through like a quick exercise that says, okay, well, how big can my addressable market be? You actually kind of have to cut most specialty crop things. The other really big problem- Because you're

SPEAKER_02 39:07

not working on soy and like the big acreage where you can do that calculation very easily. Look, we have so many millions of acres we can go. If we only capture 0.1%, then we are all going to be rich.

SPEAKER_00 39:18

Yes. Although one thing that I do think is actually, and that is really relevant to the soil side of things that I think is under thought about but is exciting in especially crop world is car this is like a real wormhole but it's carbon monitoring um it's my belief this is a hot take that it's not technically and economically feasible to measure soil organic carbon um via satellite data. I don't think that can be done. We're going to

SPEAKER_02 39:56

get some emails. I think you were very clear on measuring because measuring until now, I haven't seen anything yet. Modeling is another thing, but accuracy is the issue,

SPEAKER_00 40:08

let's say. Honestly, Corn Saves America, great podcast by Ag Economic Insights, would recommend if you want to really deep dive on the soil carbon thing as compared to ethanol markets. It's real nerdy. So without getting too in the weeds there, but there's a solution to that. I think the solution is what we should be measuring. And the thing that we really care about here is the actual atmospheric flux of carbon dioxide and methane or methane for the Europeans out there. But it's funny, I've started to say methane more often than methane.

SPEAKER_02 40:46

I don't even know what I say. I've got to get emails about this.

SPEAKER_00 40:49

Do you mean like the

SPEAKER_02 40:51

flux above the fields?

SPEAKER_00 40:53

Exactly. Exactly. Because that enables you to account for, and again, like measurement is better than modeling. And because modeling leads to all sorts of challenges. I'll just keep it short there. But it really leads to a lot of challenges.

SPEAKER_02 41:11

And you can do this remotely, like measuring the flux of these emissions or these gases we would like to measure. You could almost see the fields breathe, basically.

SPEAKER_00 41:24

That's what you would like to see. Right. And it's all correlated, right? You do need to understand soil organic carbon and all sorts of other nutrients in the soil and the biology of the soil, actually. So I'm thinking about this from a soil triangle pyramid standpoint. You've got chemical and physical. Biological is the other part that is the future of soil testing. That also can't be done totally remotely. You're going to have to You're going to have to get dirty at some point is what I'm saying.

SPEAKER_02 41:53

Can

SPEAKER_00 41:54

that get a lot cheaper? Absolutely. Like super interesting space. But what I'm saying is from a specialty crop and actually from a livestock standpoint, I would really like for us to move the conversation towards atmospheric monitoring. Because again, ultimately, like when we talk about climate change and reaching- We care about what's up there. Exactly. That's what matters. And if we can measure it, why the heck don't we? Because now we can account for for above ground biomass, above ground cow burks, whatever. And the thing that we don't even know is emitting something because we're not even paying attention to it. So yeah, that is possible. I work with the Yield Lab Europe as well, which is an impact venture capital fund, and they're invested in a company called Carbon Space Technology that does this. So yeah, that I think is a really interesting opportunity that isn't I think that permanent and specialty crops don't get nearly as much love because it's a small, you know, it's because for good reasons, they're complicated, but they're also like a more promising opportunity. And they're just kind of better to grow from a net benefit standpoint, right? Trees and perennials generally better from a carbon standpoint and fruits and vegetables generally better than corn.

SPEAKER_02 43:15

And the potential is just enormous. If you look at, I just want to say, just before we started actually on like extreme pruning, obviously on a very small scale agroforestry models, like the centropic side of things, like the possibilities there are immense. The labor challenges are immense as well. And there is some kind of sweet spot there to make it maybe slight. I'm going to get emails for sure. Slightly less complicated or complex, but still what kind of automation we can, collaborative automation, because you're going to need, you're never going to automate a centropic agroforestry, um plot i think with 20 different types that need to be pruning it like you need but you also need a lot of people to to to have some kind of augmented help there to to do it and and the like there's so much potential in perennials that we are not tapping into probably rightfully so like you said because there are a few gurus that are really good at it and and then a few other people but if you count them there are probably a few thousand and that's it that's never going to be enough to manage millions of actors so where is that technology people and what's being designed there to make those systems even possible at a slightly larger scale than we currently do.

SPEAKER_00 44:25

And I think the way that we actually get there, because, yeah, all you said is true, and I can think of a bunch of examples, too, of like, oh, that's never going to work on a spreadsheet. But the way we can get there is by stopping... stop, we have to stop thinking about labor is unskilled. There's no such thing, really, one. And it's insulting. But there's, if you flip that, you've got farming as a service and kind of crop management services that exist today. You've got like, there's all sorts of services like this in row cropping, like the guy who manages my family's land does this across different farms in Iowa today, right? He's a service provider and he's really good at it. He's a good farmer. He knows his stuff and he treats his clients well. Shift that then to specialty crops. And again, right now, the people who are doing the work are very undervalued. And if we could just shift the narrative a little bit such that we said, you know what? These guys are experts. We have a hazelnut orchard planting crew. They will tell you exactly what it will cost in this region to implement a hazelnut. Because you only plant a hazelnut orchard once, right? And so you're not very good at it. You're not very efficient. You're never going to be very good at it. Outsource it. It makes way more sense from a land management standpoint to do that.

SPEAKER_02 46:01

And bring in all the knowledge over decades built up and all the latest papers and peer-reviewed stuff that only the real geeks will read or the latest courses. Yeah, you're right. The perennial one you do once or... a few times, maybe, and you will never reach full capacity or full potential there because you don't do it daily. You don't learn daily. You don't focus daily on these kind of systems.

Why is investing collaborative automation tech now possible

SPEAKER_00 46:24

Right. So can you get to a future state where these crews are providing services to farms? Because this is the way that row crops work right now from an input standpoint, right? You've got crop consultants. They tell you what to do. You don't really have to overthink it. You're doing what your input provider tells you to do. And And right now in row crops, what's the sales channel for most technology? Input providers. In specialty crops though, you're still going direct to farmer for the most part. Maybe input providers if you're dealing with irrigation and also some chemical stuff. But from a labor standpoint, you're going direct to farmers and you should be going actually to the labor provider. But the challenge is that that system is so broken right now, it's really hard to get there. But I absolutely can envision a future world where a lot of the services that like, in the US, we have an extension service, right? And so that provides some of these services, it's definitely variable, depending on where you are, and what crop we're talking about. And it's hard to bring in new crops through this system. But you know, it's, it's something it's, it does, it provides a lot of value. And If you can kind of put some of that expertise into a specialized farm labor workforce, and that farm labor workforce then becomes your sales channel, and in fact your customer for the next generation of ag equipment companies, then you can actually start to have an experimental group within that workforce that says, hey, you want to, I don't know, do all sorts of funky integrated multi-row planting systems? We'll try that with you. We'll budget it out. for you we'll say here's what it will cost for us to implement this system do you want to do it and we'll we'll we'll be there to do it for you which solves for the major labor risk it doesn't solve for all the risks to be very clear because there's also the supply chain market risk like implementing new crops even you know like a new crop for that region or for that farm is super hard to do but it's impossible to do if we don't solve for this labor issue

SPEAKER_02 48:39

And so why now, mostly from, let's say, from an engineering or technology piece, because the labor issue, it's clear why now. It's only getting worse. We have to fix it, preferably yesterday, which we didn't. But why now? Let's ask the investor question. Why is this so exciting now and not only so relevant, but so exciting now from a building perspective and also from an investment perspective? Maybe not from the VC yet, or maybe that will never come, but from an investor and studio model, why is it time now?

What should smart investors, who want to invest in agtech for farm workers look out for?

SPEAKER_00 49:10

Well, okay, first I'm going to say the VC opportunity is there for some companies, not all companies. That's how I would view it. And again, it depends on your fund model and how you're thinking about returns. Because I think you can make it work. The time is now from a technology standpoint, the positive side and the negative side. So positive side, there has been so much progress in automation and robotics. Autonomy at this point is... can be delivered functionally as a service. It's the bare minimum. It's not that expensive to do anymore if you do it intelligently. There are lots of off the shelf robots. We're starting to see fleet robots start to be functional. And so we're starting to see technology proof points. And when you look at other industries, there are very expensive versions of the types of technologies we want to see, whether that's end effectors, whether that's vision, et cetera. that can be basically stripped down and re-engineered for agricultural applications, so both hardened for outdoor weather applications and made minimalist because we are not dealing with iPhones, we're dealing with blueberries, right? And then on the negative side of that though, I think that a lot of investors and technologists are seeing that, are seeing that that opportunity is there to apply technology that is relatively mature from a technology risk standpoint to agricultural applications. However, I fear that most of those technologists actually have a limited understanding of agricultural systems And so two things that I'm currently worried about probably could generate a longer list here. But one, they're going to be disappointed because they're going to invest in things that take too long to deliver returns or never deliver returns because they're not understanding how to sell to their market over the right time frame. And they don't have a realistic exit opportunity. And then secondly, from a more big picture standpoint, when we start to invest in fully autonomous systems for monoculture cropping systems, it becomes even harder to diversify those systems. So when you look at all of the strawberry harvesters out there, many of which are super interesting, it is a very real problem and it needs solving, but they are addressing it. So specifically in the US, you look at like Harvest Crew and you look at Tortuga and And I'm forgetting one, but I'm sorry to the one I'm forgetting, but like those are all really technically interesting and like relatively feasible things to do. But what I fear will happen from a, and also agricultural systems are going to be diverse. We'll have monoculture and that's fine actually is my belief. We need to have some of it, but it locks us in, right? So if we're only designing for the really big farms that can afford to, customize their farm setup to the very big, expensive machine, then we run into this permanent factory farming system situation. And again, we can have some of that, but we shouldn't have all of that. And so that's why now someone better also start pushing the narrative for alternatives to the all-in-one does everything for your farm type machines.

SPEAKER_02 53:06

But you have to redesign your farm to fit the machine and then you'll be locked in for that for a long time. Yeah, that's the narrative that is a bit problematic. So what would you tell to the investor side to, of course, without giving investment advice, but sort of prevent them to get disappointed? Like people are getting very excited about, of course, what technology can do. We are amazed every day. We're getting very excited about soil and then sort of at that intersection what would you tell them to be careful with to look out for to be good to look into maybe to get excited obviously especially crops and but but beyond that or next set what would you give them a sort of general general advice

SPEAKER_00 53:47

two things one understand total addressable market and understand that the global you know someone's throwing you a 1.4 trillion specially crop market number like that's not your realistic addressable market. So really understand the kind of go-to market plan and what's realistic on a bottom-up basis. And then two, and I maybe should have flipped the order of this because I actually think the second part is more important. Who's using it? Who is using the product? Talk to them. It's like that simple. It's kind of obvious. But I don't think that it's often done as part of a due diligence process for some reason.

SPEAKER_02 54:32

Which is in general really weird. I meet investors that invest in food that they didn't even try. The bare minimum you could do is order it. Let's see if it gets to your place or wherever you can buy it, if it's a direct-to-consumer. And then eat it. And if it's technology, figure out who ends up using it and see if they will and if they are happy or not. Right. If they are, let's say, engaged in the collaborative process or not.

What would you do if you were in charge of a 1B investment portfolio

SPEAKER_00 55:01

Exactly. Well, and this... even more challenging, I think, in the robotics, because it's increasingly common, and this is good, to talk to farmers as part of a due diligence process. But what's important to understand is that farmers and farm managers are not necessarily the user, and they don't necessarily like the people who are their user. So that creates a real communications challenge. And so I think that most people will really struggle to get access to the actual user. So talking about that with the founders and being realistic about how are you trying to get access to this group of people matters.

SPEAKER_02 55:49

Matters, absolutely. And then to, because time is flying, but what would you do, you're running this experiment, let's say the studio becomes a success and somehow you get access to to a significant amount of resources. I always like to use the one billion question. What would you do with that? But it doesn't have to be in the studio, actually. What if you had a billion dollars to put to work in ag and food? Let's confine it to North America. And for now, maybe you see great opportunities also in Europe. But let's say, how would you put it to work? What would you prioritize if you had that access? For a very long time, it doesn't have to be a VC model, obviously. You can also buy land to regenerate if you want it and never sell it. There have to be some kind of return model, but it could be a 50-year plan if you want to.

SPEAKER_00 56:35

I love this question, and I don't know if I'm taking a cop-out answer or not, but I definitely am wrong about most of my guesses, I'm sure. I will change in real time, hopefully. That's something I try to do forever. And there are a ton of really smart people who do not currently, and smart isn't even it, but thoughtful and with diverse perspectives, who can effectively deploy capital but don't have access to it. And so if I had a billion dollars today, I would want to spend it all ASAP so that it can start to deliver returns. And the most effective way to do that, I think, would be to break it down into a bunch of different experiments run by a bunch of different people. And I think the mandate there would be to make things as kind of open sourced as possible so that we can iterate upon that set of distributed experiments experiments. That's what I'm trying to do with Farmhand Ventures. We will be as transparent as we can be about our model. We'll be able to be more transparent in a little bit because I want someone to do it better than I'm doing it, actually.

SPEAKER_02 57:48

And beyond collaborative automation and technology, what are other pieces of the puzzle you see completely or almost completely neglected? Where do you get excited where resources are needed but not being deployed at the moment and where you would be if you had access to a billion dollars.

SPEAKER_00 58:09

I think one other thing that would be very interesting, I think that there's really a gap between the like real estate, real asset investment managers and the tech managers and like that needs to be bridged and like that some ideally would also be inclusive of the like existing land owners and like I think about this a lot. I was just with my grandma who, you know, we passively manage our farmland and it's, it's fascinating scenario. But, but like, yeah, I would like for those groups to be more interrelated. One way I could see, one interesting like capital structure to do that in my mind would be kind of like a retrofit farm type fund model. So a situation where, and these exist for, I wish I could remember the name of this fund, but there's a couple of funds like this that exist for like apartment buildings. So where you basically provide financing such that the landlord can increase insulation you know, install new windows, make the apartment more livable and increase rent slightly and also decrease utility costs substantially. And so that's how that fund ends up delivering a return, right? Usually that's debt-based. And I think a similar thing could absolutely exist for farmland and that could be tied again to the agriculture technology element of things and the practice side of things. I think that could be super duper interesting. And I would love to see if anyone's doing it, reach out. I want to talk to you.

SPEAKER_02 59:47

And scalable because that's especially when it gets into the debt side of things. The debt market is a number of times bigger than a lot of the other markets combined. And there's just so much money looking for these kinds of things, going into real estate, going into renewable energy, going into other things that would love probably access to other real assets like land, not necessarily buying it, but improving it over time. and getting an okay return out of that is very, very interesting because you're talking about large quantities of money and large quantity of actors, which means a lot of impact. And so there we need way more experimentation. Absolutely right. But what if... Go ahead.

SPEAKER_00 1:00:28

Well, I guess the one other thing I would add that I'm like, when I look at Europe especially, it's very interesting to compare, contrast, well, climate smart ag in the US versus... well, it depends if you're in the UK or the rest of the EU, but farm to fork strategies in the EU. One thing I would like to see a lot more investment in as well is really measuring emissions instead of modeling emissions on a policy basis. Because one, I think that if we could get more confidence in that number there might be a little bit less controversy. But more importantly, actually, if we could measure that number. So and so specifically what I mean here, you look at like the Netherlands or you look at Ireland in terms of like cattle culling controversies as relates to the 2030 methane reduction pledge. Right now we're having to meet, every nation is trying to meet these goals based off of models that are extrapolations of studies done in limited geographies with limited genetics with limited feed input types and it's really comparing apples to oranges and then extrapolating off of them and while i wouldn't go you know we directly need to lower emissions and so i don't want to go so far as to like say no no like cows aren't a problem um but what i would like to see is a reward for the dairies that are and the reward actually in some cases would be not a punishment But a reward for- Or

SPEAKER_02 1:02:18

not

SPEAKER_00 1:02:19

being closed, yeah. Right, not having to cull your cattle. But a reward for adopting a new manure digester that reduces your, or a feed additive that reduces your emissions, right? And right now, we don't have the infrastructure in place to enable that on a legislative basis. So I would love to see more investment on that front. But that's a tricky one.

SPEAKER_02 1:02:46

It's a tricky one because, I mean, I continue to see these charts of, I think, our world in data and things like that showing the immense emissions from livestock. And I think the listener of the show, Erov, has always replied to that on LinkedIn, constantly taking apart the LCA's underneath there and the models underneath there, which are... let's say, imprecise by best and probably flawed completely if you look at them. It's much more nuanced than that. And the issue is that they're being used for all kinds of legislative stuff across the EU and across the world, which doesn't really hold any ground. The underlying assumptions there are very, very risky. It doesn't mean we shouldn't address the methane problem and all of it, but it's very tricky to do that. And it's very tricky because you're punishing a lot of people that have made massive changes in their practices. And we just throw out the cow with all the issues and not really addressing the underlying issues, which is probably the issue because they're all inside and eating corn and soy all day. And there's an underlying issue there that is very tricky. It doesn't mean we don't have to reduce the amount of livestock in the Netherlands, but the underlying questions are not asked. And completely being relying on those models, except for measuring actually the above-fields levels that you mentioned before, that would be super interesting because then you can see actually like, okay, what's the actual emission like and how does it fluctuate over a year and how does it fluctuate over different pastures? How does it fluctuate over X, Y, Z? And we have no idea now. All of this data comes from closed environments, which by definition doesn't really represent the outside environment. So we have sort of, maybe some of them I think gets absorbed immediately by bacteria. Have we any clue? No, not really because there's no data.

SPEAKER_00 1:04:38

Right. Yeah, no, it will. And especially like, and like the positive side is that for like, for the regenerative movement, right. Or, or organic, which may go and invest in

If you could wave a magic wand and change one thing

SPEAKER_02 1:04:47

that stuff and prove, prove that your way, like a three X, 10 X, whatever the X is better, or even 10%. And show like, look, it's not the same product. It's not the same. Like we're not doing with nutrient density. Like it's not the same. It's not the same tomato. It's not the same piece of beef. It's not like you cannot call it the same because it's off the charts different in terms of certain phytonutrients that you need. Maybe it's off the charts different and sort of in a number of emissions, but we don't know because we took one study somewhere and we extrapolated for basically all of you and then said, no, you have to reduce this and this, which is risky. But yeah, what's the business model of measurement? Very, very difficult to invest in that and to get that going, but very, very needed. So completely neglected, I would keep a piece of that billion to invest in those because potentially it's the highest Thank you. potential outcome or positive outcome you can get by simply showing what's currently happening.

SPEAKER_00 1:05:45

Right. Because it can drive everything else forward, theoretically. But yeah, there's a lot of political complications.

SPEAKER_02 1:05:52

Of course, because we're on a certain track. And so what would you change if you had a magic wand? I mean, you know, this question is coming. And you could chase one thing in ag and food. What would that be?

SPEAKER_00 1:06:05

I actually think it's that. I mean, yeah, maybe I skipped a step there. But yeah, I I like to measure everything. I think that being able, now like it's unrealistic, right? Most people don't actually want to get into the weeds of the different numbers and the different kind of optimization models. But I do, and if you could do that in an affordable way, I think it can unlock almost everything that we've talked about and then some, kind of. but I don't, I also don't know that it's feasible, right? Like this goes all the way back to with like the Yield Lab Institute work that I've done. Like when I, so we at the, so the Yield Lab Institute is the nonprofit branch of the Yield Lab family of funds. And it was initially start, I started it initially because I wanted to try to quantify impact across an early stage venture capital agri-food tech fund portfolio. I don't think you can do that actually. authentically. I don't think that's really possible. The more you dig into it, the more you try to force quantification on it, or the more I dug into it and tried to do that, I realized I feel like there's going to be double and triple accounting here and it's inauthentic. And so it's better just to say we'll only invest if it has a binary positive or negative impact and we'll just have to leave it at that. And that's going to have to be good enough, actually, for an impact venture capital fund. with some reporting and continuing to monitor that. But yeah, so I say I wish we could quantify everything with the caveat that I might be wrong, that it's the best thing to do.

SPEAKER_02 1:07:55

But would it, or is it possible on a farm level or a field level? I imagine like a few layers away, okay, but to be able to start getting real data from a field, it could be an orchard, it could be whatever, table grapes, it could be are we getting any close to getting I'm not even saying real time but like proper data with an okay sense of accuracy that we can actually compare and start looking at okay this is just a better way of doing this or it's a more positive way because of this this and this do we get anywhere or is that sort of a pipe dream

SPEAKER_00 1:08:32

do you mean from do you mean from like an externality variable

SPEAKER_02 1:08:36

even just the emission side like you mentioned this is possible now is that how accurate do we get in the sense can we compare hectares to hectares or is it more regional?

SPEAKER_00 1:08:46

Today in Western Europe and most of North America and increasingly Latin America you can measure every roughly five weeks the flux so the change in atmospheric carbon dioxide and you can do that on a field by field basis that can get better when we as more satellites get launched I think the other really important thing that we haven't talked about is water. I'd argue it might be more important than the CO2 thing actually. And then also nitrous oxide. And yeah, you can, you cannot, the challenge with the water thing is evapotranspiration stuff is only valuable to agronomics if you can get it like really more than daily actually. And you can't do that right now, but I am aware of a couple of companies working on launching new satellites to enable that. So I think we can get there. But again, that runs into the problem of like, but you know, we're measuring, we're measuring these like nerdy science concepts actually. And like, again, I suspect what might matter more is the people. And so that's where I'm like, you know, the science geek in me wants to do all of that. And I wonder if that could have adverse, I'd want to think through the consequences of that. Although I think we ultimately are moving towards doing that regardless.

UNKNOWN 1:10:14

Yeah.

SPEAKER_02 1:10:16

Yeah, no, it's very interesting to think about what that would lead to if we are daily able to measure water and emissions, et cetera. What would that give us? Like, okay, we know a lot more. And now what do we do with that? And it raises... Enforce anything.

SPEAKER_00 1:10:33

Sorry. Yeah, it raises... No, no, and it raises...

SPEAKER_02 1:10:36

Go

SPEAKER_00 1:10:37

ahead. It raises super interesting questions about data ownership, like farm data ownership, because, yeah, there's been a lot of interesting content on this. And I've done a lot of work on this with the ag launch group. But like, yeah, it just raises questions when you can suddenly get all the data you need just off Google Earth.

SPEAKER_02 1:11:04

That's got to be part of a whole different podcast. Until then, I would like to thank you so much for your time today to unpack some of it. I have the feeling we only scratched the surface, but that's probably a good thing, which means we're going to check in again. And I want to thank you so much for, of course, the work you do and for coming on here to share about them.

SPEAKER_00 1:11:26

Yeah, thank you for having me, Kun. It was lots of fun and happy to chat anytime.

SPEAKER_02 1:11:36

Thanks again and see you next time.