Immigration Concerns, Labor Shortages Spur Investment in America’s Heartland

Bloomberg writer Mario Parker reported today that, “President Donald Trump’s get-tough attitude on immigration is spurring a surge of high-tech investment in America’s heartland, where farmers are scrambling for new ways of coping with labor shortages and slumping profits.

“Finding people for the sometimes back-breaking tasks of planting and harvesting crops has become increasingly 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 has 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.”

The Bloomberg article explained that, “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 such as drought that place an emphasis on water, chemical and fuel use.

That change is 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.”

Mr. Parker added that, “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, Mich.-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, 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.”

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