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Economy

Ag-Tech Accelerator? How Trump Is Pushing Farmers To Silicon Valley

President Trump's hard line on immigration is spurring a surge of high-tech investment, as farmers scramble for new ways of coping with labor shortages and slumping profits.

Now that's a tractor.
Now that's a tractor.
Mario Parker

Finding people for the sometimes back-breaking tasks of planting and harvesting crops has become more and more difficult in the U.S., where the industry has relied on cheap immigrant labor for generations. Since taking office in January, Trump has compounded the problem with actions to limit foreign workers. But that's also encouraged some investors to bet that growers will increasingly need new tools to cut costs and boost productivity.

In the first quarter of 2017, a surge of cash has poured into agricultural technology companies, including some big-time investors such as the Bill and Melinda Gates Foundation and Sam Altman's Y Combinator. Startups received $200 million through 29 deals, the most of any quarter since researcher CB Insights began tracking the data in 2012. Other recent backers include venture capitalist and Sun Microsystems Founder Vinod Khosla and Alexandria Real Estate Equities Chief Executive Officer Joel Marcus.

"With the new administration and the emphasis on deportation and immigration, that has really heightened things," David Slaughter, a professor of biological and agricultural engineering at the University of California in Davis, said in a telephone interview.

Technology isn't new to agriculture. Since John Deere invented the steel plow in the early 1800s, farming has embraced new tools from tractors that use global positioning systems to genetically modified seeds. But even though much of the $400 billion U.S. farm economy is mechanized, fresh produce and dairy remain heavily dependent on human labor. Much of that comes from immigrants, both documented and unauthorized.

Even before Trump arrived, worker shortages were intensifying because former President Barack Obama had stepped up deportations. There's also been a decline in arrivals from Mexico, traditionally the main source of migrant workers. More than half of U.S. farm workers are undocumented, according to the American Farm Bureau Federation. The U.S. Department of Agriculture estimated 2.6 million jobs were on domestic farms in 2015.

As labor supplies tighten, American farmers are increasingly under financial stress because of low crop prices and global surpluses. The USDA estimates farm income will drop in 2017 for a fourth consecutive year, the first time that's happened since the 1970s. The Bloomberg Agriculture Subindex has dropped 33 percent in the past four years.

Meanwhile, farmers are trying to figure out how they will provide enough food to feed the planet as populations grow over the next few decades. Harnessing data is still one of the biggest challenges to boosting crop yields, Sam Eathington, chief scientist at Monsanto Co."s Climate Corp. unit, said in a March interview at one of the company's research labs in Woodland, California.

The United Nations estimates that the world's population is set to expand 35 percent by 2050 to about 10 billion people. Climate change has left arable land subject to extreme weather events like drought that place an emphasis on water, chemical and fuel use.

That's drawing more interest in new farming technologies such as autonomous tractors, plant sensors, drones and data-management software that will probably generate $240 billion in revenue by 2050, according to Goldman Sachs. Farmers will be forced to adopt new technologies at a faster rate, the bank said.

At the same time, investors who found success in the tech boom are hunting for the next opportunity, Slaughter said.

Tech veteran Mark Kvamme co-founded Columbus, Ohio-based Drive Capital in 2012 with an eye toward investing in the Midwest. FarmLogs, an Ann Arbor, Michigan-based company that gives farmers data about the health of their fields, is one of the projects Drive Capital is backing. In January, the firm helped raise $22 million in a Series C round of financing.

"In Silicon Valley, nobody understood farming," Kvamme said in a telephone interview. But now, more investors are looking at the industry as another type of "data science," where gains and losses are quantifiable, he said.

So-called ag-tech started drawing more attention from investors after a big takeover was announced in 2013 by Monsanto Co., the world's biggest seed maker, said Jesse Vollmar, chief executive officer and co-founder of FarmLogs. Vollmar grew up on his family's farm in Michigan and started the company out of Y Combinator in 2012. Monsanto paid $930 million for Climate Corp., which specializes in agricultural data.

With farmers looking for any advantage to protect shrinking profit margins, they're more open to adopting new methods of growing and selling their crops, said Aki Georgacacos, managing director and co-founder of Avrio Ventures LP, an investment firm that focuses on food and agriculture companies.

In March, Avrio was part of a Series A round of financing that included Monsanto Growth Ventures, the company's venture capital segment. The financing raised $6.5 million for FarmLead, a company that allows farmers to sell crops online.

Also in March, Arable Labs, a company that's selling a Frisbee-shaped tool that can be mounted on adjustable rod in fields to collect data, raised $4.25 million. Fred Bould, who designed Alphabet's Nest learning thermostat, also designed the Arable device.

Ceres Imaging said Wednesday that it raised $5 million in a Series A financing round, led by Krishna Gupta's Romulus Capital. The company provides farmers with aerial spectral imagery and data to check the health of crops, by placing sensors on airplanes that then fly over growing areas.

Bob Payne, who grows crops including almonds and barley in northern California, is the type of farmer investors are hoping to reach. Payne uses a computer application called Agworld to help manage his operations. His Deere & Co. tractors are equipped with GPS, and a few years ago he bought a fixed-wing drone. Last year, his drone helped him spot a virus forming in his fields that he estimates would have cost him $140,000 in losses.

"It's been nice to have all my fields with me on an app," Payne said.

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Economy

Lex Tusk? How Poland’s Controversial "Russian Influence" Law Will Subvert Democracy

The new “lex Tusk” includes language about companies and their management. But is this likely to be a fair investigation into breaking sanctions on Russia, or a political witch-hunt in the business sphere?

Photo of President of the Republic of Poland Andrzej Duda

Polish President Andrzej Duda

Piotr Miaczynski, Leszek Kostrzewski

-Analysis-

WARSAW — Poland’s new Commission for investigating Russian influence, which President Andrzej Duda signed into law on Monday, will be able to summon representatives of any company for inquiry. It has sparked a major controversy in Polish politics, as political opponents of the government warn that the Commission has been given near absolute power to investigate and punish any citizen, business or organization.

And opposition politicians are expected to be high on the list of would-be suspects, starting with Donald Tusk, who is challenging the ruling PiS government to return to the presidency next fall. For that reason, it has been sardonically dubbed: Lex Tusk.

University of Warsaw law professor Michal Romanowski notes that the interests of any firm can be considered favorable to Russia. “These are instruments which the likes of Putin and Orban would not be ashamed of," Romanowski said.

The law on the Commission for examining Russian influences has "atomic" prerogatives sewn into it. Nine members of the Commission with the rank of secretary of state will be able to summon virtually anyone, with the powers of severe punishment.

Under the new law, these Commissioners will become arbiters of nearly absolute power, and will be able to use the resources of nearly any organ of the state, including the secret services, in order to demand access to every available document. They will be able to prosecute people for acts which were not prohibited at the time they were committed.

Their prerogatives are broader than that of the President or the Prime Minister, wider than those of any court. And there is virtually no oversight over their actions.

Nobody can feel safe. This includes companies, their management, lawyers, journalists, and trade unionists.

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