[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
HIGH-TECH AGRICULTURE: SMALL FIRMS ON THE FRONTIER OF AGRIBUSINESS
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HEARING
before the
SUBCOMMITTEE ON AGRICULTURE, ENERGY, AND TRADE
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
OCTOBER 5, 2017
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 115-038
Available via the GPO Website: www.fdsys.gov
_________
U.S. GOVERNMENT PUBLISHING OFFICE
27-037 WASHINGTON : 2018
HOUSE COMMITTEE ON SMALL BUSINESS
STEVE CHABOT, Ohio, Chairman
STEVE KING, Iowa
BLAINE LUETKEMEYER, Missouri
DAVE BRAT, Virginia
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
STEVE KNIGHT, California
TRENT KELLY, Mississippi
ROD BLUM, Iowa
JAMES COMER, Kentucky
JENNIFFER GONZALEZ-COLON, Puerto Rico
DON BACON, Nebraska
BRIAN FITZPATRICK, Pennsylvania
ROGER MARSHALL, Kansas
RALPH NORMAN, South Carolina
NYDIA VELAZQUEZ, New York, Ranking Member
DWIGHT EVANS, Pennsylvania
STEPHANIE MURPHY, Florida
AL LAWSON, JR., Florida
YVETTE CLARK, New York
JUDY CHU, California
ALMA ADAMS, North Carolina
ADRIANO ESPAILLAT, New York
BRAD SCHNEIDER, Illinois
VACANT
Kevin Fitzpatrick, Majority Staff Director
Jan Oliver, Majority Deputy Staff Director and Chief Counsel
Adam Minehardt, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Rod Blum.................................................... 1
Hon. Brad Schneider.............................................. 3
WITNESSES
Lisa Benson, Ph.D., Director, Rural Development, American Farm
Bureau Federation, Washington, DC.............................. 4
Mr. Kevin Heikes, Co-Founder and Chief Operating Officer, IN10T,
Lenexa, KS..................................................... 6
Mark Kester, Ph.D., Chief Scientific Officer, AgroSpheres, LLC,
Charlottesville, VA............................................ 8
Mr. Joe Guthrie, Senior Instructor, Agricultural Technology
Program, College of Agriculture and Life Sciences, Virginia
Polytechnic Institute and State University, Blacksburg, VA..... 9
APPENDIX
Prepared Statements:
Lisa Benson, Ph.D., Director, Rural Development, American
Farm Bureau Federation, Washington, DC..................... 16
Mr. Kevin Heikes, Co-Founder and Chief Operating Officer,
IN10T, Lenexa, KS.......................................... 20
Mark Kester, Ph.D., Chief Scientific Officer, AgroSpheres,
LLC, Charlottesville, VA................................... 26
Mr. Joe Guthrie, Senior Instructor, Agriculture Technology
Program, College of Agriculture and Life Sciences, Virginia
Polytechnic Institute and State University, Blacksburg, VA. 29
Questions and Answers for the Record:
Questions from Hon. Lawson to Lisa Benson and Answers from
Lisa Benson................................................ 32
Questions from Hon. Lawson to Kevin Heikes and Answers from
Kevin Heikes............................................... 35
Questions from Hon. Lawson to Mark Kester and Answers from
Mark Kester................................................ 37
Questions from Hon. Lawson to Joe Guthrie and Answers from
Joe Guthrie................................................ 39
Additional Material for the Record:
Statement from Paul T. Dacier, Executive Vice President &
General Counsel, Indigo Ag, Inc............................ 43
Statement from Martin Bremmer, Windcall Mfg. Inc............. 47
HIGH-TECH AGRICULTURE: SMALL FIRMS ON THE FRONTIER OF AGRIBUSINESS
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THURSDAY, OCTOBER 5, 2017
House of Representatives,
Committee on Small Business,
Subcommittee on Agriculture, Energy and Trade,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:15 a.m., in
Room 2360, Rayburn House Office Building, Hon. Rod Blum
[chairman of the Subcommittee] presiding.
Present: Representatives Chabot, Blum, Comer, Bacon,
Marshall, Lawson, and Schneider.
Chairman BLUM. Good morning to everyone. I call this
hearing to order.
Crazy day voting on budget. So congressional members will
be in and out throughout our hearing.
At our March Subcommittee hearing on family farms, we heard
about many challenges America's small farmers are facing,
including burdensome and uncertain regulations and excessive
taxation. The Subcommittee is here today to examine how agtech
entrepreneurs and farmers can work together in a way that can
benefit both small businesses and small family farms.
Agtech or agritech is a broad term describing a diverse
range of innovations and technologies, including agricultural
bioscience, data-enabled agriculture, automation and robotics,
supply chain and logistics, and alternative business models.
These innovations in technologies have the ability to
definitely increase farm productivity, reduce resource use,
which is so important, and boost profits, which is also
important. Additionally, agtech entrepreneurship activity may
spur rural revitalization with agtech innovations in America's
heartland and other agricultural areas attracting talent,
dollars, and jobs to those regions.
We want all entrepreneurs from all walks of life to
consider careers, businesses, and startups in agriculture.
Private sector participation in agtech research and development
has surged in recent years.
There are currently over 100 different vehicles to develop
agtech entrepreneurs and small businesses. Many of these are
funded by corporate and angel investors with trade
associations, land grant universities, State and local chambers
of commerce also getting involved to connect entrepreneurs and
innovators with startup capital. However, the most important
stakeholder in any discussion of agtech are the farmers
themselves.
Small and family farmers cannot risk their time and
resources for experimental innovations and technologies that
may or may not work. But if risk is minimized, or even
monetized, they can offer invaluable feedback to entrepreneurs
about the technology and innovations that are most useful and
most likely to increase profits. Think of farmers as a real
life focus group.
Farmers themselves may be budding entrepreneurs developing
new technology to improve their farms, but may need some help
connecting with investors and mentors to bring their ideas to
market. Our witnesses today will discuss how farmers and
industry can work together to ensure that both benefit from the
rapidly expanding innovations and technology today's
entrepreneurs are continuing to develop. We will also hear
about the challenges that startup companies face in raising
capital and navigating the regulatory burdens to market.
I want to thank all of you for being here today, and we
look forward to hearing your testimony.
My ranking member, Mr. Schneider, I understand is on his
way over for his opening remarks. So I will yield to him when
he gets here. In the meantime, I would like to introduce our
witnesses.
Our first witness is Dr. Lisa Benson, director of Rural
Development for the American Farm Bureau Federation, commonly
known as Farm Bureau. The Farm Bureau recently initiated the
Rural Entrepreneurship Challenge, which is the first national
business competition focused exclusively on rural entrepreneurs
working on food and agriculture businesses. The Farm Bureau has
also published principles for companies to adopt in regard to
the use of farm data. Thank you for being here today.
Our next witness is Mr. Kevin Bikes--Heikes, I mean. Rhymes
with bikes, right? Freudian. I won't forget your name now--the
chief operating officer and cofounder of IN10T--I got that one
right, correct?--a digital agriculture small business in Kansas
and St. Louis, Missouri. Among other services, IN10T operates
farmertrials.com, an online platform that allows farmers to
sign up for paid field trials with agtech companies
facilitating mutually beneficial relationships. We appreciate
your testimony and thank you for being here today.
And I understand Dr. Alice Robinson, the chief analytics
officer of IN10T is here today also. Right there. Thank you for
being here, appreciate it.
Our next witness is Dr. Mark Kester--did I get that one,
right, Kester? Excellent--chief scientific officer of
AgroSpheres, a biotech startup located in Charlottesville,
Virginia. AgroSpheres started as a multidisciplinary student
project in the Kester lab at the University of Virginia. After
winning several prestigious competitions, it is now a real
world agtech startup. AgroSpheres works closely with local
vineyards to trial a system to degrade pesticides using
enzymes. Most fascinating. Six other members of the AgroSpheres
team are here, including the two student cofounders are with us
today. Right here. The two student cofounders. Excellent.
Welcome. And congratulations.
And right on queue, the ranking member, Brad Schneider. We
are ready for your opening testimony. And you can also
introduce Mr. Guthrie as well when you are finished with that.
Sorry.
Mr. SCHNEIDER. No, that is okay. Thank you.
Good morning. Before we begin, I do want to take a moment
to express my condolences to all those who lost loved ones
earlier this week in Las Vegas, and send our prayers for
recovery to those who were wounded. I want them to know that
the American people are grieving with all of Las Vegas, all who
were hurt and killed. And I am incredibly grateful for the
extraordinary professionalism that we saw and the bravery of
our law enforcement and first responders during that attack.
Bring it back to this hearing, I want to thank you all for
being here and taking the time to share your thoughts, your
perspectives, your insights with us about high-tech
agriculture. I also want to thank Chairman Blum for holding
this hearing today. I think it is very important to use this
forum to highlight the technological needs of the agriculture
industry.
The global population is expected to exceed 9 billion by
2050. While concerns about population growth are not new and
warnings of increasing food pressures on global technology has
been and will continue to be essential to reducing these
concerns, addressing these risks. However, this challenge is
exacerbated by a number of problems.
The most dramatic and urgent factor is climate change.
Agriculture is highly dependent on a stable climate. As we have
seen in recent weeks, there is no denying that our planet is
experiencing more frequent and more damaging, more powerful
natural disasters. We saw with Hurricane Harvey, Irma, Maria,
and Jose, four in less than a single month. The people in
Puerto Rico and the U.S. Virgin Islands continue to face
scarcity of resources that threaten their lives. We have also
seen this with increasing wildfires in the west and
California's 5-year-long draught devastating our farms,
ranches, and forests. Extreme weather continues to reverberate
off our coast. These often result in scarce supplies,
decreasing nutrient levels, and other factors that threaten the
continuing success of the agriculture industry.
As the planet warms, weeds, pests, and fungi that thrive in
warmer temperatures are expected to force farmers to spend more
than $11 billion annually to combat them. However, technology
can help us overcome the combined effects of growing demands
for food and extreme weather and climate changes. Technology
will hold the key to remaining competitive, and we should look
to it as we consider ways to put food on the table and reduce
environmental factors for our Nation's small farms.
Many experts claim that agriculture technology, or agtech,
can reduce the amount of dependence on fossil fuels,
fertilizers, water and land requirements without--and I will
repeat, without hindering our economic growth. The time is now
for the U.S. to show its leadership and invest in agtech. Doing
so not only contributes to rural America, but also engages all
aspects of our economy, encouraging job creation and
innovation. America has always been a country of invention. We
must harness that skill today and find the balance between
government oversight and technological advancements without
hindering business opportunities.
I look forward to today's discussion and to learning more
about the challenges facing the agricultural community and the
role technology can serve to help our producers thrive. I would
like to, again, thank all of our witnesses for being here today
and providing us your insight.
And, with that, I will turn to the introduction.
Chairman BLUM. And we have already done them. Mr. Guthrie--
--
Mr. SCHNEIDER. Okay. So sorry to make you wait.
But it is my honor and great pleasure to introduce Mr. Joe
Guthrie. Mr. Guthrie is a senior business instructor in the
Agricultural Technology Program within the College of
Agriculture and Life Sciences at Virginia Tech. He taught
courses on business communications and leadership since 2007,
and brings over 25 years of agriculture business management
experience to the classroom. Through this, he has helped
educate a new class of innovators in the agriculture field with
the skills and resources they need to succeed.
Mr. Guthrie holds a bachelor's degree from Virginia Tech in
agricultural economics and a master's degree as a Fulbright
Scholar from Massey University in New Zealand in agricultural
economics and international trade. It is my pleasure to
introduce Mr. Guthrie. Thank you for being here.
Chairman BLUM. Thank you, Mr. Schneider, and well done on
the run.
Mr. SCHNEIDER. Thank you.
Chairman BLUM. I would just like to take a second to
explain our opening statements and the timing lights that you
have in front of you.
If Committee members have an opening statement prepared, I
ask that it be submitted for the record.
You, the witnesses, will each have 5 minutes to deliver
your testimony. The light will start out as green. When you
have 1 minute remaining, the light will turn yellow, and,
finally, at the end of the 5 minutes it will turn red. And we
ask that you try, if possible, to adhere to that time limit. I
know you are thinking green, yellow, red, something in Congress
makes sense, correct?
And, with that, I recognize Dr. Benson for 5 minutes.
STATEMENTS OF LISA BENSON, PH.D., DIRECTOR, RURAL DEVELOPMENT,
AMERICAN FARM BUREAU FEDERATION; KEVIN HEIKES, COFOUNDER AND
CHIEF OPERATING OFFICER, IN10T; MARK KESTER, PH.D., CHIEF
SCIENTIFIC OFFICER, AGROSPHERES, LLC; AND JOE GUTHRIE, SENIOR
INSTRUCTOR, AGRICULTURAL TECHNOLOGY PROGRAM, COLLEGE OF
AGRICULTURE AND LIFE SCIENCES, VIRGINIA POLYTECHNIC INSTITUTE
AND STATE UNIVERSITY
STATEMENT OF LISA BENSON, PH.D.
Ms. BENSON. Thank you so much.
Good morning. I want to thank Subcommittee Chairman Blum
and Ranking Member Schneider and members of the Subcommittee
for inviting me to participate in today's hearing. My name is
Dr. Lisa Benson, and I am the director of Rural Development at
the American Farm Bureau Federation, which includes 50 State
Farm Bureaus, Puerto Rico Farm Bureau, and nearly 6 million
members across the country.
In my role, I lead the Farm Bureau's Rural Entrepreneurship
Initiative, which provides rural entrepreneurs with world-class
business training, networks, and resources to help them
succeed. My professional career has centered on helping
beginning farmers, ranchers, and rural entrepreneurs grow their
businesses, overcome obstacles, become more profitable, which
is key, and sustain economic development in their rural
communities.
Farm Bureau created the Rural Development program and the
Rural Entrepreneurship program because our leadership
personally witnessed the decline of the rural communities.
Their children weren't returning home after college, many of
the local businesses were closing, and the infrastructure was
deteriorating in those communities. Farm Bureau wants to
reverse this trend by engaging on policies and creating
programs that extend beyond the farm gate. We chose to focus on
an area that sustains economic growth, creates jobs, and
improves the quality of life for rural Americans. We chose to
focus on entrepreneurship.
As entrepreneurs grow their businesses, they hire their
family, their neighbors, and their friends. Entrepreneurs tend
to purchase goods and services from local businesses. So as
they thrive and prosper, so too do those rural communities
where they come from.
Farm Bureau wanted a program where the rubber meets the
road and a program that highlights the success of businesses
that are located in rural America. This led to the creation of
the Rural Entrepreneurship Challenge and the Rural
Entrepreneurship Initiative.
In 2014, we kicked off the challenge, which is the first
national business competition that focuses exclusively on rural
businesses and ag and food businesses. The competition helps us
identify excellent rural entrepreneurs that have unique
products and strong business skills. In the first year, we had
95 applications. Now, in our fourth year, we had 471
applications from 47 states and Puerto Rico.
Over time, we identified a trend in the competition. The
entrepreneurs that had ag tech businesses dominated our winners
circle. These ag tech winners included ScoutPro from Iowa that
offers an app to help scout fields; Levrack from Nebraska that
developed a storage device to help expand your storage in farm
shops; and Vertical Harvest Hydroponics from Alaska, my home
State, that created a growing system engineered to withstand
arctic conditions.
Many of these ag tech entrepreneurs came from family farms
or farming communities. They saw problems on their farms and
then created solutions to address those.
A hurdle that many of these ag tech entrepreneurs expressed
to us was trying to find enough capital to scale-up their
production to reach economies of scale. They considered
reaching out to investors, but were reluctant to give up equity
in their businesses and also weren't sure what terms to expect
in a deal. To address this challenge, we created the
Agriculture Investment Summit, and it brings together rural
entrepreneurs with venture capital funds and accelerator
programs that target rural investments.
We brought together 35 rural entrepreneurs and 15 investors
representing more than $300 million in investment funds. Two of
those entrepreneurs are in negotiations now with investors they
met at the summit.
Through the Rural Entrepreneurship Initiative, Farm Bureau
has supported more than 1,000 rural entrepreneurs from 37
States, including Hawaii and Alaska. We have provided more than
$500,000 in startup capital, mentorship, networking with
investors, and publicity nationwide for those small businesses.
Entrepreneurs have used those startup funds to refine their
prototypes, to build greenhouses, hire staff, develop online
marketplaces, and upgrade their production facilities.
At Farm Bureau, we believe that supporting rural
entrepreneurs is critical to enhancing and strengthening rural
communities. We continue to work with rural entrepreneurs and
help them overcome their obstacles and help them achieve their
dreams for their businesses.
Thank you for your time today, and I look forward to
answering any questions you may have.
Chairman BLUM. Thank you, Doctor.
Mr. Heikes, you are now recognized for 5 minutes.
STATEMENT OF KEVIN HEIKES
Mr. HEIKES. Yes. Thank you.
Thank you Chairman Blum, Ranking Member Schneider, and
members of the Subcommittee, for allowing me, on behalf of my
partners, Dr. Alice Robinson and Randall Barker, to be here to
talk about digital agriculture.
Growing up on my family's farm and ranch in Colorado, I had
the pleasure of learning the art of ag. Over the last 20 years,
I have had the opportunity to learn about the science and
technology of the industry through various experience in
different agtech companies.
IN10T is a small company. We were started with the simple
belief that connecting farmers and businesses doing research
grounded in data science was necessary. What makes our company
unique is the founding leadership capabilities and our varying
skill sets.
Our team fuses the art and science of agriculture together
into one small business. By working with farmers and
agribusiness companies, we combine the strength of both groups
through the application of science, data analytics, computer
science, engineering, and service to improve how digital
agriculture works today.
IN10T is committed to ensuring farmer success and their
engagement in the innovation process. We do this by guiding
farmers through the IN10T product innovation process, while
capturing their valuable perspectives. The most important thing
that we have learned in this process is to keep talking to and
keep listening to our farmer constituents.
Here is what one of our Illinois collaborators, Bill
McDonnell, shared regarding our company and our process. As
both a farmer and a crop consultant, IN10T'S trialing process
is great. It focuses on gathering data in a true commercial
production field environment. It is some of the best data that
we can use as farmers because it is implemented using realistic
production data and it comes from our own farms.
IN10T supports our clients or agribusinesses by ensuring a
rigorous science is applied to all of our trials for both
product performance and also customer sentiment. Agribusiness
companies need realtime and real world information to compete
and deliver farmer value in this digital and precision-driven
world. Rather than more products, companies need better
products in the right location or the right fields. Better
products are a result of product feedback and also customer
perception.
The digital and precision world has arrived. We can capture
more data and we can move it faster than ever. With each pixel
of data and each piece of equipment, we can gather valuable
insights, but it has to be managed properly. With the increased
digitization of agriculture, more and more opportunities come
for other small businesses to deliver solutions that weren't
necessarily available yesterday.
The number one question that we hear from farmers all the
time is: How well did this work? How well did product X work on
this field last year? IN10T establishes paid experiments
linking business research with qualified farmers to capture
this data, drive insights, and ultimately answer that question
that farmers ask us. Since farmers are key to the IN10T vision,
we needed a way to engage and recruit more farmers.
When IN10T began, there wasn't an initial platform in which
farmers could indicate their interest in field trial
opportunities. We determined there had to be a better way to
engage with farmers interested in participating with field
research opportunities, so we created FarmerTrials.
FarmerTrials is a simple concept in which a company can connect
with agribusinesses--and our company connects agribusinesses to
farmers. We can and do believe that farmers should be paid for
this valuable research that they do at their farm.
New technologies need to be evaluated on real farms to
understand the value and utility. FarmerTrials is a place in
which objective data and farmer feedback regarding new
technologies can be used to drive faster and better innovation.
With regards to the agtech industry, there are more and
more solutions being introduced to the market by startups
throughout the U.S. This is significant because agtech is
receiving the capital and resources for needed advancement. To
supplement this, data science and full field trials are
necessary to understand product performance and efficacy. We
also need to drive user adoption at the farm level.
With respect to small business, we believe that small
businesses work very well in agriculture. They must be part of
the launching pad and also new products and services that are
launched. Small business can be agile and move quickly and
respond to the complexities that we see in agriculture today.
Additionally, some small businesses can engage in expanding
rural communities by growing businesses, employment
opportunities, and also by deploying technology resources.
On behalf of our small business, IN10T, thank you for
allowing us to be here today to talk about agriculture,
technology, and small business.
Chairman BLUM. Thank you, Mr. Heikes.
Dr. Kester, you are recognized for 5 minutes.
STATEMENT OF MARK KESTER, PH.D.
Mr. KESTER. Thank you very much.
Good morning, Chairman Blum, Ranking Member Schneider, and
distinguished members of the Small Business Committee. I am
Mark Kester, the chief scientific officer of AgroSpheres, a
biotechnology company in Charlottesville, Virginia.
I would like to acknowledge six members of the AgroSpheres
team behind me, the true student entrepreneurs behind this
company who are with me today.
We thank you for calling attention to agriculture
technology entrepreneurship and for inviting us to tell the
story of AgroSpheres. We would like to share what we have
learned from taking this company from a student-run project in
my laboratory to a standalone, business where we are going to
change the way agriculture embraces technology.
AgroSpheres is an ag biotechnology company based in
Charlottesville, Virginia, working on, simply, nanotechnology-
enabled, environmentally friendly biocontrols. Let's break it
down. All we have done is created a ``FedEx truck'' that is
designed to deliver on time, all the time, to the plant. Simple
as that.
What we actually have done is utilized a bacteria and have
engineered it to make a specific protein. And that protein is a
biocontrol that let's plants thrive. Now, when the bacteria
makes this protein, we also got the bacteria to divide. But
this is where the intellectual property comes in. We got to
divide the two cells, not 50/50, but 99 to 1. Ninety-nine
percent of one of the cells has all the genetic material. The 1
percent is just a membrane expressing the protein, the
biocontrol, no genetic material. So we made genetically
modified organisms without the genetic materials.
And we did one other thing. We also got this 1 percent to
actually express certain proteins on the outside that bind to
plants. And just as the FedEx truck can deliver on time all the
time, in the back of these trucks are packages. In our FedEx
trucks there are packages, which are biocontrols. That is the
AgroSpheres' product.
So how did we actually develop this? Really, really
quickly. But in all seriousness, it is said that for new
businesses, it is about the thirds. It is one-third the gee-
whiz science, it is one-third the intellectual property, and it
is one-third the team. That is the team behind me. They are
student entrepreneurs. And, in fact, I am going to embarrass
now Payam Pourtaheri, who actually graduated with pretty much
the highest GPA in the engineering school of UVA. He applies to
med school, doesn't get into med school. He gets into M.D.-
Ph.D. programs. Not only will they give him an M.D., they will
give him a Ph.D., and they will pay him for it. Highest honor
in that realm. He gives up that huge honor and opportunity to
stay with AgroSpheres. That is the passion, that is the
entrepreneurship, that is the commitment that hopefully will
grow and nuture these new student-run businesses as we take
them out of universities and take them to real world
applications.
As we developed Agrospheres, we have learned to engage the
farmer early in the process. And we did that. Around University
of Virginia in Charlottesville, there are multiple vineyards
and apple orchards. And we worked with the farmers directly. We
said, what is your problem? And the problem for our solution
was that they have to put pesticides on their plants, and they
cannot harvest that plant until the pesticide degrades--that is
called the pre-harvest interval. And that plant is susceptible
to blight, temperature, wind, storms, or if the grapes get too
ripe too early, you can't harvest. They are at risk. What we
have done is we expressed a protein that degrades pesticides.
So what Mother Nature does in 6 to 10 weeks, we can do in 2
hours. Wow.
And what we learned from the farmers, also, is what they
really wanted was biocontrols, ways to make the plants thrive
using our FedEx trucks. So by engaging the farmer early, we
were able to refine our product; that was critical.
Since I have now a minute left--what are we asking for?
What are our concerns? Where are the positives? Number one,
accelerators and incubators. We have an accelerator incubator
at UVA. It is called the Innovation Lab, i.Lab. This gave our
students access to space, resources, legal, corporate,
financial, and taught them how to be student entrepreneurs and
then actually entrepreneurs in the community. That model of
student entrepreneurialism should be strengthened.
Number two, we have to work closely with the association
partnerships, the trade organizations, not only at the State
level, but at the local Level. One of our early grants was from
the Virginia Wine Board. Without their funding, we don't have a
company today. That is the funding that gets you to the data,
which gets you in front of the angel capitalists and venture
capitalists and truly can turn you into a real company.
And, number three, SBIR grants, Federal SBIR grants. We are
now seeing more targeted funding in the ag-space from DOD, DOE,
National Science Foundation, as well as the USDA. What is
really important is that we streamline how quickly we can
evaluate these grants. When we put a grant in, it can take
anywhere from 9 months to 18 months to find out if we are truly
funded. And when we get a grant and we now want to take it to
the next level for higher funding, we have to start all over
again and take 9 to 18 months to find an answer. That is not a
good way to keep a business thriving. So we want to suggest
that we can make that process more expediential.
Thank you very much. I would like to thank the Committee
members for giving me the time to tell you the AgroSpheres
story.
Chairman BLUM. Thank you, Doctor. Absolutely fascinating.
Mr. Guthrie, you are recognized for 5 minutes.
STATEMENT OF JOE GUTHRIE
Mr. GUTHRIE. Thank you [off mic] on this very important
topic and how agriculture is being changed by ever-advancing
technology. I will talk to you both from a perspective of being
a small business owner of a farm myself and an instructor in
agriculture who was teaching the next generation of farmers and
small business owners, who will comprise most of the
agriculture industry, and to help keep America at the forefront
of feeding a hungry world. As Mr. Schneider pointed out, that
we will need to feed 9 billion people by 2050.
Technology in agriculture has changed more in the past 100
years than it has, perhaps, in all of human history combined
before that. As an example of that, my father, who was born in
1925, walked behind a horse that was pulling a plow, and 25--I
am sorry. I didn't have the microphone on. I thought--oh, good
enough. Well, I am using my teaching voice.--walked behind a
horse that was pulling a plow. A quarter century later, he was
driving a tractor with the power of 100 of those horses. By the
time he handed the farm off to me, we weren't even plowing
fields anymore, because we were using zero tillage techniques
as a soil conservation measure. Just to show you how much
agriculture has changed in a brief period of time.
What will the next 25, 50, or 100 years bring? There is no
way for us to tell that any more than people 100 years ago
could have foreseen the advances we have now. But there is no
question that precision agriculture is an all-important driving
force in crop production, and it appears that it will be even
more important in the future.
Precision agriculture is a term used to describe several
related technologies used together to decrease input cost and
increase yields. Those technologies include soil and yield
mapping with GPS, tractor guidance systems that allow for
automated tractor operation in fields, and variable rate
applications of fertilizer, chemicals, and seeds. Unmanned
aircraft, or drones, are also often incorporated for many
different applications as well into those systems.
A USDA study released last year found that precision
agriculture was used on 30 to 50 percent of America's corn and
soybean acres in a 2010 to 2012 timeframe in which the study
was done. No question that those acres have increased
substantially since then.
To give you an example of the use of precision agriculture
and how it is transforming how we farm, I visited a dairy farm
in central Virginia last year, where one of my students was
doing an internship. And the farmer said, ``Joe, come back in a
year and you won't see me sitting on the seat of a tractor
planting corn. Instead, I will be sitting at a desk, in front
of a computer monitor, watching five different tractors, with
no driver on them, in five different fields, pulling five
different corn planters at the same time, all using precision
agriculture.'' Each one of those planters, by the way, would be
able to change the rate and variety of corn seed to match the
precise condition of the soil the planter is driving over.
So the implications of this technology is, as you can tell,
staggering, and so are the changes it might have on our
industry. First, the technology, while designed to improve
profits, has been found so far to be only marginally helpful in
improving profitability because of the high cost of the
technology itself.
Another consideration is that the precision agriculture and
other advances will make more sense on larger farms. And so we
would tend to think that we would see more larger farms adapt
them more quickly and that we would see a trend towards more
large farms. And, indeed, we are seeing those trends. It is
important to keep in mind, however, that even large farms in
the U.S. are considered to be small firms. And, in fact, most
are family-owned.
Another important implication of precision ag is a
reduction in the number of people needed for farm labor. You
can imagine in that example I gave, there is no one driving
those five different tractors. So that reduction in the need
for farm labor is one of the benefits of the technology, but it
has serious implications for rural communities.
Another example of an innovation is so-called robotic dairy
in which nobody actually milks the cows anymore. The cow walks
into a stall. She is milked whenever she wants to by a robot.
Again, we are seeing implications for that and what that might
do to rural communities. And we are also seeing larger and
larger dairies with fewer people on them, and, again,
implications of that for our rural communities.
Given the time limitations, let me just give you an example
of what we are doing at Virginia Tech. We started a precision
agriculture class 3 years ago using material and technology
that was donated to us from a manufacturer. In fact,
manufacturers are coming to us all the time asking to donate to
us so that students can learn on that material. And I would
advise that, you know, if you haven't done so already in your
land grant universities, to consider that as well.
Thank you very much.
Chairman BLUM. Thank you, Mr. Guthrie. Fascinating,
fascinating testimony. Thank you very much.
I will recognize myself for 5 minutes now. I have too many
questions and too little time. So I will throw them out to
whoever would like to answer them.
First of all, I am a small entrepreneur myself. So I love
small business because I am one of them. I was just sitting
here thinking about the major corporations that are players in
the ag industry like Deering Company, they are very big in my
district; Case; Monsanto, lots of big names.
Are they involved at all in any ways with you all? Are they
helping? Are they standing in your way? Do you see them as
somebody that, once your technology catches on, that they would
purchase your company? I would just like to hear about the
interaction of these mega corporations.
Mr. GUTHRIE. Sure. And I pointed out with the technology
that we are using in the classroom that is being donated to us
from some of those major corporations, some of which you named
there, we are also seeing not only big corporations, but
smaller companies that are starting up and are developing and
selling technologies, opportunities for college graduates in
things such as sales, and, you know, a lot of different
opportunities. And keep in mind, even though those are large
companies, they have a local presence as well. And so those
companies, you know, are hiring people, you know, at the local
level, at the local dealership. And so we are seeing some
benefits from it already in having more professional, college-
graduated students in rural communities as a result of that.
Chairman BLUM. Is there encouragement from the mega
corporations? Because, you know, I know situations where it is
just the opposite, they try to squash competition sometimes.
Mr. KESTER. So let me just add to that. AgroSpheres already
has a sponsored research agreement with a mid-size ag company.
And for a company that is only 9 months old, that is pretty
awesome. But we want to be a large business. So we have to
partner with mid- to large-size ag to really get our product
out there. So it is part of our business plan. These
eventually, hopefully, will be our partners. We have to watch
who we work with and how we work with them. But, at the end of
the day, it has to be a partnership.
Ms. BENSON. Let me just say that John Deere is one of our
sponsors for the challenge competition. So there are many of
these larger companies that have venture capital wings, and
they see innovation as rising the level of the water for
everybody, all the ships rise. And so I think, for them, the
idea of having new technology gives them the opportunity to see
what is coming down the pike, and they may not be as nimble as
some of these smaller companies. So there is an opportunity for
the entrepreneur to either grow their own business or to think
about selling that technology to a larger company that can ramp
up production. So, for us, we see it as diversifying how that
entrepreneur can grow.
Mr. HEIKES. And I would say that those are our clients. We
are linking the multinational agribusinesses to farmers. So the
point that you made is exactly right on. There needed to be a
neutral platform, and that is the void that our company fills,
is how do you provide a neutral platform where multiple
companies can work with growers and different assets? And what
we try to do is some farm research trials work better for some
farmers and some work for different companies. Our job is to
link those together.
And I would say when you talk about agility in small
companies, some of the things that we are doing on the data
science element, we are able to move faster, be more agile in
our approach. And so I think small business and working with
farmers and linking those agribusinesses is the niche that we
are filling.
Chairman BLUM. Thank you. We have got a minute left.
How interested is venture capital in agriculture these
days? I have read and I have heard that they are increasingly
interested. The money out west, Silicone Valley, very
interested in ag. But I would like to hear from you.
Ms. BENSON. Yes. Very interested. But, in my experience,
they are still trying to figure out how to adjust to the
different horizons that ag investments have. So people that are
used to quick turnarounds with software, able to get in and out
within 3 years and have a 10 percent return, you don't see
those kinds of returns and that horizon with a business
investment.
But with the rural business investment companies coming
through there are a brand new type of firms, what we are seeing
is targeted investment in rural communities. So that has been a
real, I think, boon in venture capital funds that are trying to
go for ag tech and for rural investments.
Chairman BLUM. Good to hear. I am out of time.
And I would now like to recognize our ranking member, Mr.
Schneider, for 5 minutes.
Mr. SCHNEIDER. Thank you. And, again, thanks, everyone, for
your testimony.
I have one question off the panel. It is Pourtaheri, right?
What did your parents say when you told them you weren't going
to med school? That was a rhetorical question.
Mr. KESTER. He has a great answer.
Mr. POURTAHERI. I mean, at first, they were a little
hesitant, but since I am doing what I love, they were happy I
am doing what I love.
Mr. SCHNEIDER. You are lucky to have the parents you have.
That is a great answer. Do what you love.
But I do want to touch on some of the things. And, Dr.
Kester, you touched on a couple of things. You talked about
accelerators and you talked about trade organizations and
having access to connecting the entrepreneurs. And this is
something we are working on here in Congress. In fact, we
passed a bill earlier this year that I had the privilege of
drafting and introducing in 2013 called the HALOS Act trying to
allow those entrepreneurs to meet the investors. And we have
something, Accelerate Our Startups Act, another bill
introduced, exactly that. We would like to try to do more of
that and look for ways to--and perhaps we can do in this
Committee--to drive that into more agriculture and agtech where
the opportunities in our rural communities are greater.
Can you touch a little bit on how you have seen those
affect or expand a little on your comments with the incubators?
Mr. KESTER. Exactly. I think the key part is designing
them, making them into boutique applications for the ag
industry. There are many incubators, accelerators, trade
organizations, et cetera, and they are really geared towards
software development. I do a lot of pharmaceutical innovation.
I have drugs in the clinic. That is where most innovation
happens in terms of the incubators and accelerators. We need
these research accelerators and incubators directly designed
for ag. And we are seeing more of it. I mean, the outlook is
very, very positive.
Mr. SCHNEIDER. I think I am going to shift to Mr. Guthrie.
I think, you know, it is the glamour, if you will. But when you
talk about ideas, and the term you used, Mr. Guthrie, precision
agriculture, it kind of talks technology is about getting more
precise and getting exactly what we want, whether it is in
medical technology, in computers, or agriculture.
Can you expand a bit about exactly how precision
agriculture technology is changing the techniques of
agriculture? And you talked about zero tilling perhaps is one--
--
Mr. GUTHRIE. Sure. And so what we are finding is a more and
more sophisticated agricultural producer in the world today,
one that needs to be able to adjust and to adopt, ever-
increasingly more complicated in advanced technologies. The
entire point, though, Mr. Schneider, goes back to the most
simple principle of economics, which is, you know, revenue
minus cost equals profits.
Mr. SCHNEIDER. Right.
Mr. GUTHRIE. And the precision agriculture works on both
sides of that side of the income statement in which it is both
increasing yields to help us to increase the revenue side, and
the precision side of it that allows for the decrease in the
amount of inputs is helping us to work on the expense side of
it as well. But then we have to offset that with the cost of
the technology itself. And so that is where we really are.
And I heard the word risk brought up earlier. And that
certainly is something that is important to consider,
particularly as you look at, you know, legislation here and the
new farm bill that--you know, that has a lot to say about and a
lot to do with farm risk, is, you know, the risks of this new
technology. And Mr. Blum brought that up earlier. We can't have
farmers that are, you know, spending a lot of money on
technologies that are not going to work and are not going to be
productive. And as these things, you know, come out and they
are tried, only a certain number of them are going to be
successful.
Mr. SCHNEIDER. I speak as an engineer, part of engineering
is trial and error.
Mr. GUTHRIE. Sure.
Mr. SCHNEIDER. And part trial. You want to find the error
quickly in the process rather than at the end of the process
after spending a lot of money, and certainly you want to find
it before trying to take it out to the broad market.
Mr. GUTHRIE. Sure.
Mr. SCHNEIDER. As you were doing your initial remarks, the
diagram I drew in my notes: Lowering costs----
Mr. GUTHRIE. Right.
Mr. SCHNEIDER.--increasing yields----
Mr. GUTHRIE. Right.
Mr. SCHNEIDER.--but much higher capital investment----
Mr. GUTHRIE. Right.
Mr. SCHNEIDER.--which is going to increase the size of our
farms. Larger farms with fewer people working those farms----
Mr. GUTHRIE. Yes.
Mr. SCHNEIDER.--changes the entire economics within our
communities. And that is probably a conversation for another
time.
Mr. GUTHRIE. Yes.
Mr. SCHNEIDER. I am almost out of time. I wanted to give
Mr. Heikes and Dr. Benson a chance to touch on these issues. I
apologize for not getting to you, but if you have just a quick
remark.
Mr. HEIKES. Yeah, quick remark. Thank you for your interest
in the accelerators and tech programs, because those are
necessary. And I would say that as a small business, one of the
things that we have identified is that you have to evaluate,
when is the funding the right option. And I think one of the
areas that we have touched on is building a small business is
hard. But we have to always remember that we have to add value.
And so when you start a business and you are building this,
start with the value piece and then think about the investment.
So we tell a lot of small companies that as they are getting
started.
Mr. SCHNEIDER. And I came late, so I missed the
introduction. Where in Colorado are you?
Mr. HEIKES. I grew up in southern Colorado, La Veta. But
now our business is in Lenexa, Kansas, and St. Louis, Missouri.
Mr. SCHNEIDER. Okay.
Ms. BENSON. And I would just add when you talk about the
changing dynamics when you have larger farms and more
mechanization, how that impacts jobs within those rural
communities. I would just say there is a diversity of
businesses in ag or ag-related businesses that we are starting
to see pop up. Craft beverage is a huge industry that is
growing.
Mr. SCHNEIDER. Right.
Ms. BENSON. Ag tech is growing. Farm-to-table is, using
apps and connecting consumers to their growers and to food in
different ways.
So while we see a shift happening in maybe traditional
farming, we also see new opportunities in the ag production
line across the spectrum of different sectors. So we always are
looking to encourage the new types of businesses as well as
more traditional.
Mr. SCHNEIDER. Thank you. And I went too long. But I yield
back. Thank you.
Chairman BLUM. Thank you, Mr. Schneider.
As you can see, votes have been called again. This is
budget day. So welcome to Washington. It is a crazy time. I
just would like--so we are going to conclude our hearing here.
But I just want to say that, do not interpret the lack of
attendance today in this Committee meeting as a lack of
interest on Capitol Hill in what you all do, because it could
not be further from the truth. People are extremely interested
here, congressional Members are, in clean water, pesticides,
weather events, plants that can sustain themselves through
draught conditions. It is a frequent topic, and I know
particularly water quality and runoff is. So people are very
interested here. It just happened to be you have gotten to be
here on one of those days where we have many, many budgets that
we need to vote on.
So, once again, I want to thank--I want to thank all the
witnesses for their testimony.
And as we heard today from our panel, agtech investment is
driving rural revitalization in cities, States, and regions
using agtech entrepreneurs to bring jobs and dollars into our
local communities. All stakeholders--and we heard that today
over and over again--must work together to make sure that small
farms, family farms, can benefit from the many exciting
technologies and innovations America's brightest entrepreneurs,
such as your students, are developing.
I ask unanimous consent that members have 5 legislative
days to submit statements and supporting materials for the
record. And I will encourage members to submit questions to the
panel that you can respond to in writing, those members that
weren't here.
And, without objection, our meeting is adjourned.
[Whereupon, at 10:59 a.m., the Subcommittee was adjourned.]
A P P E N D I X
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Good morning. I want to thank Subcommittee Chair Blum,
Ranking Member Schneider and members of the Subcommittee for
inviting me to participate in today's hearing. My name is Dr.
Lisa Benson. I am the director of rural development at the
American Farm Bureau Federation (Farm Bureau), which includes
50 state Farm Bureaus, Puerto Rico Farm Bureau and nearly 6
million members. In my role, I manage Farm Bureau's Rural
Entrepreneurship Initiative, which provides rural entrepreneurs
world class business training, networks and resources to help
them succeed.
My passion has always been helping rural communities
thrive. I was born in Fairbanks, Alaska and grew up in
Anchorage. My family still lives in Anchorage so I have seen
firsthand the challenges and opportunities facing entrepreneurs
living in rural communities.
My professional career and research has centered on helping
beginning farmers, ranchers and rural entrepreneurs grow their
businesses, overcome obstacles, become more profitable and
sustain economic development in their rural communities. My
career began at the University of Florida, then at Virginia
Tech and now at the Farm Bureau. I earned a doctorate in
agricultural education and extension at Virginia Tech where my
research focused on how beginning farmer programs contribute to
rural economic development.
Rural communities across the United States face diverse
challenges in terms of income, education and infrastructure. A
USDA Economic Research Service report found that rural
communities have fewer adults with college degrees than urban
communities.\1\ This lower educational attainment is linked to
higher poverty and higher unemployment rates compared to urban
communities. According to the Federal Communications
Commission, 39 percent of rural Americans lack access to 25
Mbps/3 Mbps service, compared to only 4 percent of urban
Americans.\2\ Current and future generations of rural Americans
will be left behind their fellow citizens if they are without
affordable high-speed broadband service that enables them to
tap into health care and educational services, government
agencies, and new business opportunities.
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\1\ USDA Economic Research Service. (April 2017). USDA Rural
Education at a Glance, 2017 Edition. Economic Information Bulletin 171.
https://www.ers.usda.gov/publications/pub-details/?pubid=83077.
\2\ Federal Communications Commission. (January 2016). 2016
Broadband Progress Report. https://www.fcc.gov/reports-research/
reports/broadband-progress-reports/2016-broadband-progress-report.
Farm Bureau leadership personally witnessed the decline of
their rural communities back home in their states. Their
children weren't returning home after college. Local businesses
were closing. Infrastructure was deteriorating. Health and
education services were declining. Farm Bureau leadership
wanted to reverse this trend by having Farm Bureau engage on
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policies and create programs that extend beyond the farm gate.
Farm Bureau chose to focus on programs to enhance
entrepreneurship. Entrepreneurship can be a tool to sustain
economic growth, create local jobs and improve the quality of
life for rural Americans. When rural entrepreneurs succeed,
rural communities thrive and prosper. As entrepreneurs grow
their businesses they create jobs for their family, friends and
neighbors. Entrepreneurs tend to purchase goods and services
from other local businesses, which increases the prosperity for
the entire rural community. Farm Bureau wanted a program where
the `rubber meets the road' and a program that highlights the
successful business opportunities located in rural America.
This focus led to the creation of the Rural Entrepreneurship
Initiative. For more information on the Rural Entrepreneurship
Initiative, visit our website at StrongRuralAmerica.com.
In 2014, Farm Bureau kicked off the Rural Entrepreneurship
Challenge, the first national business competition focused
exclusively on rural entrepreneurs with food and agriculture
businesses. The competition identifies rural entrepreneurs with
unique products and strong business skills. In the first year,
there were 95 applications submitted. Now, in its fourth year
there were 471 applications submitted from 47 states and Puerto
Rico. The Challenge has also expanded into separate categories
to highlight the diverse and emerging trends in food and
agriculture. We offer awards for the best startup in the
following categories: agricultural technology, craft beverage,
agritourism, farm-to-table, farm and local product.
Over time, we identified a trend in the Challenge
competition. Entrepreneurs with agricultural technology
businesses dominated the winners circle. Winners included
ScoutPro, Inc. from Iowa that offers an app to help scout
fields, Farm Specific Technology from Tennessee that developed
a roller crimper to help break down cover crops, Levrack from
Nebraska with an expandable storage device for farm shops and
Vertical Harvest Hydroponics from Alaska that crated a growing
system engineered to withstand arctic conditions. Many of these
ag tech entrepreneurs came from family farms or farming
communities rather than Silicon Valley. These entrepreneurs saw
problems on their farms and created solutions to solve them.
A hurdle many of these ag tech entrepreneurs faced was
trying to access enough capital to scale up their production to
reach economies of scale. Some of these entrepreneurs
considered reaching out to investors but they were reluctant to
give up equity in their businesses and were not sure what type
of terms to expect in a deal.
To address this challenge, Farm Bureau created the
Agriculture Investment Summit that connects rural entrepreneurs
with investors from venture capital funds and accelerator
programs. We targeted investors from Rural Business Investment
Companies and accelerator programs focused on rural and ag tech
investments. We brought together 35 rural entrepreneurs and 25
experts and investors representing more than $300 Million in
investment funds. Investors participating in the Summit
represented the following funds: Midwest Growth Partners,
Innova, CVF Capital Partners and the Kirchner Group. We also
had managers from the following accelerator programs:
Techstars, Village Capital and The Yield Lab.
The Summit provided Venture Capital 101 training to
entrepreneurs on topics such as the right time to take on
investors and how to protect your intellectual property as you
meet with investors. Entrepreneurs shared their experiences
with investors and investors talked about what they looked for
in companies. Rural entrepreneurs had the opportunity to pitch
their businesses to investors and engage in a question and
answer period. After the Summit, investors remarked that they
found the entrepreneurs thoughtful, passionate and down-to-
earth. Entrepreneurs said they received top caliber training
and enjoyed networking with other entrepreneurs and investors.
Two entrepreneurs are now in negotiations with investors they
met at the Summit.
Through the Rural Entrepreneurship Initiative, Farm Bureau
has supported more than 1,000 rural entrepreneurs from 37
states, including Hawaii and Alaska. We have provided more than
$500,000 in startup capital, mentorship, networking with
investors and publicity. Entrepreneurs have used the startup
funds to refine their prototypes, build greenhouses, hire
staff, crate online marketplaces and upgrade their production
facilities.
We continue to work with the entrepreneurs that
participated in the Challenge to learn what obstacles they face
and help them overcome barriers. Entrepreneurs told us they
wanted to learn more about federal programs they could access,
grant opportunities, and how to connect with investors. We
developed an online, monthly newsletter called Ag Spark to
provide ongoing support for rural entrepreneurs. The newsletter
provides entrepreneur case studies, expert interviews and a
calendar of upcoming opportunities. We promoted the USDA Small
Business Innovation Research grant with articles from a
previous recipient and grant reviewer. We also publicize USDA's
Value Added Producer Grant program and Rural Energy for America
Loan and Grant program. We have more than 1,600 newsletter
subscribers and that number grows each month.
American Farm Bureau also works closely with our state Farm
Bureaus to cross-promote programs for entrepreneurs and
beginning farmers. We work with the Iowa Farm Bureau to promote
their Renew Rural Iowa program, a program that supports small
business development in Iowa. This year, we are working with
North Carolina Farm Bureau to launch the North Carolina Rural
Entrepreneurship Challenge to highlight exceptional rural
entrepreneurs in their state.
At Farm Bureau, we believe that supporting rural
entrepreneurs is critical to enhancing and strengthening rural
communities. Through the Rural Entrepreneurship Initiative, we
have educated more than 1,000 rural entrepreneurs and provided
resources to make their food and agriculture businesses more
profitable. Our Challenge competition and Investment Summit
connect entrepreneurs to startup capital and investors who can
help them take their businesses to the next level. We continue
to work with rural entrepreneurs to help them overcome
obstacles and achieve their dreams for their businesses. Thank
you for your time today. I look forward to answering any
questions you may have.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Good morning Chairman Blum, Ranking Member Schneider, and
distinguished Members of the Small Business Committee. I am
Mark Kester, the Chief Scientific Officer of AgroSpheres, a
biotechnology company located in Charlottesville, Virginia. I
would like to also acknowledge six members of the AgroSpheres
team who are here with me today. We thank you for calling
attention to Agriculture Technology entrepreneurship and for
inviting us here to tell the story of AgroSpheres. We would
like to share what we have learned during the process of taking
our company from a student project in my lab at The University
of Virginia to a real-world company that just closed a seed
round of funding. AgroSpheres Inc, is an AgBiotech company
based in Charlottesville, VA working on nanotechnology enabled
environmentally friendly biocontrols.
AgroSpheres is a true success story. In a very short time,
we have taken a concept and turned it into a reality. When UVa
students, Ameer Shakeel and Payam Pourtaheri conceptualized the
technology, they realized that they had come across something
special. They had a ``solution'' but needed to find a problem.
Ameer and Payam initially wanted to target the pharmaceutical
space with their nano ``solution''. I advised them that the
runway was too long to develop a pharmaceutical application and
that there was ``lower hanging fruit''. They took this advice
and adapted the technology to make a pesticide-degrading spray
to address the problem of residual pesticide contamination.
Being from a region in Virginia rich in viticulture, we
reached out to our local vineyards to understand how pesticide
contamination was affecting our community. After visiting many
sites, it was clear that the problem of residual pesticide
contamination limited the capability of farmers to harvest
premium quality products and posed a health risk to workers
during the harvesting process. Farmers saw such great value in
our technology that multiple vineyards and one apple orchard
even agreed to allow us to run small-scale field trials and
generate our first field-trial data for our technology. The
willingness for small farms in our community to work with us
was key to the early stages of our success.
As we transitioned from a laboratory concept company to a
company now in the marketplace looking for commercialization
partners, we began to learn more about what we had developed.
We learned that the market place and farmers were more
interested in products that grant crop protection in a more
environmentally friendly manner. With this new market
information, we went back to the lab and developed a three-
stage approach to safer crop protection. First, we would make
synthetic pesticides protected and targeted, reducing the
amount sprayed, drift, and run-off. Second, we would look for
partners that have currently developed biocontrols that are
lacking field delivery mechanisms. Lastly, we would develop our
won, next-generation biocontrols for crop protection to take to
market independently.
While exploring different uses for our technology, we
continued to build on our initial assumption of the platform's
versatility. We have developed a platform that has the ability
to encapsulate synthetic chemicals, encapsulate or express
biocontrols, and form a natural adhesiveness to plants for a
more targeted delivery. We are most excited about the
biopesticide industry because we are a one-stop shop that can
create the biocontrols, encapsulate and protect the
biocontrols, and engineer proteins on the outside of our
capsule to target the intended plants. Our products are crated
through bacterial engineering and produced through the cheap
and scalable process of bacterial fermentation. Most
importantly, the AgroSpheres product delivers the biocontrol
without any genetic material.
I also would like to highlight some of the successes that
we have had along the way as we have morphed a concept into an
agricultural biotechnology company. Our first milestone was
licensing our pesticide-degrading technology from the
University of Virginia. This meant that we now had value as a
standalone company. Next, we started pitching investors and
after a few months closed our seed round of financing. Then we
used our newly acquired funds to purchase equipment and outfit
our new lab in our home in Charlottesville. Lastly, we signed
our first corporate research contract where a company is
funding us to encapsulate one of their synthetic biocontrol
chemicals. Our next steps are continuing to produce data
validating our technology, find a partner in biocontrols for
Agriculture, and hopefully, receive some SBIR funding!
We have many factors that have contributed to our success
but would like to highlight a few:
Creating a team of young motivated
entrepreneurs with diverse backgrounds allows us to
attack problems from many different angles. We have
various science backgrounds, business backgrounds, and
a faculty entrepreneur. Our young entrepreneurs changed
career paths from going to medical or graduate school
to pursue AgroSpheres.
Engaging farmers and crop protection
companies early to define and modify the product and
initial company vision based on market need. Potential
customers were much more generous with their time,
information and resources than we initially thought.
Without this initial generosity, we would not have been
able to confirm our platform's versatility.
Entrepreneurial competitions provided us the
much-needed gap financing between technological
development and equity funding. This non-dilutive
funding gave us the ability to pay expenses and explore
the technology and different end markets before
approaching investors with inadequate information. When
we needed money for an experiment, to pay a lawyer, or
to run a field trial, we would look for a competition
that we thought that we could enter and win.
In closing, I want to leave the committee with a couple of
final thoughts that could help early-stage AgTech companies
going forward.
Public funding for company incubators or
accelerators. At the University of Virginia, we have an
iLab incubator that is funded by the University of
Virginia and its donors. This program was immensely
helpful to our development, providing office space,
entrepreneurial mentorship, and contacts.
Strengthening Federal, State and most
importantly local grant opportunities for commercial ag
research and development. If we had the ability to
receive short-term funding to bridge the gap between
technology conception and equity funding, we would have
devoted more time to the rapid development of the
technology and less time to the competitions that were
a necessity for survival.
We have applied for a couple of SBIR grants
regarding different commercialization opportunities,
but as startups move quickly and adapt to real time
market feedback, it would be helpful if the evaluation
timeline was expedited and shortened. This would allow
us to incorporate this funding into our future
planning.
In closing, I would like to thank you again for inviting
AgroSpheres here today to share our experiences. I look forward
to answering any questions you might have.
High Tech Agriculture: Small Firms on the Frontier of
Agribusiness
Testimony presented to the House Committee on Small
Business, Subcommittee on Agriculture, Energy, and Trade
Presented by Joseph W. Guthrie, Senior Instructor,
Agricultural Technology Program, Virginia Tech, Blacksburg,
Virginia
Ladies and gentlemen of the committee, I am honored and
delighted to speak with you today about agriculture and how the
many small business owners who comprise most of our nation's
agricultural production are finding challenges and
opportunities in the adoption of ever-advancing technology. I
will also present information to you about how those of us who
are teaching agriculture in higher education are preparing the
next generation of agricultural producers to successfully
incorporate new technology into their farm businesses.
Agriculture has been at the center of my life's work since
I was a boy growing up on a beef cattle and dairy farm in the
New River Valley of Southwestern Virginia. It is a farm that my
family has owned for six generations since 1795, and one that I
will pass along to my children to continue a legacy of a small
family business that is helping to feed a hungry world. And
that task will become increasingly important and challenging as
the world's farmers will need to feed over 9 billion people by
the year 2050.
For the past eleven years, I have also taught courses in
agricultural business management in the Agricultural Technology
Program in the College of Agriculture and Life Sciences at
Virginia Tech, which is Virginia's Land Grant University. So I
can speak to you today both as a small business owner of a farm
and as someone who is helping to train tomorrow's farmers,
agricultural supply business managers, farm equipment dealers,
and others who will keep America at the forefront of
agricultural production.
It is no exaggeration to say that technology in agriculture
has changed more in the past 100 years than it had in any 100
years prior, and perhaps more than in all of human history
combined. As an example of that, when my father, who was born
in 1925, was growing up on our family farm, he walked behind a
horse that was pulling a plow, just as every generation before
him had done. A quarter century later, he was driving a tractor
with more power than 100 of those horses. By the time he handed
the farm off to me, we had stopped plowing altogether because
we had begun using zero tillage planting as a soil conservation
practice.
So, what it happening now and what will continue in the
future with advancements in agricultural technology? Just as it
was impossible for people in the early 20th Century to foresee
the advancements that awaited them, so it is difficult for us
to say what advances in agriculture might be in the next 25,
50, or 100 years. But what we can see is what some recent
advancements have been and where the industry appears to be
headed with them.
There is no question that precision agriculture is an all-
important driving force in crop production now and appears that
it will be even more important in the future as it is more
widely adopted, as the technology will likely become more
affordable, and as it continues to improve over time. Precision
agriculture is a term used to describe several related
technologies that are often used together to decrease input
costs and increase yields. ?Those technologies include soil and
yield mapping to great precision using GPS, tractor guidance
systems that allows for automated tractor operation in fields,
and variable rate application of fertilizer, chemicals, and
seeks. Unmanned aircraft, or drones, are also often
incorporated into precision agriculture to provide imaging of
fields that enhance decision-making on irrigation and
application of chemicals and fertilizers.
A USDA study (USDA ERS Report Number 217) released October
2016 found that precision agriculture was used on 30-50% of US
corn and soybean acres in 2010-2012. There is no doubt that the
percentage has risen significantly since then.
Let me give an example of the use of precision agriculture
and how it is transforming how we farm. I visited a dairy farm
in central Virginia a year ago where one of my students was
working as an intern during the summer. The farm owner said,
``Joe, come back in two years and I won't be sitting on a
tractor planting corn. I'll be sitting at a desk watching a
monitor of 5 un-manned tractors in 5 fields pulling 5 corn
planters.'' Each of those planters are able to change the rate
an the variety of corn seed to match the precise conditions of
the soil the planter is driving over.
The implications of this technology to enhance production
is, as you can tell, staggering. So are the changes it might
have on the agricultural industry. First, the technology, while
designed to improve profits by providing savings in input costs
and increases in yields, is very expensive. The USDA study
found only a small increase in farm profitability among farms
that had adopted precision agriculture during the time of the
study. Hopefully, profitability will increase as the technology
becomes more affordable over time.
Another consideration is that precision agriculture and
other technological advancements make more sense on larger
farms where their fixed costs can be spread out over more
acreage. That would indicate that we might expect larger farms
to adopt the technology first and that we might see a trend of
fewer but larger farms. And, indeed we are seeing those trends.
It is important to keep in mind, however, that even large farms
in the US are still considered small firms. Most, in fact
nearly all, are family owned.
Another implication of precision agriculture and other
technologies in agriculture is a reduction in the number of
people needed to farm labor. As you can imagine from the
example of the dairy farmer, he won't be hiring anyone to drive
those 5 tractors. The reduction in the need for farm labor and
labor costs is one of the benefits of the technology, but it
has serious implications for rural communities.
Another example of a labor-saving technology that is
becoming increasingly popular in agriculture is the so-called
robotic dairy. Using this technology, no one at one of these
dairy farms actually milks the cows any more. Instead, the cow
is trained to walk into a stall whenever she wants to be
milked, and she is fed some grain from an automated feeder
while a computerized robotic milking machine attaches to her
and milks her. It's truly amazing to see in practice. It costs
about a half million dollars.
That leads me to another example of the staggering changes
we are seeing in agriculture, specifically in the dairy
industry. A colleague of mine from Virginia Tech took her Dairy
Management class to visit 4 Virginia dairy farms that milked a
total of 5,000 cows. A generation ago, given the size of the
typical Virginia dairy herd, she would have needed to have
visited 50 dairy farms to see that number of cows, and even
more to see the equivalent amount of milk produced, since the
average cow produces much more milk now than a cow of 20 or 30
years ago. Again, the use of technology favors larger farms
that spread out fixed costs, so we are seeing fewer and larger
dairy farms with increased production per cow.
These changes associated with technology and increased
economies of scale increase production, which makes
agricultural products more plentiful and less expensive.
Therefore, they ultimately benefit consumers, perhaps more than
they actually benefit the farmers who use them.
Given time limitations, I have discussed only a little bit
about only a few of the changes in technology we are seeing in
agriculture. Others would include the use of genetically
modified crops such as Round-Up Ready corn, new technology in
chemicals and particularly in herbicides, and the increasing
use of drones for a number of applications.
We on the faculty of the Agricultural Technology Program at
Virginia Tech, like faculties of colleges of agriculture around
the nation, are endeavoring to keep up in teaching courses that
incorporate new technology as we train the next generation of
agricultural producers and suppliers, most of whom will own,
manage, or work for small businesses. An example is a new
course that we added to our curriculum three years ago specific
to teaching precision agriculture. We were able to do this with
a grant of the precision agriculture equipment from a
manufacturer. So, the students are learning on the equipment
that the may use some day or may already have at their home
farm. Public/private partnerships such as this one can be
greatly beneficial to both the students and to the technology
manufacturer, and I would encourage your states' Land-Grant
universities to pursue a similar partnership if they have not
done so already.
Given the brief time I have been asked to speak, I will
stop there in what is a very large and broad topic, but one I
am glad your committee has seen fit to put onto its agenda to
learn more about. To the extent I am able, I will now try to
answer any questions you may have or top provide your answers
later if I need to do more research before I can answer
accurately.
Thank you.
Questions for the Record
Committee on Small Business
Subcommittee on Agriculture, Energy, and Trade
``High-Tech Agriculture: Small Firms on the Frontier of
Agribusiness''
Lisa Benson
Rep. Al Lawson
Question 1:
Can you please explain the important role of 1890
institutions in helping to expand agri-tech and how these
universities can assist in the development of this industry?
The field of agricultural technology is critical to helping
U.S. farmers and ranchers produce enough food to feed a growing
global population. Land grant institutions provide key training
to the next generation of entrepreneurs who will create
agricultural technology innovations to help us produce healthy,
safe food using less land, water and inputs. The role of 1890
land grant institutions will become even more important as the
U.S. population shifts from a majority of non-Hispanic whites
to a more diverse population with a minority-majority.\1\ The
1890 institutions serve an important role equipping diverse
students to enter into the field of agricultural technology.
The 1890 institutions and other HBCUs (Historically Black
Colleges and Universities) provide much needed career
exploration and STEAM training (science, technology,
engineering, agriculture and mathematics) to ensure our country
has a robust, skilled and diverse workforce to address the
mounting challenges facing agriculture. Career exploration
programs include Tuskegee University's AgriTREK Summer
Institute and AgDiscovery Summer Program \2\ that introduces
high school students to potential career tracks through a two-
week residential program. Florida A&M offers AgTech Century 21
\3\, a summer enrichment program to help middle and high school
students learn more about careers in agricultural science. Some
initiatives focus on entrepreneurship and the commercialization
of agricultural inventions. The HBCU Innovation and
Entrepreneurship Collaborative \4\ fosters innovation,
commercialization and entrepreneurship at college campuses
across various disciplines including agriculture, science,
engineering and technology.
---------------------------------------------------------------------------
\1\ U.S. Census Bureau (2015). Projections of the Size and
Composition of the U.S. Population: 2014 to 2060. https://
www.census.gov/content/dam/Census/library/publications/2015/demo/p25-
1143.pdf
\2\ Tuskegee University (2017). AgriTREK/SciTREK and AgDiscovery
Summer Programs for High School Students. https://www.tuskegee.edu/
programs-courses/colleges-schools/caens/conferences-workshops/
agritrekscitrek
\3\ Florida A&M (2017). AgTech Century 21 Summer Enrichment
Program. http://www.famu.edu/cesta/main/index.cfm/cooperative-
extension-program/agriculture/herd-health/agtech-century-21-summer-
enrichment-program/
\4\ Association of Public & Land-Grant Universities (na). HBCU
Innovation and Entrepreneurship Collaborative. http://www.aplu.org/
projects-and-initiatives/access-and-diversity/hbcu-innovation-
commercialization-and-entrepreneurship/index.html
---------------------------------------------------------------------------
Question 2:
Can you discuss what improvements can be made to improve
the agri-tech industry, particularly as it relates to
protecting the environment and food production?
We are facing the challenge of producing food for a growing
global population with an ever dwindling supply of farmland and
water. Ag technologies are being developed to produce food more
intensively, using less water, farmland and inputs. Through the
Farm Bureau Rural Entrepreneurship Challenge \5\ we have
identified and promoted a number of technologies developed by
rural entrepreneurs that help produce food with less farmland,
water and inputs. Albert Wilde from Croydon, Utah, developed an
all-natural plant food from sheep wool that reduces the need
for watering by 25%. Albert's business is Wild Valley Farms
\6\. Alex Adams, an entrepreneur from Knoxville, Tennessee,
developed a technology called GeoAir \7\ that uses drones to
detect mold in corn so farmers can conduct targeted spraying
and reduce overall crop protection chemical applications. To
learn more about agricultural technology businesses across the
country, visit our Entrepreneur Showcase available here:
https://app.reviewr.com/s1/showcase//RUral2018
---------------------------------------------------------------------------
\5\ Farm Bureau Rural Entrepreneurship Initiative (2017). Rural
Entrepreneurship Challenge. http://www.strongruralamerica.com/
challenge/
\6\ 2018 Farm Bureau Rural Entrepreneurship Challenge (2017). Wild
Valley Farms. https://app.reviewr.com/s1/
pitch?subid=2618319&evtid=2499238
\7\ 2018 Farm Bureau Rural Entrepreneurship Challenge (2017).
GeoAir. https://app.reviewr.com/s1/pitch?subid=2815350&evtid=2499238
---------------------------------------------------------------------------
Question 3:
I just launched a hunger initiative calle4d the ``Let's
Feed America'' initiative where I am advocating for various
hunger initiatives to eradicate food desserts in my district
and to provide food aid to low and moderate income residents
along with senior citizens and the disabled populations. How
can agri-tech be used to help eradicate hunger in food
desserts?
Food deserts are crated when residents living in a
designated area have limited access to healthy, reasonably-
priced food. Agricultural technologies, innovations and systems
can be used to address food deserts by 1) increasing the
availability of healthy foods for residents living in remote or
low income areas, and 2) providing foods at a price point that
is affordable for low and moderate income residents. Through
the Farm Bureau Rural Entrepreneurship Challenge we have
identified a number of agricultural technology businesses that
address the challenges of food deserts. Linda Janes and Dan
Perpich of Anchorage, Alaska, created Vertical Harvest
Hydroponics \8\, a hydroponics farm built in a shipping
container that can withstand artic conditions. The containers
are shipped throughout Alaska to provide fresh vegetables to
communities living in remote rural villages and towns. Local
residents learn how to farm using the containers, In South
Carolina, Lindsey Barrow Jr. created the Lowcountry Street
Grocery \9\. The Lowcountry Street Grocery is a community-
supported mobile farmers' market that delivers local, farm-
fresh food and nutrition education to communities surrounding
Charleston. Lindsey takes a portion of the revenue from the
stops the mobile market makes to pay for additional visits to
low-income/low-access communities to ensure that residents in
these areas receive access to healthy food. Visit our
Entrepreneur Showcase to see more ag technology businesses that
are helping increase access to healthy, affordable food:
https://app.reviewr.com/s1/showcase//Rural2018
---------------------------------------------------------------------------
\8\ Vertical Harvest Hydroponics (2017). What We Do. http://
verticalharvesthydroponics.com/about/
\9\ Lowcountry Street Grocery (2017). About: An Innovative and
Unique Approach to Doing Good Business. http://
www.lowcountrystreetgrocery.com/about-us/
Questions for the Record
Committee on Small Business
Subcommittee on Agriculture, Energy, and Trade
``High-Tech Agriculture: Small Firms on the Frontier of
Agribusiness''
Thank you again for the opportunity to be in DC for this
experience. Here are our responses to the questions provided:
Question 1: Can you please explain the important role of
1890 institutions in helping to expand Agri-tech and how these
universities can assist in the development of this industry?
One way to increase AgTech adoption is continued hands-on
experiences through the land-grant system. For example,
Internships provide opportunities for young people to
experiment and pursue careers in agriculture while helping
agribusinesses.
With the AgTech industry change happening at such a rapid
pace, we need more partnerships between education and the
private sector. There are many benefits to completing an
internship for the student, the business, and the university.
Question 2: Can you discuss what improvements can be made
to improve the Agri-tech industry, particularly as it relates
to protecting the environment and food production?
IN10T believes in the importance of continued access to
environmental data. In addition to access, continuing to
increase the quality of environmental data is essential. An
example environmental data set is the SSURGO database which
contains information about soil at collected by the National
Cooperative Soil Survey. Other examples are the satellite
imagery and radar information that is published daily.
Secondly, IN10T believes we need more testing and
validation of products and practices at the farm level. New
technologies need to be evaluated on real farms to understand
value and utility. FarmerTrials is a place in which objective
data and farmer feedback regarding new technologies can be
generated to drive better innovation. A neutral platform
displaying research and innovation projects is a needed tool
for tomorrows farmer.
Question 3: I just launched a hunger initiative called the
``Let's Feed America'' initiative where I am advocating for
various hunger initiatives to eradicate food deserts in my
district and to provide food aid to low and moderate income
residents along with senior citizens and the disabled
population. How can agri-tech be used to help eradicate hunger
in food deserts?
Data is already helping us measure and improve many
elements of today's agriculture. In the proposed initiative,
there appears an opportunity to apply data science to the
currently available data. This analysis could evolve to a model
with predictive/potential opportunities thus supporting the
future eradication of hunger.
Thank you,
Kevin Heikes/IN10T
w: 913.283.4270
c: 913.220.4375
Questions for the Record
Committee on Small Business
Subcommittee on Agriculture, Energy, and Trade
``High-Tech Agriculture: Small Firms on the Frontier of
Agribusiness''
Rep. Al Lawson
Question 1:
Can you please explain the important role of 1890
institutions in helping to expand Agri-tech and how these
universities can assist in the development of this industry?
My University, the University of Virginia works closely
with 1890 Land Grant Institutions including Virginia State and
North Carolina A&T. In particular, the nanoSTAR Institute at
University of Virginia, which I direct, works closely with the
North Carolina/Virginia Minority Alliance to place
undergraduate students from these schools into our Summer
Undergraduate Research Program. As discussed in my testimony,
all schools of higher education should be committed to a
culture of entrepreneurialism for their undergraduates. These
students should be encouraged to participate in team-projects
that prepare them for the new opportunities offered by the
scientific ``revolution'' in synthetic biology and agricultural
technology.
Question 2:
Can you discuss what improvements can be made to improve
the Agri-tech industry, particularly as it relates to
protecting the environment and food production?
As discussed in my testimony, one of the companies I have
founded, Agrospheres, is using the science of synthetic biology
to engineer non-GMO delivery platforms to degrade pesticides
directly on plant surfaces. Agrospheres, developed as a student
entrepreneurial project, is now a University ``spin-out:
company that has won several prestigious National competitions
including the United States Patent and Trademark Office
Collegiate Inventors Competition. To successfully compete and
grow as a company, Agrospheres has taken advantage of incubator
facilities in the Charlottesville area as well as grant funding
from local, State and National Sources. Further support for
these resources, particularly enhanced SBIR grant funding in
the Ag space, from NSF, USDA, DOE and DOD, are essential to the
development of these new companies that will change the world.
Question 3:
I just launched a hunger initiative called the ``Let's Feed
America'' initiative where I am advocating for various hunger
initiatives to eradicate food desserts in my district and to
provide food aid to low and moderate income residents along
with senior citizens and the disabled population. Howe can
agri-tech be used to help eradicate hunger in food desserts?
There are now numerous examples of companies developed
through Academic/Industrial partnerships that are making
agricultural products safer and more cost-effective. This
directly transfers to a healthier economy for farmers but also
to fresher and more plentiful products in urban settings. Ag-
tech provides the ``solutions'' to feed urban food deserts and
quite possibly the world.
Respectfully,
Mark Kester
Director, nanoSTAR Institute, University of Virginia
Questions for the Record
Committee on Small Business
Subcommittee on Agriculture, Energy, and Trade
``High-Tech Agriculture: Small Firms on the Frontier of
Agribusiness''
Joe Guthrie
Question 1:
Can you please explain the important role of 1890
institutions in helping to expand Agri-tech and how these
universities can assist in the development of this industry?
The 19 colleges and universities that comprise the Council
of 1890s Institutions are integral and vital components of the
land-grant missions that provide invaluable new knowledge of
agriculture to the people in their states and to the nation.
These historically black colleges and universities--such as
Florida A&M in Rep. Lawson's state and Virginia State
University in my home state--have the same 3-part mission of
all land-grant universities: education, research, and
extension. In each of the states with one of the 1890
Institution, that institution partners with another
university--such as the University of Florida or Virginia
Tech--to fulfill the land-grant mission. Agriculture has been a
central focus of the land-grant mission since the passage of
the Morrill Land-Grant Act and the establishment of
universities around the nation that it provided for.
Today, the land-grants are continuing to provide leadership
in the burgeoning new agricultural technologies. Importantly,
the land-grants are fulfilling that leadership role in all 3
aspects of their mission. They are educating students, such as
through the new course in Precision Agriculture in the
Agricultural Technology Program at Virginia Tech that I
discussed in my testimony. They are providing research in many
aspects of agriculture, both on-campus and at agricultural
research and experimentation centers. And they are extending
that knowledge to farmers through the Cooperative Extension
Service.
There has never been a time in which it was more important
to get new information quickly to agricultural producers and
suppliers than it is right now. The states with 1890
Institutions are fortunate to have two sets of campuses,
faculties, and students with a combined extension component to
fulfill that need. As an example, in Virginia, the work in
agricultural research and extension is divided up with Virginia
Tech and Virginia State University partnering in some sectors,
and each taking areas of specialization in other sectors. In
Virginia, we are particularly fortunate to have these two
institutions in two geographically distinct parts of the state.
Virginia Tech's campus is in the ride and valley region of the
Southwestern part of the state, which is primarily a forage and
livestock producing area and lends itself well to research in
those sectors. Virginia State University is located in
Petersburg, in Virginia's coastal plain region, where row crop
farming predominates. The two institutions partner in having
about a dozen other research stations around the state.
Virginia State has also taken the lead in several initiatives
that work well in its area such as aquaculture. To the extent
that other states with 1890 Institutions can find similar ways
of having their land-grants partnering with specializations, we
have found in Virginia that it can certainly create synergies
and efficiencies and be beneficial to stakeholders.
I am a person with a love of history and the story it tells
us of who we are today, so I'd just like to add a note about
the history of the Morrill Land-Grant Act and two other great
acts of Congress and the Lincoln Administration that have
proved to be of incalculable value to the nation and have made
American agriculture the most productive and efficient in the
world.
First, the Morrill Land-Grant Act provided for a grant of
land in each state from the federal government to provide
either the site or the funding for a public institution of
higher education with areas of focus on agriculture, mechanics
(what we now call engineering), and military science. It was
originally passed during the Lincoln administration in 1862 and
was expanded to include colleges for African-Americans in 1890.
Another of those great pieces of legislation was the one
which created the United States Department of Agriculture in
1862. Lincoln called it ``the people's department.'' From its
humble beginnings where its most prominent mission was to
distribute seeds to farmers, it now works to ``assure food
safety, protect natural resources, foster rural communities,
and end hunger in the United States and internationally''
according to its website.
The third great work of Congress and the Lincoln
Administration of 1862 was the Homestead Act. It provided for
settlement on the vast and rich farmlands west of the
Mississippi. Settlers were given title to land for free if they
settled on it and farmed it. The act was expanded in 1866 to
include African-Americans. More than 1,600,000 homesteaders
settled on over 270 million acres, which is about 10% of the
total area of the United States. As a result, today's American
agriculture is largely comprised of family farms where
ownership is passed down through generations of landowners who
tend the land as their own and protect it for their heirs. No
other system provides as well for productivity or
sustainability.
I cite these great acts of Congress from 1862 to give
examples of how legislation can provide great benefits to the
nation with the hope that this Congress will be as inspired and
as gratefully remembered for the works it passes.
Question 2:
Can you discuss what improvements can be made to improve
the Agri-tech industry, particularly as it relates to
protecting the environment and food production?
Among the advantages of many of the new innovations in
technology in agriculture is that they can have positive
effects on environmental sustainability. For example,
enhancements in seeds and chemicals have led to reduced soil
erosion by reducing or eliminating tillage. Precision
agriculture more accurately and efficiently applies fertilizers
which helps reduce run-off. Precision ag can also reduce the
number of trips over the field that a farmer would need to make
during the growing season, and that saves diesel fuel and other
input costs. So, while these technologies are designed to
reduce input costs, they have an indirect benefit of
environmental stewardship in doing so. We can only presume that
further improvements in precision ag and other new technologies
in agriculture in the future would tend to have the same
effects.
In addition to reducing inputs, precision ag and other new
technologies are designed to improve yields. For example,
modern corn planters can select from a number of varieties of
seeds as the planter covers a field and select, to a high
degree of accuracy, a particular seed that will maximize
production in a specific part of the field. That selection is
based upon precise satellite mapping and records of previous
yields that measure the field down to the square meter. As
yields per acre improve we can produce more food to feed more
people on the same acreage.
Ultimately, sustainability in American agriculture is
linked to profitability of millions of small farms, mostly
family farms, across the nation. Our farmers can only stay on
the land and make it productive while providing for long-term
environmental stewardship if the farm business is profitable
enough to allow for investments to go back into the farm. New
technologies should improve profitability by reducing input
costs and increasing yields, and they generally do. However,
the technology must increase profits enough to pay for itself.
So far for precision agriculture, that profit has only been
nominal because of the cost of the technology, as I pointed out
in my testimony. The hope is that the cost of the precision ag
technology will go down over time, as the cost of technology
generally tends to do.
Question 3:
I just launched a hunger initiative called the ``Let's Feed
America'' initiative where I am advocating for various hunger
initiatives to eradicate food deserts in my district and to
provide food aid to low and moderate income residents along
with senior citizens and the disabled population. How can agri-
tech be used to help eradicate hunger in food deserts?
I applaud the Congressman's efforts in these initiatives to
enhance nutrition for all Americans in general and for the more
economically disadvantaged people in his district in Florida in
particular. I hope it helps to raise our consciousness of the
issues associated with the lack of adequate nutrition faced by
many Americans. Food deserts are a problem in many places
across the United States, but in our urban centers in
particular. I share the Congressman's hope that we will find
applications for new agricultural technologies in providing for
food production in areas that are currently food deserts.
One challenge that we will face in achieving the use of
enhanced agricultural technologies in eliminating food deserts
is the scalability of the technology. As I pointed out in my
testimony, precision agriculture technology tends to be used on
large farms because only the larger farms are able to afford
the technology since they can spread the cost outlay for the
technology out over enough acres to make it worthwhile. The
hope is that the technology will become less expensive over
time, as most technologies tend to become, and then they will
be used more generally in medium sized and small farms. That's
important because most of the efforts in eliminating food
deserts focus on smaller scale operations and start-ups with
limited acreage. That could help us to raise more food, not
necessarily in the urban centers, but perhaps close enough in
outlying areas to make small farms there viable, productive,
and profitable enough to specialize in marketing to consumers
in the urban centers with fresh produce through outlets such as
farmer's markets and produce stands.
Because of the limited acreage available in urban areas, we
would also tend to look to intensive, high value returns from
acreage in the urban centers themselves. Greenhouses are one
way to capture that high value per acre. I'll point out an
example of such an intensive operation that has been successful
as an agricultural producer, a youth training center, and a
community outreach program. It is a hydroponics operation
called Pulaski Grow in my home county, Pulaski County,
Virginia. Their website is www.pulaskigrow.org. Pulaski Grow
uses greenhouses to grow both plants and fish in a symbiotic
relationship called hydroponics. Hydroponics allows for the
production of both plants and fish on a large enough scale to
be economically viable in only a very small area. A similar
project could be done on a couple of vacant lots or perhaps, on
a smaller scale, even on a roof top. While such an operation
could be viable as a for-profit venture for an entrepreneur,
Pulaski Grow has chosen to be a philanthropic non-profit and
focus on using the operation as a youth training center which
employs disadvantaged youth in the area to help them acquire
hands-on skills and important life lessons in working at a
business. Such an operation could be replicated almost anywhere
because of the use of greenhouses. Outputs can include both
farm-raised fish, which can be a very affordable protein source
for a local urban population, and organically-grown herbs.
Pulaski Grow receives a modest annual grant from Pulaski
County's Board of Supervisors, of which I am a member. The
grant is specifically used to help enhance the youth training
aspect of the venture. I want the Congressman and all the other
members of the committee to consider themselves to have an open
invitation to visit and tour the facility. Their staff can
contact me to make the arrangements.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Our Experience With Rural Entrepreneurship
I am glad your paths crossed with Dr. Lisa Benson from the
American Farm Bureau Federation. She is very dedicated to rural
business development, is genuine, and tack sharp.
My name is Martin Bremmer and I am the president of
Windcall Manufacturing, Inc. in rural Venango, Nebraska (the
southwest corner where Nebraska, Kansas, and Colorado meet).
Our company manufactures a small handheld grain combine. Its
purpose is to allow grain growers to harvest a small amount of
grain to test the sample for water content. The percentage of
water is how farmers determine if a field or crop is ready to
harvest. If the grain is too wet the farmer is charged a
``drying'' fee and if the grain is too dry the farmer will lose
money from ``shrinkage'' when the grain is sold. The GrainGoat,
a patented machine, is the only one of its kind in the world
due to the complex nature of threshing grain in such a tiny
machine. You can learn more at www.graingoat.com.
Dr. Benson asked me, and several other who participated in
the Farm Bureau Rural Entrepreneurship Challenge last year
(2016), to describe the ``challenges and opportunities'' facing
rural entrepreneurs.
Despite being 100 miles from the nearest town with a Home
Depot or a good sushi restaurant, we are, for the most part,
satisfied with shipping access to plastics and metal
fabricators. We are accessible to all freight companies, FedEx,
and UPS. So acquiring our raw components and drop shipping our
finished product is relatively uneventful.
We are challenged with the distance to our plastics and
metal fabricators during product development, however, simply
because they are four to six hours away by interstate. Face-to-
face meetings are usually necessary when new CAD drawings are
being discussed and implemented into ``one-up'' prototype parts
prior to larger purchase orders. This step is critical in
discovering errors in manufactured parts before large orders
are requested.
This hurdle could be eliminated with reliable high speed
internet access is rural parts of the U.S. While most cities
enjoy internet speeds of 20 to 100 mbps of speed, here in rural
Nebraska, Kansas, and Colorado we either have dial up speed or
we must pay $60-$100 per month for 3-8 mbps. This means we
cannot hold reliable video conferences and a simple webinar
usually cuts in and out. Cell phone companies do not equip
their cell towers with high speed equipment due to the low
population in rural areas. This past summer our only internet
provider is this area announced they were closing, which would
have left us without internet completely until an ISP from 200
miles away purchased the business and has continued to offer
our area with basic internet access. This is our greatest
challenge, currently as a rural entrepreneur.
I echo the four points brought up by Dr. Hofecker (Demeter,
Inc.) in his email on this subject (Access to tech,
entrepreneurial training, peer communities, and access to
capital). Most rural entrepreneurs do not intentionally set
their trajectory to become an entrepreneur, rather, they take
skills from their careers and start a second career developing
their own businesses. They are very often lacking in the
training necessary to understand the process to grow a start-up
to a successful level.
If I could add anything to these points it would be
emphasizing access to capital through all stages of a start-up.
Seed money for prototyping, funds for product development, and
finally commercialization all require varying amounts of money
at very specific milestones. If the business owner cannot
accurately plot this timeline and secure the funding before it
is needed the business will fail. Training in this matter is
equal in importance to oxygen!
I feel so blessed that here in Nebraska we have been
supported by an enthusiastic network of Angel Investors, and a
Dept. of Economic Development who value rural business growth.
Outside of Nebraska, our hard work has caught the eye of USDA
and their Small Business Innovative Research program (SBIR). We
thank them for awarding us both a Phase I & Phase II grant
allowing us to reach the threshold of commercialization. With
that assistance we will market our product not only to farmers
and custom harvesters but also to seed breeders such as Bayer
and ADM, university researchers, and in the next few years to
overseas markets. If any of these groups or agencies had not
assisted our business, our goals could not be attained.
If you have additional questions or would like further
details of our experience with starting a manufacturing
business in rural Nebraska, please let me know.
Thank you for being interested in this very important
element of the U.S. agricultural economy. Ripples from the ag
economy travel to every corner of the country.
Have a great fall,
Martin Bremmer
303-243-1553
GrainGoat.com
Windcall Mfg. Inc
75345 Road 317
Venango, NE 69168