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Innovations in AgTech - Royse Law Firm

New advances in AI, biotech, drone technology, IoT, and satellites have transformed the way food is produced, managed, and distributed. This presentation discusses the technologies, legal hurdles, and investment trends of the growing AgTech industry.

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Innovations in AgTech - Royse Law Firm

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  1. AgTech ROGER ROYSE – ROYSE LAW FIRM, PC I RS C I RC ULA R 230 DI S C LOS URE: TO EN S URE C OMPLI A N C E WI TH THE REQ UI REMEN TS I MPOS ED B Y THE I RS , WE I N F ORM YOU THA T A N Y TA X A DVI C E C O N TA I N ED I N THI S C OMMUN I C A TI ON , I N C LUDI N G A N Y A TTA C HMEN T TO THI S C OMMUN I C A TI ON , I N N OT I N TEN DED OR WRI TTEN TO B E US ED, A N D C A N N OT B E US ED, B Y A N Y TA X PA YER F OR THE PURPOS E OF (1) A VOI DI N G PEN A LTI ES UN DER THE I N TERN A L REVEN UE C ODE OR (2)PROMOTI N G , MA RK ETI N G , OR REC OMMEN DI N G TO A N Y OTHER PERS ON A N Y TRA N S A C TI ON OR MA TTER A DDRES S ED HEREI N .

  2. 2 Roger Royse @rroyse00 | @royseagtech www.rroyselaw.com

  3. 3 ROYS E A G TEC H I N N OVA TI ON N ETWORK The Eras of Agricultural Technology Innovation • Domestication • Information Age • Industrial Revolution • AgTech Revolution • Green Revolution

  4. 4 ROYS E A G TEC H I N N OVA TI ON N ETWORK Dynamics • Food Security • Market Forces • Consumerism • Funding • Labor

  5. 5 ROYS E A G TEC H I N N OVA TI ON N ETWORK Food Security: The Need for AgTech • Total population by 2050: 9 billion • 60-70% increase of food production needed to meet demand (UNFAO) • 50% increase in prices • 90% of crop production from higher yields on existing farmland • More output, fewer inputs

  6. 6 ROYS E A G TEC H I N N OVA TI ON N ETWORK By 2050 • 9 billion people • 100% more food consumption • 70% from technology

  7. 7 ROYS E A G TEC H I N N OVA TI ON N ETWORK Consumerism • Grow local movement • Sustainability - Convenience - Water, precision • GMO and gene editing - Year-round food • Environmental - Urban and vertical farming • Animals and protein - Waste, transport, packaging • Transparency • Growing middle class - Supply chain • China

  8. 8 ROYS E A G TEC H I N N OVA TI ON N ETWORK Farm Labor “Larger farms usually perform better financially “The average number of hired farmworkers has […] The differences reflect lower costs per unit of steadily declined over the past century, from production and not higher revenue. In turn, larger roughly 3.4 million to just over 1 million.”* farms appear to be able to realize more production per unit of labor and capital.” * *Statements from the USDA Economic Research Service

  9. 9 ROYS E A G TEC H I N N OVA TI ON N ETWORK Shortage of Farm Labor • Poor working conditions, back-breaking work • Fewer undocumented migrants coming to the US • No suitable alternative workforce • Decreased supply, increased cost

  10. 1 0 ROYS E A G TEC H I N N OVA TI ON N ETWORK Regulatory Effects on Labor Agriculture = low margin industry Overtime regulations • Gov. Jerry Brown signed bill in September Who absorbs cost? • Consumers? 2016 to be implemented by 2022 • Farmers? Immigration • 2015 glitch in seasonal worker visas Raised minimum wage ($15 by 2022) • Competitive wage: >$15 delayed arrival of legal farm laborers in US • Farms still lose 5-10% of crop production • Competition with other sectors for visas due to lack of labor (H2-A ag guest worker program v. H1-B tech visa)

  11. 1 1 ROYS E A G TEC H I N N OVA TI ON N ETWORK Regulatory Effects on Labor

  12. 1 2 ROYS E A G TEC H I N N OVA TI ON N ETWORK Markets: Agriculture Economy • Average farm in California is a • In 2012, 70% of all farms had internet access __$6 million to $10 million business • California’s agriculture industry is a __$46 billion per year industry California is at the cutting edge of innovation within the agriculture sector, from water use efficiency to research advancements and product development. Through social media and the information age, we have the power to transform people’s relationship with government in a positive way. Secretary Karen Ross, CFDA

  13. 1 3 ROYS E A G TEC H I N N OVA TI ON N ETWORK Funding AgTech The market is still immature • Most deals done at the seed stage AgTech raised • $100 million from 40 deals (2012) • $4.6 billion from 526 deals (2015) • $3.2 billion from 580 deals (2016)

  14. 1 4 ROYS E A G TEC H I N N OVA TI ON N ETWORK Funding AgTech • AgTech investment dropped 30% in 2016 year-over-year despite exponential growth for three consecutive years • Pullback in funding reflects declines in bioenergy, drone technology, and food delivery investment • This decline comes after a 10% decrease across global VC markets after record-breaking highs in 2015

  15. 1 5 ROYS E A G TEC H I N N OVA TI ON N ETWORK Funding AgTech Source: AgFunder

  16. 1 6 ROYS E A G TEC H I N N OVA TI ON N ETWORK Funding AgTech: Key Stats for 2017

  17. 1 7 ROYS E A G TEC H I N N OVA TI ON N ETWORK Investment Sources • Angels • Accelerators/incubators • Venture capitalists • Universities • Corporate ventures • Government • Farmer-backed funds • SBIR • Private equity • USDA

  18. 1 8 ROYS E A G TEC H I N N OVA TI ON N ETWORK Investment Sources

  19. 1 9 ROYS E A G TEC H I N N OVA TI ON N ETWORK New Innovations in AgTech • Precision Agriculture • Farm management • Big data and analytics • Supply chain • Molecular and cell biology • Mobile • Soil • Social media • Drones and satellites

  20. Part 2: Ag Technologies

  21. 2 1 ROYS E A G TEC H I N N OVA TI ON N ETWORK Older Ag Innovations • Combines • Oranges • Soil cultivators • Almond sweepers • Harvesters • Mechanical spinners • Strawberry • Produce sorter • Tomato

  22. 2 2 ROYS E A G TEC H I N N OVA TI ON N ETWORK Precision Agriculture Allows farmers to determine when, where, and Today, precision ag provides: what to plant with an extreme level of accuracy. • Satellite navigation and guidance • Monitoring and mapping of yields • Live soil information through sensors installed Automated three-step process 1. Collect information in vehicles 2. Creates a soil (field) map to analyze • Crop information through drones, bots, and 3. Combines soil and yield information satellites • Water and grow equipment • Farm management and decision support

  23. 2 3 ROYS E A G TEC H I N N OVA TI ON N ETWORK Base Ag Tech: Gathering Data • Determines health and vigor of growing crops Yield monitors • Instantly records and displays crop yields from • Provides better agricultural survey of field than farm equipment manual sampling Global positioning systems (GPS) Geographic information systems (GIS) • Pinpoints exact locations of crops • Maps data and analyzes relationships between • Produces precise maps (grid soil sampling), factors (Soil types, fertilization levels, crop marking exact latitude and longitude on a yields, etc.) in user-friendly way gridded map Variable rate technology (VRT) • Any tech that allows producers to vary the rate Remote sensing (RS) • Data collected through satellite imagery of crop inputs

  24. 2 4 ROYS E A G TEC H I N N OVA TI ON N ETWORK Big Data, Analytics, and IoT in Precision Ag Collects vast amounts of data Report times • Requires advanced technologies to analyze • Batch • Monthly Uploads results to the cloud • Provides real-time information on land and crops • Weekly • Daily to farmers • Hourly Allows for better growing decisions • Farmer management benefits • Near real time • Real time Ownership, access, use, and control of Ag data is an important topic

  25. 2 5 ROYS E A G TEC H I N N OVA TI ON N ETWORK Farm Management, Sensing, and IT

  26. 2 6 ROYS E A G TEC H I N N OVA TI ON N ETWORK Social Media The global agricultural community is: • Connected • Engaged

  27. 2 7 ROYS E A G TEC H I N N OVA TI ON N ETWORK Mobile Only (and Beyond) The enterprise potential of mobile is greater than today’s smartphone and tablet apps

  28. 2 8 ROYS E A G TEC H I N N OVA TI ON N ETWORK Other Trending Technologies • Machine learning • eCommerce &subscription • Soil health • Satellite imagery delivery • Animal tech • Sustainable protein • Farm to business • Product procurement • Big data marketplace & platforms • Cellular agriculture • Food safety • Infrastructure • Plant and pest identification • Gene edited crops • Community building • UAVs • Robotics • Regulator guidance • Plant sensors • Waste reduction & monitoring • Smart farm devices • Biological crop protection • Supply chain & analytics • Indoor agriculture

  29. 2 9 ROYS E A G TEC H I N N OVA TI ON N ETWORK Farm Tech Examples • Consider what can be automated? • Possibly Harvest, transport, sort, grade, inspect, or package • Automate the low skilled, more dangerous or unhealthy jobs and use current labor supply for more meaningful positions.

  30. 3 0 ROYS E A G TEC H I N N OVA TI ON N ETWORK Soft Robotics: Delicate Produce Gripper • “This is the most exciting project I’ve worked on in my career,” says Alan Applonie, President of Taylor Farms Pacific. • Octopus inspired robot fingers can handle delicate produce such as cherry tomatoes and strawberries without damaging them. • Taylor farms invested $1 million • HQ in Cambridge, MA Video Demo

  31. 3 1 ROYS E A G TEC H I N N OVA TI ON N ETWORK Kray Technologies: Self-Piloting Agriculture Drone • Designed to replace aerial and ground sprayers at 1/10 the cost • Travels 70 MPH and enables farmers to spray up to 1,200 acres per day • Flies 1 meter above crops to reduce spray drift • Fully automatic and available 24/7 Video Demo

  32. 3 2 ROYS E A G TEC H I N N OVA TI ON N ETWORK Crop Enhancement: Sustainable Crop Protection • Developed a sustainable and environmentally friendly alternative to traditional pesticides. • CropCoat forms a film that modifies plant surfaces (leaves, stems, fruit, and seeds) to improve their resistance to pests and diseases. Video Demo

  33. 3 3 ROYS E A G TEC H I N N OVA TI ON N ETWORK Teralytic: Soil Health • Allows growers to easily monitor soil health. • Probes contain 23 sensors reporting soil moisture, salinity, aeration, respiration, NPK, air temperature, and humidity - at three different depths. • Requires minimal wiring. No Wi-Fi or internet connection needed. • Automatically sends alerts when sensors detect poor soil conditions for crops.

  34. 3 4 ROYS E A G TEC H I N N OVA TI ON N ETWORK AgBoost: Livestock Insights • Provides genetic profiles and assessments of livestock • Gives breeding suggestions, forecasting, lineage tracking, and nutrition recommendations • Data lives in the cloud Video Demo

  35. 3 5 ROYS E A G TEC H I N N OVA TI ON N ETWORK Ganaz: Connecting Growers with Workers • Enables employers to post jobs and connect with local farm workers. • Makes it easy to rehire workers from previous years. • Allows supervisors to draft and translate messages / instructions for workers. Video Demo

  36. 3 6 ROYS E A G TEC H I N N OVA TI ON N ETWORK FreshSurety: Freshness Reporting • Helps measure the freshness of produce with low cost disposable sensors. • Monitors and reports temperature, moisture, and metabolite data. • Allows measurement of cooling and packing performance, pre-shipment quality assessment and approval, in-transit quality tracking, and incoming acceptance based upon shelf life.

  37. 3 7 ROYS E A G TEC H I N N OVA TI ON N ETWORK Osmo: The Future of Shrimp Farming • Provides hardware and software for maximizing shrimp production. • Monitors dissolved oxygen, pH, NH3, nitrites, nitrates, turbidity, temperature, and salinity • Automates water quality and feed management to optimize shrimp growth rates.

  38. Part 3: Legal

  39. 3 9 ROYS E A G TEC H I N N OVA TI ON N ETWORK Legal Issues • Farm data • Data and privacy standards • Drones - Benefits/problems - Legality • IP Issues • Antitrust

  40. 4 0 ROYS E A G TEC H I N N OVA TI ON N ETWORK Issues in Big Data Lack of data standards Data privacy and security • No standard today Data ownership • Makes data use/cooperation a challenge • Who owns the data? • AgGateway, Open Ag Data Alliance, etc. are • Who controls the data? working to solve this • Is there intellectual property in the data?

  41. 4 1 ROYS E A G TEC H I N N OVA TI ON N ETWORK Legal Issues: Data Ownership and Privacy information and transparency from farmers. Data ownership • The AFBF warned that companies collecting • With more data in the cloud, there is more data from farmers may use it for their own information for them to request. • In 2012, the EPA released personal information commercial advantage in ways not foreseen by on farmers following a FOIA request. farmers • AFBF advised farmers to consider data Data can be sensitive; farmers want some ownership rights when storing data in the cloud information kept private (e.g. pesticide use) Privacy • Environmental activist groups are demanding

  42. 4 2 ROYS E A G TEC H I N N OVA TI ON N ETWORK AgData: Ownership, Access, & Use • How can growers access the data? Licenses: Startups using standard EULA • SaaS, Terms of Services, Browser, Click Wrap • Is the data accurate and presented in a useful way? Issues • Is digital data property, and who owns it? • Trade secret protection (UTSA) • Who has rights to posses, use, enjoy, exclude, - Information transfer, consume? - Independent economic value from unknown • What are the rights and responsibilities of the - Reasonable efforts to maintain secrecy parties?

  43. 4 3 ROYS E A G TEC H I N N OVA TI ON N ETWORK Issues in AgTech Data • Received information on ~80,000 farmers and Biggest Issues: • Ownership ranchers • Access • Included personal data • Control of data 2013 EPA CAFO Data Incident* • Earth Justice, the Natural Resources Defense Council, and the Pew Charitable Trust made a FOIA request *Smart Farming May Increase Cyber Targeting Against US Food and Agriculture Sector, Joint Private Industry Notification of USDA and FBI Cyber Division, March 31, 2016

  44. 4 4 ROYS E A G TEC H I N N OVA TI ON N ETWORK Ownership, Use, and Disclosure of Data Farmers want to retain ownership of their data • Can they take data with them if they no longer use the service? Do all parties have the appropriate rights to use the data? Farmers are concerned about who ends up with the data • Wall Street traders could manipulate market prices • EPA could look for potential regulatory violations • Retailers could use the information to sell new parts when an existing part needs replacing or to set prices

  45. 4 5 ROYS E A G TEC H I N N OVA TI ON N ETWORK Blind Data • Can the aggregated data be reverse What is aggregated, or “blind,” data? • Data combined from two or more sources engineered to find out where the data • “Anonymized” originated? Is it truly anonymized? Aggregated data is required for software • Is all personal data removed? companies, but precautions should be taken • Are there enough sources to ensure to ensure true anonymity anonymization (especially for small startups)?

  46. 4 6 ROYS E A G TEC H I N N OVA TI ON N ETWORK Data and Privacy Objectives Farmers are increasingly becoming aware of the need to protect their data and enforce their ownership rights through stakeholders • Government • Input providers • Trade groups • Startups Stakeholders are trying to implement a common set of data and privacy standards to guide Agriculture Technology Farmers (ATPs), farmers, and other contracting parties on appropriate contract terms

  47. 4 7 ROYS E A G TEC H I N N OVA TI ON N ETWORK Current AgTech Data Standards Open Ag Data Alliance (OADA) • Open data sharing standards (API’s) and open source software libraries, March 2014 American Farm Bureau Federation (AFBF) Privacy and Security Principles of Farm Data • Affirmed by 39 Ag entities as of April 1, 2016 • Originally known as the 2014 Farm Data Principles Agriculture Data Coalition Agriculture Data Coalition (ADC) • Partnership of agriculture stakeholders focused on building a “farmer-centric data repository where farmers can securely store and control the information collected every day in the fields by their tractors, harvesters, aerial imaging and other devices.” (March 2016)

  48. 4 8 ROYS E A G TEC H I N N OVA TI ON N ETWORK Current AgTech Data Standards Farmobile, Inc. – Ag Data Collection Startup • Farm Data MarketPlace where Farmobile collects offers from companies that want to use the farmer’s data, whole transaction is governed by Farmobile’s legal agreements “Guiding Principles” Independently Developed by Ag Companies • Ex. Climate Corp, Farmer’s Business Network, John Deere

  49. 4 9 ROYS E A G TEC H I N N OVA TI ON N ETWORK AFBF Privacy & Security AFBF principles include the following key provisions that should be incorporated into contracts: • Easy to understand language • Farmers should own information generated through their farming activities and any use of that data by the ATP is only with the explicit and affirmative consent of the farmer • ATPs shall notify farmers how their data is to be used, with whom it will be shared, and for what purpose • Farmers should be able to retrieve their data for use with other systems • ATPs shall not sell or disclose a farmer’s data to other parties without notifying the farmer and without that other party agreeing to the same terms as the farmer • ATPs shall use reasonable security safeguards to protect against risk of loss or theft of data

  50. 5 0 ROYS E A G TEC H I N N OVA TI ON N ETWORK Workable Standards? Strong protections for farmers, but not always workable • Many farmers are not able to negotiate terms • May feel they are in “take it or leave it” position • The business model of some ATPs is the collection and presentation of data (subscription model) - The ATP doesn’t want to let farmers take this data with them when they no longer pay for the service • Contract terms are complicated due to the multiple agreements in place

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