Agriculture Technology in the Time of COVID-19: What has changed?
Even while the United States remains in the throes of a host of health, economic and social challenges, the lessons reached by individuals, businesses and companies are beginning to take shape. One central theme that I have been considering is the health and resiliency of our food supply chains; now more than ever, we must embrace disruptive technologies that value efficiency, transparency, safety, and preservation. The first mass outbreaks of coronavirus were followed by food stockpiling due to fear of insufficient food supplies. Whether panic buying was necessary does not matter as much as the principal – especially during times of uncertainty, we rely on intricate food systems to sustain ourselves.
The fact that we didn’t see mass food shortages is a testament to the strength of our systems – but masks global shortages that did occur and the deficiencies of our systems. Much more is needed to maintain during the ongoing pandemic and lay the groundwork for better food systems for the next catastrophe. Agriculture technology will continue to grow in importance within the US and around the world as food producers look to supplement labor with innovations and increase their access to real time data and actionable results on the farm.
The pandemic and subsequent lockdowns resulted in reports of wasted milk and discarded harvests due to companies shutting down offices and massive school systems temporarily closing their doors. These events sent shock waves through our food systems, leading some countries to struggle filling shelves. And while all areas of agtech are not seeing forward momentum, certain sectors are being teed up as the next big thing.
Investors are now seeking technologies that provide a value-add during the current cycle but also for the recovery to follow. Here, the focus has shifted to companies that can transform the value chain of food; provide solutions to systemic challenges; improve traceability and reduce waste; and address the labor challenges highlighted by COVID-19. Above all, investors are looking for startups now that are well-positioned for the current environment, have a clear plan for today and tomorrow, and remain well financed. Of these, indoor farming, food logistics and tracing, and food safety provide great opportunities for investors.
As outlined in the excellent research conducted by BCG, the agriculture industry will follow a three-step rebound:
· First: A cyclical shift in the supply-demand structure
· Followed by: Short-term COVID-19 response measures for the 2020 growing season
· And then: A long-term response to ensure secure and resilient food systems
As of August 2020, we are in step two; we have shifted our supply-demand framework for the short term and are responding to the needs of the 2020 growing season. Soon, we will emerge and begin the hard work of addressing some of the systemic deficiencies of our food systems. Startups that are positioned – or can reposition – to take advantage of these trends will put themselves in prime position for market growth and fundraising. Companies in agtech finding their feet over the next decade will feel the ramifications of the events of 2020 and should keep in context the cracks in our food system that became apparent during the time of COVID.
The story of the data: Pitchbook outlines the explosion of deal activity in agtech and food tech – much of which can be attributed to the rise in bridge funding and round extensions. https://pitchbook.com/news/articles/agrifood-investment-trends-in-the-covid-19-era
Written by Nick Sramek, Director of International Relations
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