

By Rob Trice and Seana Day




So why are we confident things will change? For two reasons:

  1. When the money stops the thinking starts.

The US dairy market and many other commodity markets, including corn and soy, are insulated from market pricing through government programs that establish a guaranteed floor price for the purchase of their goods. Many of these commodity markets, however, have seen bumper harvests the last couple years so the commodity pricing is sitting on the floor at recent historic lows. Most family-owned and operated dairies in the US that comprise 97% of the US market have not made a profit in the last two years. In fact, USDA is forecasting that median average on-farm income for America’s two million family farms will be -$1,412, nearly twice as bad as the 2015 median of -$765.

For labor-intensive fresh specialty crops, grown mostly in California and the Western US, agricultural inefficiencies have been manageable due to the availability of a cheap pool of (mostly migrant) manual labor. Now, not only has the supply of manual labor workers diminished, but California is in the process of implementing a $15/hr minimum wage, and farm labor overtime laws that are hiking up the cost of labor as a percentage of overall operating costs from roughly 50% to 66% (based on anecdotal discussions with small, mid and large sized California farmers). Most California agriculture producers simply cannot cover such a big jump in labor costs.

Rob once worked with a startup CEO who told him that “when the money stops, the thinking starts.” The net effect of the changing labor input costs for is that most food producers in the US can see that the money is stopping in the sense that profits are shrinking—so new thinking is starting. Throughout the day at the RoboUniverse conference farmers, ranchers and dairymen, known for fierce independence, were espousing the need for greater collaboration with the tech talent that can help develop and deploy technology solutions that meet the needs of food producers.

2. Technology is is pervading all sectors. Agriculture will be no exception.

One of the themes that we harp on at The Mixing Bowl is the spread of “Exponential Innovation” that is bringing technology innovation to all of us. Curt Carlson, formerly of SRI, and 3D Robotics CEO Chris Anderson, among others, have written of this trend whereby more and more of us are gaining access to powerful tools to innovation: affordable access to a pervasive internet; anything-as-a-service via cloud-based computing; open-source software and publicly available large data sets through APIs (application protocol interfaces); and low-cost, democratized tools of production, discovery, distribution, logistics, marketing and customer management. The result, as Carlson notes:

“In a world where so many people have access to education and cheap tools of innovation…The sweet spot for innovation today is “moving down”, closer to the people because all the people together are smarter than anyone alone and all the people have to tools to invest and collaborate."

Walking the floor at RoboUniverse, you could see technologies—better, cheaper and faster than even one year ago—hungrily searching for markets. The food production sector in the US has challenges and its acute financial reality is forcing it to embrace a new mindset. This is why we remain bullish that robotics and automation will reach the food and agriculture markets.

Rob Trice