PMA Takes on Tech Podcast

Description:
The history of the world’s food systems has had major shifts - from hunting, gathering, fishing and foraging through the current industrial food system. The fifth and current food system has exhausted its growth trajectory and the world is, once again, staged for a major transformation in the way that food is grown, distributed and produced. There is a movement away from an industrialized, monoculture system built to provide calories and yield to one based on healthy people and sustainable, equitable ecosystems. In the produce industry we are all about nutrient-dense fresh food for healthy people and a healthy planet. In this episode, we talk to Caesare Assad, CEO of Food System 6 a nonprofit accelerator whose mission is to support impact driven entrepreneurs as they transform how we grow, produce and distribute food. We also talk to two companies involved with FS6: Ethan Rublee, a brilliant roboticist turning his passion and experience from computer vision startups and google to the farm and Lindsey Lusher Shute on supporting smaller acre producers for a more equitable food system.

Guests:

• Caesaré Assad CEO, Food System 6
• Ethan Rublee, farm-ng
• Lindsey Lusher Shute, Farm Generations

Vonnie Estes:
Welcome to PMA Takes on Tech, the podcast that explores the problems, solutions, people and ideas that are shaping the future of the produce industry. I'm your host Vonnie Estes, the vice president of technology at the Produce Marketing Association, and I've spent years in the ag-tech sector. So, I can attest it's hard to navigate this ever changing world. Thanks for joining us and allowing us to serve as your guide to the new world of produce and technology.

Vonnie Estes:
On my podcast, I typically look at a problem for the produce industry and then talk to one or two companies with technology based solutions to that problem. Today with my guest, we're going to look at some problems and solutions of the food system itself moving away from an industrialized, monoculture system built to provide calories in yield towards one based on healthy people and sustainable equitable ecosystems. In the produce industry, we are all about nutrient-dense fresh food for healthy people and a healthy planet.

Vonnie Estes:
I have with me Caesare Assad the CEO of Food System 6. Food System 6 is a nonprofit accelerator with a mission to support impact-driven entrepreneurs as they transform how we grow, produce, and distribute food. That's a really big mission. Many listeners may not be familiar of the concept with the 6 Food System. Welcome, and can you explain that?

Caesaré Assad:
Yes. Well, thank you, Vonnie, for letting me just dig right in. So at Food System 6, we are obviously thinking about systems and as such our name as it indicates, we've really been looking at the systems over the last six systems and we look at that through the context of the first system really was hunters and gatherers. That lead to early domestication. We call that the discovery of beer and then hybridization and trait selection really earmarked the third food system.

Caesaré Assad:
The fourth was what we look at as the Green Revolution, that's where we started seeing a lot of synthetic chemicals, high yield varietals and then the emergence of the fifth food systems started happening around the 70s, response to globalization. This is where we saw a lot of the lengthier supply chains being built, standardization, larger scale production and distribution, a system, as you said at the beginning, optimized for yield, calories, not necessarily for sustainability, which leads us to the sixth food system, the one that Food System 6 is focused on building, one that shifts us towards a system that can sustain itself, one that looks at the planet, the people that depend on it and thinks about and enables solutions that prioritize resilience, regeneration, and health.

Caesaré Assad:
So, our work is really about holding the complexity around this vision and supporting innovators, entrepreneurs who are building businesses that are achieving outcomes focused on resilience, sustainability, and health.

Vonnie Estes:
And, how do you define impact and how do you use that to pick the companies that you work with and invest in?

Caesaré Assad:
We're focused on innovations that are building vibrant farms, so resilience, richness, life-filled land. We're looking for solutions that support healthy people. You've talked a lot about labor already, so I think we can all appreciate the importance of taking good care of the people who are really stewarding and backboning the work that's happening out in the fields and also looking for companies that are creating healthy foods, healthy lands for our communities.

Caesaré Assad:
Sustainable ecosystems is our third pillar. This is working within the bounds of our ecological living systems, ensuring production and consumptions cycles of our land are loops rather than lines. We also look at justice and fairness. I would say really this is the heart of what's most important and especially now and I know that your audience is global and can really appreciate the need to look at the systemic inequalities of our food system to address dismantling the injustices, looking for ways to uphold dignity and quality of life for food workers, healing social, historical, cultural connections with the food people in the land.

Caesaré Assad:
There are so many innovators that are building solutions that are addressing all of these areas and then we've added a fifth element to what we look for, which is circularity and we've been able to do this in partnership with Huhtamaki, which is a global packaging company. They're sponsoring us to select a cohort focused on these closed loop models of circular production, enabling us to really go further into seeking regeneration, production models, and connecting that to all of the different parts of both small to mid-scale resilient system and the much larger corporate companies and looking at ways that they can really be involved.

Caesaré Assad:
So, those five pillars, circularity, justice and fairness, sustainable ecosystems, vibrant farms, and healthy people provide us with a holistic lens to look at how companies are making a difference.

Vonnie Estes:
That's really fascinating. I've worked with a lot of venture capitalists and been on a lot of selection committees of companies and nobody looks at it that way, and it certainly adds a challenge to both the people that are coming to talk to you and also as people who are trying to depict what companies do I invest in because on top of that as well, you have to think they have a good business model and they have to be able to make money for their investors at some point. So, those are a lot of hoops to jump through and I love that you're doing that and it's really forcing people to look at how what their doing has an impact on the whole system and not just one piece and maybe making money and then going, so it's really exciting to see the work that you're doing.

Vonnie Estes:
So, what are the ways that you are engaging with the companies? You mentioned the circular economy, the cohort, what other cohorts do you have and how does that whole process work?

Caesaré Assad:
Yes, and thank you very much for just pointing out the bit of the elephant in the room and a lot of our work is about blended capital, a lot of our work is about building this pre-competitive environment to help educate investors about what's happening in the food systems, so that we can look at where the other instruments ... That's a big part of what our program does, so our formal work is that we run a two-year cohort based accelerator program. We're currently in the midst of Cohort 5, so folks can go to our website, see who those six companies are.

Caesaré Assad:
The work itself for this cohort is founder-focused. It's largely bespoke and we're designing what we do to meet CEOs at their individual milestones. Our work is done in a way that we don't charge any companies who participate with us. We've just with this fifth cohort started to charge 1.5% equity for four profit companies. So, it's a much more just an advisory stake and we tend to work with these companies for much longer than the two years. That's actually been one of the things we've iterated over the years.

Caesaré Assad:
We used to be a 16-week model, much more of a traditional accelerator. What we learned with food and ag-companies we were building with a focus on impact is that they need a lot more time, they need a lot more resources, they need a lot more support removing barriers, and so that's really what the program focuses on, looking at ways in which we can build unique relationships, we can build partnerships, we can create an environment that's community-minded that creates a space for a lot of different types of people to engage without this expectation of necessarily an investment or something happening except for the opportunity to build relationship, lend expertise, and that's really the ultimate way in which we continue building out our work.

Caesaré Assad:
How do we create relationships that remove barriers? How do we create access to capital, intellectual capital, social capital? Financial being what we see as actually one of the things our entrepreneurs need ... I wouldn't say they need the least of, but it's not just the money. They need people who have real experience and wisdom and a real willingness to create a more resilient business that can help to bolster this beautiful food system that we have.

Vonnie Estes:
And, did the cohorts work together within the cohorts? Did they spend time together? It has to be virtual now, but normally do people get together and learn from each other? Is that part of the value?

Caesaré Assad:
Yes, and thank you for asking. Part of our selection criteria is that we're really looking at the impact pillars, how are companies working across these areas of impact we talked about, we're looking at the business viability. Most of the entrepreneurs we work with have already been in business, some of them have been in business for 10 years and it's because they're building these longterm, barrier resilient supply chains, which we've seen stand up.

Caesaré Assad:
We're looking for folks who actually want support and help, so they have a certain coachability and that are really committed to being part of a community. So, that is really an essential ingredient I would say is that yes, we very much build a system's thinking cohort of entrepreneurs who want to help one another and who want to help other entrepreneurs. It's really a core ethos of our work and we find that ... And, I think as folks talk to other entrepreneurs, this is really lonely.

Caesaré Assad:
So, we're looking for people who are committed to building businesses that can really withstand the pressures of this environment. You have to be willing to collaborate and work with other people in order to make that happen.

Vonnie Estes:
And, I think doing something as laudable and huge as changing the food system, there are so many moving parts and different parts of the supply chain and what you step in and do affects what happens in the rest of the chain, especially when you're trying to make a change. So, it's really exciting that people are able to have a resource and depend on each other, that's really amazing. So, through this, you've introduced me to two companies that you are working with that I'm going to interview next, farm-ng and Farm Generation Cooperative. Can you tell me briefly what interested you about these two companies and why you're involved with them?

Caesaré Assad:
Yes, I will try to keep it brief because there's so much within each of these, which is the case of every entrepreneur we work with, they're just fascinating humans. So at FS6, we have an initiative focused on scaling open source technology solutions for farmers to decrease their reliance on commodity production models and increase productivity and efficacy of small to mid-sized regional food systems. So, in partnership with ... We'll talk about one, but expert scientists, roboticists, engineers, farmers, this program is really working to decentralize and broaden access to technology to build tools that can support small to mid-scale production needs and bolster the resiliency of regional food production communities.

Caesaré Assad:
So, you're going to talk with Lindsey at GrownBy and Ethan with farm-ng. Both these entrepreneurs are farmers that are building technology solutions that are farmer-focused and are designed to meet farmers where they are. They are both experienced entrepreneurs and you touched on it earlier, but they recognize that traditionally funded BC Tech is often just extractive for small to mid-scale farmers.

Caesaré Assad:
There's just a business model incompatibility, so they're really trying to leverage new entity types within this pre-competitive environment that we have at FS6 to seek blended capital that's non-dilutive and to seek other support. That's a long rambling background to introduce Farm Generations Coop. It's a farmer-owned cooperative and it's a software solution, so I'm very interested in just generally alternative ownership models. Cooperatives are uniquely stable entities. In the last few years, there are around 134 agricultural cooperatives that have been in business for over 100 years.

Caesaré Assad:
So, the idea of taking an applying this model to a software solution that's farmer-built and farmer-owned means that profits made on the software will go back to farmers. That's a very uniquely differentiated model. And similarly, Ethan Rublee who's running farm-ng, this is a farm robotics company, Ethan is also the entrepreneur and resident for Food System 6 leading this open tech initiative that I described in my earlier ramble and he initially approached us just seeking connections to buyers for his small farm, but we quickly aligned on values and vision and really together talked about the need for a food tech revolution that's inclusive of farmers that's open sourced, that's supported in this pre-competitive environment, so that we can learn together, we can share insights and help other farmer producer innovators with their solution.

Caesaré Assad:
So, really what we're looking at is trying to build a multi-size farm tech revolution that is fragmented, so that it can meet localized solutions and help bring more value back to farmers who are looking to be more participatory in the small to mid-scale production landscape.

Vonnie Estes:
That's so exciting because I see a lot in the produce industry where they are smaller farms for the most part and a lot less attention and a lot less technology gets turned towards specialty crops then towards the big broadacre crops and I worked for a while in the big broadacre crops as well and I know almost every startup, the investors will say, "No, you have to make something for corn. Stop looking at strawberries or fruits or anything like that. If your product doesn't work in corn, we don't want to talk to you."

Vonnie Estes:
And so, a lot of innovation gets turned a different direction because of just the size and scale of the broadacre crops. And so, I really love what you're doing that really looks at smaller farms, which will be more specialty type of farms, and also within those farms in around the area of robotics, a lot of people won't try to come up with solutions because it costs a huge amount of money to develop a strawberry harvester and strawberry growers are going to be able to buy it.

Vonnie Estes:
And so, what are the particular models that you can use where people can work on these things together and develop something that everyone can use that really benefits across the industry? And, I think the models that we've been using before that may apply to corn and that's a whole nother conversation whether we should be putting our money there or not, but I think it's really exciting to see with the lenses that you're using to look at smaller farmers and farmers of crops that are more nutrient-dense and can be grown more sustainably. It's just great to see your work there. So, anything else you want us to know? I think you have a slightly different audience here than you might be used to talking to, so I'd love if you have parting thoughts or any last words or call to action.

Caesaré Assad:
Sure, thank you and that was such a great summary, and I think just other folks have echoed this, but opportunities to continue seeking collaborations, removing barriers, we're really seeing the need to decentralize and broaden access to technology and tools that can support small to mid-scale production needs and to bolster the resilience of regional food communities and economies and this is the time to embrace sustainability and justice as a core value proposition for any business, especially in food and farming.

Caesaré Assad:
We need to collaborate to increase market competitiveness, and we need to create access for small to mid-sized farmers that have been left out of the ag-tech revolution, and we need to continue innovating, so that we can expedite this transition to a food system that prioritizes sustainability, health, and justice and that is really, truly a win-win proposition for everyone and anybody that needs help orienting around that, we say it all the time. We're slammed and we're happy to keep going, so reach out if you want to talk and think about ways to really just think differently about what's next for you, for your business, how you can innovate. Technology doesn't have to be extractive and innovation doesn't have to be expensive and the time to really just start thinking about doing better together is right now.

Vonnie Estes:
Now, we'll move into two conversations with companies that are involved with Food System 6. The first is Ethan Rublee of farm-ng or if you're cool enough to get the joke, farm-ng and then we'll move into a conversation with Lindsey Lusher Shute from Farm Generations Cooperative.

Vonnie Estes:
Your background is not one I usually run across in the ag-industry. Among other things, you've started a company that you sold to Google and then started another company that was based on computer vision and machine learning and now you're doing a company called farm-ng. I'm so excited to dig into what you are up to and what you're thinking about. So, how did you decide to move into applying your skills to agriculture?

Ethan Rublee:
Well, I've been working as an engineer and entrepreneur in Silicon Valley for the past decade and last year I started looking for an application area where I could apply myself basically to what I feel is the existential threat that we all have to work towards solving which is the climate change and the crises, the impact of that.

Ethan Rublee:
And so, I came across this amazing paper on my archive feed, which was titled Tackling Climate Change with Machine Learning, it's by David Rolnick and it's basically this call to action to join a global effort against climate change as a machine learning practitioner. And so, it got me thinking, it's a long paper, but there's a section in there in terms of application areas and it's really geared towards engineers or scientists or investors or entrepreneurs looking for opportunities to help and there was one on farms and forestry and then subsection called precision agriculture.

Ethan Rublee:
And, it was robots, and computer vision, and machine learning and I was like, "Oh, this is so cool." But prior to getting into engineering, I grew up in rural Bucks County, Pennsylvania on my grandmother's 20-acre horse farm, mucking horse stalls, and after high school I thought I wanted to be a starving artist and poor farmer, so I worked a few seasons on some small, organic, CSA family farms.

Ethan Rublee:
So anyway, it just seemed like a really amazing area to start digging into and of course, I was naïve and still am, but I started looking at the problems that farmers were facing and talking to former colleagues from Willow Garage who were picking apples with robots and talking to sustainable agriculture advocates and it became clear to me how important our food system really is. We all have to eat and ensuring that it's resilient both because of climate change, but also from a social justice and health perspective it just started to really resonate with me.

Ethan Rublee:
So, I basically November 2019 moved from our home in Mountain View to a little 11-acre, ag-parcel here in Watsonville with my wife and two kids and ripped them out of the city life, and so we're starting a market farm and selling produce for the local farmers on an online store and working on testing robots in our backyard.

Vonnie Estes:
Wow, just like everyone would do that.

Ethan Rublee:
Yeah, why not?

Vonnie Estes:
Well, it's so cool, your story because what is really needed in agriculture and food production is people with these different skill sets. So, we still need people that go to school and get degrees in agronomy, that's still really important, but we also need people with different skill sets to bring farming and production into the new age with some new tools. And so, it's great to see that this was attractive to you. We'll have to get that paper and send it around to more people. So, can you tell us a little bit about one of the companies you're working on called farm-ng and what are you wanting to provide for farmers and how are you doing it?

Ethan Rublee:
So, with farm-ng, we're a technology company, still fledgling, but our mission is to scale a sustainable food system through appropriate automation. And so, that's a lot to unpack there, but basically we're interested in enabling the small to mid-scale farmer and specifically looking at market farming, market vegetable farming, looking to make those operations more cost-effective with robotic tools and technology.

Ethan Rublee:
And so, right now we're very much in that early prototyping, searching for the business model phase of the company, but we have four people working on this and because of the pandemic and the time we started this, it's a completely distributed team. So, I've got a partner, Matthew Bitterman who's out in New Hampshire out of Alphabets X, their agriculture project and Michael McGowan who's up in Oregon, he's the founder of Carts and Tools and they built this little electric rototiller.

Ethan Rublee:
We have an intern, Simcha Bradski. She's an ME student out of Waterloo University in Canada. And so, right now what we're all working on is basically developing a low cost, open source, smart electric microtractor that would be basically a general purpose beast of burden, artificial beast of burden for a vegetable farm.

Vonnie Estes:
Would this be something that a smaller producer would purchase or would you have the business model of having a fleet and do the Uber of tractor model or how are you thinking about the business model?

Ethan Rublee:
Well, so that's a good question. It's still too early to understand what a business model is around a small robot essentially that you can use on your farm, but just to give a sense of how we're building this, we're on our second iteration. We have three built of that second iteration and it costs us about $6,000 in off the shelf parts. And so, we're publishing all of the software and hardware designs on GitHub and so the intent is really to find a repeatable, easy to manufacture platform that you can do research on how to effectively use this on a farm or an industrious farmer could take and build or maybe buy one from us and experiment with using it to save labor on the farm, but it's such an early project and so we can't promise too much, but we'll keep you posted on all of our success and failure if you follow us on our GitHub project.

Vonnie Estes:
Great, so what level of adoption do you think we'll have with robotics outside of the broadacre crops in the next five years. So, besides corn and soy as we start looking at some of the crops that are grown around you in Watsonville, how do you think robotics are going to come to those farms?

Ethan Rublee:
I think RTK-guided tractors, that's already being adopted, but it's looking at essentially the low cost of implementing those systems and strapping them onto existing older tractors for your small Kubota or your old used John Deere. I think that that's certainly coming and there's a lot of exciting work going on, so more companies are implementing that and I think that'll become really practical and I think transportation and logistics on the farm, basically carrying items in and out of he field with AGBs, and talking to farmers, that seems like a very practical way to essentially scale your labor force, augment them with something that actually might be able to get to market in the next five years.

Ethan Rublee:
And then, I see smart implements that can leverage computer vision that can bolt onto any tractor and do transplanting or weed cultivation or aid in those types of operations as pretty promising in the next five years. I guess these market farms that we're working with here in Watsonville, they frequently also have 50% of the labor happens in their pack sheds when they are packing these CSAs that they're delivering basically door to door and we might have 400 subscribers.

Ethan Rublee:
So, it's actually a pretty interesting logistics automation problem at each farm. And so, I think pack shed automation is another low cost, affordable pack shed automation work cells is another area where you'll see some adoption. And personally, I feel like automated harvesting will be limited to those high value specialty crops where you have a certain scale like apples that it makes sense, but I think in the near term, helping workers in a generic sense harvest some product into a bin and place it on a robot and have that robot basically take it to the pack shed, that can save an extraordinary amount of time.

Vonnie Estes:
And, I think as we're more and more nervous about not having enough workers and then keeping the workers that we have safe and healthy, these types of developments will really help. What do you think the barriers to development and adoption are for these types of technologies for smaller acre farms and how do you think the best way to address them is?

Ethan Rublee:
I think some of the challenges that we're dealing with really stem around identifying the return on investment for the farmer and what applications to go after and balancing that with what's practical to build with existing technology. Also, in robotics there's this issue of human safety and then system reliability and those intertwined, but also have an effect on return of investment. If you basically need to constantly monitor the system with a person close by, that's not as practical or it just doesn't make the person actually more efficient.

Ethan Rublee:
And safety, there's not a lot of precedent for safety and so a lot of companies are concerned about liability and waiting for legislation to become more concrete in the United States, especially before deploying a robot at any type of scale. And then, I think the third issue for smaller farmers is really access to capital and this has two legs to it I think. So, there's smaller farms and they might lack essentially access to capital and there might not be loans or lending facilities available for newer, more novel robotics systems.

Ethan Rublee:
So then, the onus is on the companies that are developing these systems to figure out how to support that lack of access to capital from the farmer's side and institutional side and then an investment in companies that are focused on smaller farms. If you look at the venture capital model where you're really looking for something that can scale relatively quickly, the smaller farms it's the long tail. There's 95% of the farmers in the US could be considered small to mid-scale farms, but if you focus on the top 5% of producers, that accounts for 40% of the agricultural value in the US.

Ethan Rublee:
So, a lot of the investment is going into the larger commercial operations, and so I think that part of the work that we're doing at Food System 6 was to identify essentially capital and business model access for investing in development that's going after these smaller operations.

Vonnie Estes:
That leads into my final question, which you've started to answer there is, how does the work that you're doing align with Food System 6 in working towards a better food system?

Ethan Rublee:
What resonates with me with Food System 6 is they're really trying to enable these local food sheds and making those as resilient and self-sufficient as possible and one of our theses around the technology and the reason why we wanted to be appropriate for these smaller scale farm businesses is really to develop something that's financially accessible to the small farm budget and is adoptable in a wide variety of farm systems, that it's reparable by the user.

Ethan Rublee:
If you buy $1 million piece of equipment and you're not allowed to fix it, this is something that just isn't going to work for the five-acre farm where you have essentially the polymath farmer that's playing the piano and rebuilding all of their tractors. I think what we're looking to do is really build technology that is in alignment where the business model and the technology and how it is proprietary and the competitive moats are well-aligned with essentially the values and principles behind essentially a sustainable food system.

Ethan Rublee:
And so, it's still a work in progress. The thesis is if we can make those small to mid-scale farmers economically competitive with automation, if they can be as effective at growing produce as a larger operation, all of a sudden you bring them out of the red. The majority of those small to mid-scale farmers are actually at operational risk. And so, if we can make them profitable, I don't know, there could be a $1 trillion yield gap in the US alone. So anyway, that's longterm what we're working on and I think Food System 6 has been incredibly supportive of our effort and we're looking at farming as a prototype for a sustainable ag-tech company.

Vonnie Estes:
That's great, thank you so much and that's one of the things that I've seen in my role is that an awful lot of the risk of developing and adopting technology ends up on the farmer which is not the place it should be. And so, I think working with people like you in the systems that you're developing, it turns that on its head and we're going to see a lot more adoption and a better food system because of that.

Vonnie Estes:
I have with me Lindsey Lusher Shute. As I was reading up on your background, there are so many things that you're involved in. I was having trouble deciding what to talk to you about. You've ran the National Young Farmers Coalition for over 11 years, you hosted the Young Farmers Podcast, which has really great conversations with important voices. I've really enjoyed listening to some of those, but for this discussion, let's talk about your current venture, Farm Generations. So, what does Farm Generations do and why did you start it?

Lindsey Lusher Shute:
Thank you for having me on, Vonnie. So, Farm Generations is an outgrowth of the National Young Farmers Coalition. It's a national agricultural cooperative that was incubated by Young Farmers Coalition and we are delivering fair technology to the farmer community and our first project is an app called GrownBy that will be available this fall more broadly and it makes it very easy for farmers to market and sell their products through subscription and online orders to consumers.

Vonnie Estes:
So, what size of markets and what type of people will be involved in the app?

Lindsey Lusher Shute:
This app is really focused on direct to consumer operations and that's where we found real need for technology. My husband and I have a thoroughly scaled direct to consumer vegetable farm in the Hudson Valley and through my own experience seeing him try to manage that farm and our crew of 17 people and we have over 1,000 CSA members this year, it is very complex and so the idea is GrownBy will help to manage some of that complexity, those relationships with customers and hopefully save our farm and many other farms lots of time in employee hours and trying to get those orders right and really provide a service to customers that they enjoy, so they'll keep coming back, but it's really focused on direct to consumer farms really from the smallest beginning operations to more scale operations like ours.

Vonnie Estes:
And, do you think there's going to be an increase in that demand because of COVID or are you seeing more people trying to do that now?

Lindsey Lusher Shute:
We have seen that on our farm. We had an incredible increase in sales in the spring. Some of that has shifted a little bit as there's been more availability at grocery stores and just some of the normalcy of markets have sort of crept back in. Things are more as they were, but we still have much stronger demand than we ever had in our 17 years of operating this farm.

Vonnie Estes:
Wow.

Lindsey Lusher Shute:
So, there's the trend of people wanting to buy online and there's the trend of people looking to buy food locally from regional producers where they want to support that producer because they're essential to their community and I think consumers really understand how important direct to consumer farms are now in terms of regional food security in new ways, but I think there's also a real relief for consumers in knowing exactly where their produce comes from. They know who grew it, they know how it's being handled all the way to their refrigerator.

Vonnie Estes:
We're definitely just through a lot of the consumer research that we see at PMA, we're seeing those trends and it's interesting to hear you see how they're playing out out there. So, I met you though Food System 6 and how does what you're doing align with their values?

Lindsey Lusher Shute:
Well, Food System 6 has a truly holistic and such a thoughtful approach to looking at the food system and supporting the food system from the producer to the consumer to the ecosystem at large and how an individual farm and farm system impacts that. So, what we're doing at Farm Generations is thinking deeply about how can we serve the world through improved technology, but we're going beyond that because we're also thinking about fairness and how the cooperative model uniquely offers farmers equity in the future of the food system and that's something that not everyone just understands right away, but Food System 6 is a group of people who have been thinking about these problems for a long time and are willing to really engage deeply in the complexity and the challenges faced by the food system.

Lindsey Lusher Shute:
So, I think certainly from a values point of view, we're highly aligned in the outcomes we're looking for. We're looking for good food, regional food, and good environmental and social outcomes, but also the people at Food System 6 I think are very thoughtful and willing to embrace the complexity and what it's going to take to get there.

Vonnie Estes:
I got to talk to Caesare and I am amazed at how they're thinking about it and how they're looking with this huge vision of really changing the food system and how we work, so I'm very excited about all of the companies and the cohorts. So, I love the various issues that you're focusing on through the podcast that you had and the work that you've done with Young Farmers and in this time with a desire to eat for health and immunity and our disrupted supply chain and also financial inequity, what are some of the changes and movements that give you hope going forward?

Lindsey Lusher Shute:
This is such an interesting time. I'm certainly hopeful in what I'm seeing in shifts in consumers' interest and understanding in just around local food and agriculture and regional food systems. As a grower, I've always known that I am essential. What we're doing is critical. We are growing food that most people are not involved in that business. It's like 1% of the population is growing food for everyone else. I'm also very excited to see what's happening around race in the United States happening in parallel with the COVID-19 crisis.

Lindsey Lusher Shute:
This conversation around race and inequity is carrying over into the food system and is encouraging many more young people to take action in communities thinking about nutrition, how we can improve the lives of people who do not have access to food, but also how we can encourage black, indigenous people of color to become farmers in the United States and reclaim some of that history and give people new opportunity in that space. So, there's just been all of these projects that have come up around providing new opportunities for land access for farmers of color in all parts of the US, just this new burst of enthusiasm and there's been financial support for training and many of these more structural initiatives, so I'm hopeful that on the other side of this we're going to have a food system that's much more resilient and a food system that is much more diverse and ready to serve what is ever going to come at us next. I think hopefully after this, the nation will be more well-prepared.

Vonnie Estes:
That's great, I love hearing that. There's a growing awareness that the food system is not merely the sum of its parts, but that all parts of the system relate to and affect one another in a complex and sometimes indirect ways. This was such a great opportunity to talk to people who are thoughtfully involved in moving our food system towards an integrated approach where decisions are made within the context of environmental, physical, and social health. We're in a time of massive upheaval where fundamental shifts are calling for technology, innovation, and entrepreneurship.

Vonnie Estes:
No matter where we sit in the food chain, we can respond to these shifts with ingenuity and creativity to shape the food system in a positive way. What can you do today? That's it for this episode of PMA Takes on Tech. Thanks for allowing us to serve as your guide to the new world of produce and technology. Be sure to check out all of our episodes at pma.com and wherever you get your podcasts. Please subscribe and I would love to get any comments or suggestions on what you might want me to take on. For now, stay safe and eat your fruits and vegetables and we'll see you next time.

Description:
COVID-19 has shocked the foodservice industry on all fronts. Restaurants are having to open and close at a moment’s notice. Foodservice operators and suppliers are responding and modifying their business models for the new post-crisis world. How we plan, how supply chains move, and how we collaborate is all going to change. In times of rapid and drastic shocks, those who are quick to adjust will lead the way for the industry to follow. New technology and increased use and reliance on existing technology will help the industry plan for the future. Join the conversation about current state of food service with Vesta Foods and two different types of technical solutions from Avolast and Agtools.

Guests:

• Jin Ju Wilder - Director Of Marketing And Business Development at Vesta Foodservice
• Martha Montoya - CEO Agtools Inc
• Aidan Moaut - CEO of Hazel Technologies, Inc
• Patrick Cortes - Senior Director of Business Development at Mission Produce Inc.

Vonnie Estes:
Welcome to PMA takes on Tech, the podcast that explores the problems, solutions, people and ideas that are shaping the future of the produce industry. I'm your host Vonnie Estes, the Vice President of Technology at the Produce Marketing Association. I've spent years in the ad tech sector, so I can attest it's hard to navigate this ever changing world. Thanks for joining us and allowing us to serve as your guide to the new world of produce and technology.

Vonnie Estes:
The foodservice segment of the produce industry has been hit particularly hard during the COVID-19 pandemic. The complete and swift shutdown of restaurants, schools, hotels and pretty much everywhere people met outside their homes to eat, shook the industry. This resulted in over supply and chaos in the supply chain. Planning and forecasting on how to move forward is extremely difficult. Today we are speaking to Jin Ju Wilder at Vesta Foodservice, about the effect on her business. Later we will speak to Agtools and Hazel Technologies about technologies aiding the foodservice industry. Let's hear from Jin Ju at Vesta Foodservices.

Jin Ju:
Vesta Foodservice is a distribution company and we're dedicated to providing solutions to the foodservice industry, in particular. We have facilities and distribution throughout California and large portions of Arizona and Nevada. We supply a full line of fresh produce items, as well as specialty grocery items. We typically carry about 7,500 unique SKU's in our facilities.

Jin Ju:
As to my role, I cover a lot within the company; branding, marketing, communications is all in my purview as well as community engagement. I have a category development team, whose job is to really take a look at adding new products, new lines, new vendors that provide value to the customers. They also provide education and product training to our sales team and to our customers. Then, I also have a key count management team. What they do is they really take care of some of our regional chains, and they create the systems and processes that are unique to each one of those chains, again providing the unique solutions for the company, whether that's logistics, product solutions, labor solutions, et cetera. That's pretty much where you'll find me working within the company.

Vonnie Estes:
Busy times. And you've had a little bit of a background with the Produce Marketing Association, as well, right?

Jin Ju:
I have. I've spent, started very early in my career, great opportunity to network and learn more about the industry, not having grown up in the produce industry, so wanted to just learn more about it when I started, PMA was a great was a great way to do that. I volunteered for committees. I served many years on the Board of Directors for PMA, three different terms. Then served as the PMA Chairperson, amazing opportunity, 2017 to 2018. It was just such a wonderful opportunity to work with my industry peers, some amazing people. To come up with the new strategic vision for PMA, at the time, which was bringing together the global produce and floral communities to grow a healthier world, which we talk about a lot right now, especially. Really bringing that vision alive through the different focus areas, whether it was demand creation, technology, which you know Vonnie; sustainability talent, global connections is definitely a focus, and then as always, the science and safety. To be able to help articulate that, and to be able to help PMA bring some of that alive during my Chairmanship was just a fantastic time. I learned, I grew so much through that time period. And I'm so grateful to the other board members that certainly helped make that happen and were so generous with their experience and their expertise with me at the time.

Vonnie Estes:
Great. Yeah, you've had a great impact on the organization. And your support was part of the reason I was hired. So, thank you for that. I think, not just particular to me, but just your realization that technology was a really important part of our industry going forward. I appreciate that and recognize that impact. So, COVID-19 has hit the foodservice industry super hard. The last time we talked, I think about a week and a half ago, things were starting to open up a little bit and you were a little more hopeful and things were moving again. And now, things are starting to contract a little bit. Can you tell us what's happening in your business right now?

Jin Ju:
Sure. You are absolutely right. We're such an optimistic, hopeful industry, aren't we? Even a slight uptick we get very excited and that's certainly how I felt the last time we talked. Things continue to open up a bit more, albeit very slowly. We still obviously have a lot of challenges. You're right. The recent rollbacks to in room dining, they are damaging. I think, the restaurants that had mechanisms in place early on, to be successful with takeout and delivery did well. They now find themselves building upon that success. We certainly have some chain customers that, gosh are at 85-90 percent now, which we're very happy about.

Vonnie Estes:
Oh. That's great.

Jin Ju:
Yeah. Absolutely, but I wouldn't say that's the majority. We have plenty of customers who haven't reopened, have shuttered for good, or were planning on reopening for 4th of July weekend and due to the rollbacks had to shut back down again. For those familiar with the supply chain and how it works, they won't be surprised. But for those, who maybe don't live it every day. In order to open up for 4th of July weekend, they ramped up their inventories and so did we. They brought back employees in anticipation of the increase in business and so did we. So to have to take another hit on inventory is devastating, to have to tell employees that you have to lay them off again because that anticipated bump in business isn't coming yet, that there's at least a 3 week delay, and we don't know it maybe even more. It's not looking good. It's just heartbreaking. So, you're right from the last time we spoke there's been a change, but overall we're still optimistic that things will continue to open up and customers will continue to be very creative in the ways they find to get food to the customers, get food out into the communities

Jin Ju:
Then, we talked about as well, we're one of the contract awardees on the USDA Farmers to Families box program. Our contract got extended through August. That has had such a positive impact on our business, as well as our growers and our immediate communities, in that we're able to help get food out to families in need. That has been helpful and that was a bit of good news.

Vonnie Estes:
Oh. That is good news. You had mentioned to me, your job when everything is going normally, is to solve the problems of the chef. Can you explain what that looks like normally and how you're trying to handle that now in whatever way you can?

Jin Ju:
Absolutely. So we have a very diverse customer base. Our customer base covers everything from the independent high end restaurants to regional chains, business and institution, colleges, hotels, sports venues. It runs the gamut and each one of those segments, and each individual customer is going to have their own unique challenges in reaching whatever their goals are for their organization. Those solutions can be just in sourcing, whether it's sourcing the particular items that they need for their menus, or even organizational goals. Some of the businesses may want to purchase only organic, or they may only want to purchase most of their product from locally grown sustainable food systems. So there are some things on the sourcing side that we do to provide solutions and then depending on their facilities and how much product they can hold, and how quickly they need to get product; some of those solutions are logistics. Some of the chains have commissaries where they're producing some of the items needs to be combined with the product we're sourcing for them, so we're setting up some unique logistical solutions for them, so they're getting just-in-time delivery and the freshest product available.

Jin Ju:
Then some of it is labor, whether it's packing in smaller sizes or sorting the product. We have customers who need bean sprouts, for example, to be exactly five inches long and that's it. We've got our rulers out and our team is out there measuring. It could be green beans. It could be cherry tomatoes. I don't think that is necessarily unique to us. We certainly pride ourselves on the level of service we provide. I believe that is something that foodservice distributors across the country do in terms of service.

Vonnie Estes:
So how do you think your business will change? Your business specifically, and then also just the industry in foodservice coming out of COVID-19. What will look different? And how will things change?

Jin Ju:
I think this particular crisis was so devastating across the board that there's been much more understanding throughout the supply chain.

Vonnie Estes:
Even from consumers, right?

Jin Ju:
Yes.

Vonnie Estes:
I think consumers have never thought about the food supply chain and they are now.

Jin Ju:
Correct, because it was such a big shutdown. There have been more stories written about the supply chain than ever before. Some of it is eye catching because they are accompanied by photos of crops being left in the field or milk being dumped. So, people are paying more attention. In particular to the foodservice industry segment, I believe that there's more open communication from the grower all the way to the customer. An understanding of how each one of us has been impacted, and as things start to open up the understanding of the open communication that needs to take place in order for us all to succeed. Very early on, for example, we were very clear to our customers in constant communication what was happening with the growers and the processors, and the decisions the growers and processors were having to make; not only to deal with COVID-19 and employee safety, but also planning for business sustainability.

Jin Ju:
There are going to be fewer plantings of the foodservice SKU's and once foodservice comes back; you're going to have more demand for less supply of those items. So, you need to be more communicative about when you're opening up and your menu changes, but also more flexible about the specs you are willing to accept and be able to use in your menus.

Jin Ju:
There's a lot of that kind of dialogue happening. And then we're trying to do our best to communicate back to our growers when our customers are coming back, and at what percentage they're coming back. That has been a great challenge. I wouldn't say we found the magic algorithm that allowed us to be accurate in doing that. Frankly, that's something that continues to be a daily challenge right now, but we have a focus on it and we're doing our best to communicate back to the grower so they can have some data to make better decisions.

Jin Ju:
A big joke around here is there's just not enough data to do good maths and make good decisions. We're doing our best to collect that data and share it as much as possible. I just find there's more openness on either side of the supply chain to do that.

Vonnie Estes:
That's great. That leads me to my last question, which you kind of touched on. What are some of the specific issues that you're facing where technology might help going forward? Certainly forecasting is like you just mentioned.

Jin Ju:
Yes. Forecasting is one of them. That is something that is not new to the foodservice distributor. We regularly use forecasting to create pars levels within the company, but I think it has never been more critical that we get it right because none of us can take another big hit. We can't take the kind of inventory losses we took at the beginning of March and survive. Forecasting from the customer side is one part of it. Inventory management is certainly another one. Everyone's keeping much tighter inventories because we just can't afford it. We don't know. In our case, our inventory management planning, we are considering another shutdown. Some people may say, it's not going to happen; states can't afford it. Yet, the rollback, I think is evidence that it's very much a possibility and that it does have to be considered in your inventory management plans.

Jin Ju:
So, forecasting, inventory management, another thing the rollback brings to light is that anything we can do in terms of shelf life and helping us kind of keep inventory in good condition for longer than maybe we have up to this point would be extremely helpful. As customers open up, they're not able to take full cases. If your dining room is only able to seat 25 percent of what you normally did, you're just not going to use full cases. In the past, at the grower-processor level, when we asked for smaller pack sizes, because we don't have the labor in house right now to provide those services that we used to provide to the customer, if we could purchase them in smaller pack sizes. But, affordably, I know that's the key, it's not that, the capacity is not there to do that. It's that typically when we ask for the smaller pack sizes, it pushes the price up so high that it's no longer a viable option. The customer will say, I'll take the case and throw half away, which is not what we want happening in the supply chain.

Jin Ju:
I think there's a lot of opportunity there. The learnings, the pain that we went through in losing so much inventory; I think there's opportunity there from a technology standpoint to provide some solutions. So again, the forecasting, inventory management, packaging and shelf life are the top issues that come to mind. Then, labor would be another one.

Vonnie Estes:
Great. Well, thank you so much for giving us a view of your world. I think you kind of sit in a spot that most people don't get to see what's really happening with foodservice and the impact.

Vonnie Estes:
We will now turn to two technology solutions that can help solve some of the problems that Jun Ju talked about. First, Agtools, a data subscription service that allows for better forecasting and decision making. Then, second, we will jump into a conversation with Hazel Technologies and Mission Produce about increasing product longevity.

Vonnie Estes:
Let's hear from Martha Montoya, CEO of Agtools.

Martha Montoya:
What we do is we literally gather data from all types of government entities; first, second and third floor layer of data to be able to bring it into a dashboard that gives us the insight of what really is happening across the market, not only in the United States, but Mexico and the Americas, on sourcing; where the products are coming from.

Martha Montoya:
After many years, I decided we needed to find a way to see things faster and forecast. The fun thing about this whole world is that all of us in the industry kind of know what's going to happen, we just don't have the tool to confirm what we know. We just need that little extra element. What we do is we make sure the Agtools brings you historical data in seconds because we have a platform that operates one billion transactions per second. You have 25 years of historical data so you are able to, as a buyer, or in the foodservice industry, you can see where things are coming from and how much volume is coming, when is the beginning of the season or the downturn of the season for freshness and be able to turn around and either tell your supplier, the large suppliers to myself as a restaurant or as a buyer myself of the commodity, be able to say, can we start sourcing strawberries from this region now, because they're best, they're fresh and they're less expensive.

Martha Montoya:
I think this Covid-19 has created that need of transparency of understanding where anything comes from; even for this whole program of the farm to four or the family program, where sourcing is where do we find the products. It's kind of people calling people, no longer, it's all in one little dashboard that tells you exactly where they are coming from and when, because it's all government data.

Vonnie Estes:
So that's where you get your data? It's mostly government data.

Martha Montoya:
It's all government data, adjusted a couple things and there's always a misunderstanding in the world of data. The whole government, not just here but all over the world, they're continuously updating data in our industry, what we call the fresh market every second. By the time we get these "reports" we used to get, the general scope of what happened, there might be upgrades that we don't see crossing the borders. Or our processing plants or packaging houses that put out three truckloads, but it was really two because one didn't leave. The following morning at 6 a.m. it's revamped. We can continuously, as a buyer, me as a foodservice company; I can see literally, is it moving more from the Rossi side? Is it moving more from the Fresno area? Because now I can see where the volumes are coming from and plan better

Martha Montoya:
I think the second, and most important part of forecasting which our tool does is the market movements. We have 67 variables that impact at any time our buying decisions. The tool does the thinking process for you, whether it's a storm on the way to the distribution center or to my door, or through in the process. Or whether there's an exchange rate on all of us in Argentina went down and the blueberries are $5 versus $14 in Michigan. You see what I mean. All these variables are anytime working in this tool to tell you the best place to source in the next month, three months, six months, is from this area or at this price or these volumes. It helps us make better decisions to avoid losses which is what we are trying to do right now, avoid the losses, the financial losses.

Martha Montoya:
I understand food, but at the end of the day in our industry the P&L is important.

Vonnie Estes:
Right. One of things you were talking about, the different variables that we talked about last time I spoke to you was there are all of these questions that everyone who is buying should be asking. There's all these variables that people should be looking at and whether they're using your tools or not, a lot of people, you had mentioned you talked to someone and they got up every morning and they looked at like 10 different sources to try to get a sense of what's the weather and what's the exchange rate and what are all these things that are happening? The advantage of a tool like yours is there's so many variables, no one can be watching that many and they should be. So, your tool actually allows them, in one place to look at all these variables at once, instead of trying to hold it all in your head, which no one person could do.

Martha Montoya:
There's no way. Not only that, Vonnie, the more important part also is we need to bring the new generations in. It's a tough industry. It's a little bit of a chaotic industry, sometimes because it's almost like a panic reactive mode. When young people come, either they love it or they are like, I don't think I want to do this kind of thing. The tool we have young users loving it and performing the season ones, buyers because they are able to see it in seconds. They can see where the tomatoes are coming from, where the cantaloupes are going, where did they sell more. And in seconds understand. We are able to train other people underneath us. We love our industry and we want to bring more people, but we need to give them to tools to love our industry enough, not be scared of it and screaming, "Hey what happen with the truck?" “Why did we buy it at this price,” and so on and so forth. Right?

Vonnie Estes:
Yeah. No, that's a great perspective.

Martha Montoya:
It's almost like a retention tool or an enhancing tool for the younger generations. We always have had the gurus of our commodities across the world, and the United States, the one who knew everything about asparagus, the one who knew everything about cantaloupe, right?

Vonnie Estes:
Yeah.

Martha Montoya:
We're grabbing all those brains and we're putting it in this tool.

Vonnie Estes:
Yeah. No, that's great.

Martha Montoya:
Before they go to play golf.

Vonnie Estes:
So, is it a subscription service? Is that how it works?

Martha Montoya:
Yeah. It's a license we went through UC Davis research to make so accessible, knowing the pain, the common pain that corrodes our industry is thin margins. We made it very simple, $199 per month, per commodity. I always say, you save one truckload, you pay the membership.

Vonnie Estes:
Yeah.

Martha Montoya:
That's our thinking process.

Vonnie Estes:
Yeah.

Martha Montoya:
Nothing fancy. It’s very simple. Not that we're not smart people. We need simple 67 things to tell us in seconds, what should I do with that truck? To cross it or to send it or to pick it up again.

Vonnie Estes:
Well, it takes very smart people to make complicated things look simple.

Martha Montoya:
That's for sure.

Vonnie Estes:
Yeah. What do you think post COVID-19 supply chain is going to look like? And do you think people are finally going to rely more on data to make decisions, whereas before it was more phone calls and spreadsheets and doing their own work. Do you think going through this process is going to help people rely more on this type of data and these types of tools?

Martha Montoya:
There are two things I'm seeing a trend. One, the grownups are starting to understand that they have to get in, or some of them are saying, you know what, I'm done, I did my job, I move on. I heard 50 plus people actually retiring, taking advantage of the "situation" to move on because observing data is not easy and we are all living this. I mean we're doing a crash course on every new thing, technology, but definitely digitalization is crucial; worldwide digitalization of our industry is crucial. People just don't understand, and having done this globally, how any farmer in Philippines can impact our supply, at any time. Or how a supplier in down in Sinaloa will impact us. We knew it. We kind of saw it but it was slow waves. Now the waves are faster so we need these tools to understand faster what's going on.

Martha Montoya:
I think the biggest one, Vonnie is that we used to just plant based on the request of the buyers and we in the foodservice industry, we need to start looking a little more on matching supply and financials. That is one tricky one that is finally starting to, after a couple years growing it this process, finally the industry is starting to understand what we produce in the farm or the production packing houses, has to match when we get out to the market based on the market itself to avoid the losses that we've been encountering for decades.

Vonnie Estes:
Nice.

Martha Montoya:
That is where the forecasting is so crucial, matching the market against the production and/or even the planting. We have customers already planting based on historical data of markets. They are growing one of our biggest customers has grown this by up to 280 percent because he's matching broccoli growth against market demands.

Vonnie Estes:
We just talked to Jun Ju Wilder about the many issues she has faced in the foodservice industry. One of the issues is around product longevity with all the changes and hiccups in the supply chain given in the opening and the closing of foodservice establishments in all the up and downs there.

Vonnie Estes:
We're now going to talk to Hazel Technologies and Mission Produce about a collaboration that should help with product longevity in the supply chain. Welcome to Aiden Mouat, CEO and Co-Founder from Hazel Technologies and Patrick Cortez, Senior Director of Business Development from Mission Produce.

Vonnie Estes:
Great to have you guys.

Patrick Cortez:
Great to be here.

Aiden Mouat:
Thank you.

Vonnie Estes:
All right. So first, Aidan, why don't you tell us about Hazel Technologies and what you do?

Aiden Mouat:
Absolutely, I'm one of the co-founders and CEO of Hazel. We formed the company in 2015 with a pretty direct mission of using new sustainable biochemistry and biotechnology to stop food waste by reducing spoilage in the storage and transit process. We've developed a number of products over the years, but our core focus has been to use very eco-friendly, highly sustainable, very cheap technologies, put them in the hands of the world's food suppliers, growers, packers, et cetera. By providing them control over critical processes in perishable food, help them keep their stuff fresh for the longest possible duration and move from point A to point B with minimum spoilage. The ultimate goal of trying to tackle to massive food waste problem that's emerged in the market.

Aiden Mouat:
That's who we are and what we do.

Vonnie Estes:
Where are you in the commercialization process? I know you have a number of partnerships and clients but are you out in the market completely, are you still doing development, kind of where are you?

Aiden Mouat:
No. We're fully in the market. We're fully commercialized. I think it's a great question because the scale of agriculture is just so huge that even though I can say unabashedly we're deploying millions of units a year in 12 different countries, even that's not big enough and we're going to keep growing. But no, we're fully commercial. I think this year we're planning on treating a total of about three billion pounds of produce, that's we're on track for it. Based off the analytical work that we do and the studies we conduct with our customers. We see that translating to about 500 million pounds, give or take, of produce saved from going to waste.

Vonnie Estes:
Wow.

Aiden Mouat:
We've got a lot more to go. It's a much, much bigger world than that but so far, we've been growing to meet that challenge. We're out there. We got a couple of flagship products already taking heavy traction in the market. We've got new product pipeline coming up over the next couple years. You're going to be seeing a lot of new innovations from us, as well as the stable of stuff we've already put out there.

Vonnie Estes:
Wow. That's amazing. Are you mostly in the U S right now? Have you started expanding into other geographies?

Aiden Mouat:
I would say our principal territories are really the Americas, as a general. We've got, certainly North American presence, mostly in the U.S.; a fair amount in Mexico now. We do a lot of business out of a number of South American countries, but yeah the next big phase for us is really the global development piece. So, we're active in New Zealand and Australia. We're getting active in Japan. We're getting active in India, the EU, South Africa, quite a number of other countries. Within the next three to five years, you'll really see us in more like 30 or 40 countries. We're trying to really tackle some of those global supply chain problems, not just the ones here.

Vonnie Estes:,br/> Yeah. It's really amazing, the need for that right now. I've been talking to a couple of companies in Australia right now. One of their biggest issues is because there's no flights coming in and out, I didn't realize how much food was carried in the bottom of commercial airlines and so, there's just a real problem with not getting product in and out on a regular basis as much. Really, the need of having things that extend that shelf life and keep things fresh is super important during these times as well.

Aiden Mouat:
Yeah. Honestly, Patrick could speak to this pretty heavily because of Mission's very international presence. I think that's part of the importance of having these types of partnerships between tech providers and supply chain folks; people that are actually out there moving crop from place to place because there's so many challenges to be solved that we really have to get in under the hood and think about these individual international opportunities and all of these different supply chains. It's been a real benefit to us to be able to work with somebody like Mission that has a lot of experience in those kinds of supply chains. That's good for us and good for the world.

Vonnie Estes:
Great transition. So, as I've talked about on this podcast a number of times is that technology adoption really does come through collaboration like you said, and working with the industry. That's the way we're going to get technology adopted and that's how we're going to make an impact.

Vonnie Estes:
We also have with us as I mentioned, Patrick Cortez from Mission Produce. Before we launch into the collaboration Patrick, why don't you tell me a little bit about Mission Produce and who you are.

Patrick Cortez:
Sure. Vonnie, thank you for having us and this conversation, which I think is very, very important, but Mission Produce, we are the largest grower, packer, shipper of fresh Hass Avocados in the world. We're the largest grower in Peru. We pride ourselves on innovation supply chain service all of the benchmarks that our customer base is expecting for us. We have the world's most advanced avocado network with nine ripening centers in North America. We've got a sales office and ripening center in Holland, operations in China. Our reach is to be global and expansive. We're a very competitive company. We like to position ourselves as a top produce brand. You can't do that without innovation. You can't do that without service. You can't do it without source. You can't do it without collaborations like the one we have with Hazel.

Patrick Cortez:
We continually know that if we don't innovate, we're going to get caught by the competition. That's not in our DNA. That's not in our culture. As you can tell, we're very competitive and very much want to continue to win. At what we're doing in addition to doing what's right for the world. We're very serious about making sure we work to leave the world a better place than how we found it. What we're doing with Hazel, it goes a long way in trying to help achieve that.

Vonnie Estes:
So, Patrick, why don't you tell us a little bit about the relationship? How it came about? What's going on with the two companies right now?

Patrick Cortez:
Yeah. I think we got together three or four years ago. What really intrigued us by what Aidan and Hazel are doing was not only the technology, the ability to extend the shelf life, but also the ability to incorporate it virtually anywhere in our supply chain. That was as critical. At the end of the day, the avocado supply chain is extremely complex when you look at California, Mexico, Peru, South Africa. You name it, it's very challenging, the logistics of getting avocados from place to place, as it is with a lot of produce commodities. We're not alone in that space, but we also found that there's value in trying to extend the shelf life at the retail level, reducing waste, which reduces the carbon footprint, but also affects the bottom line on financials. And the foodservice space, where food cost is so critical to every operator out there, now more than ever.

Patrick Cortez:
The ability to buy avocados and have confidence they're going to last until you need them, until those sales come through is valuable to the bottom line of the business. When we combine all of that and we look at how Hazel integrates in our supply chain and delivers results, it was a virtual no-brainer.

Vonnie Estes:
That's great. Can you talk about what the relationship is and how you're working together? What's happening going forward?

Patrick Cortez:
We have launched a product for fresh Hass avocados called Avolast. We are in partnership with Hazel doing this in a joint manner. Obviously they're working closely with our R&D team to provide the right quality and spec. Aidan can obviously touch a little bit more on that.

Patrick Cortez:
With Avolast, what we're able to do is extend the shelf life of both hard avocados and then also, for the foodservice base, ripe avocados. We've been able to achieve, anywhere depending on the seasonality two to four days of added ripe shelf life, which is massive in all sectors. It's huge in the retail sense. It's huge in the foodservice sense. The other thing we've been able to do is we've also been able to extend the internal quality of the avocado.

Patrick Cortez:
Take it for a practical application at home, if you've left something on the window too long and it feels really mushy, you think, oh man, there's no way it's going to be any good, we've time and time again shown that we can still cut that avocado and it still cuts clean and it still tastes great. You still get the benefit of it.

Patrick Cortez:
Regardless of what sector you're in, there's value add to what we're doing along the way. In addition to, potentially opening up new supply chains. Getting from Peru to India, isn't easy. Something like Hazel helps us open up new markets which in turn grows the category as a whole.

Aiden Mouat:
Vonnie, you can think of Hazel and Mission as kind of the horse and the cart, Right? You've got a company that's already got a long and prestigious history of very high quality fruit and then we come along and we provide a little bit of extra tech on top of that in order to ensure, it's just at all times the best eating experience possible from an avocado that you get.

Aiden Mouat:
I think that's the best way of describing the partnership.

Vonnie Estes:
That's great. Just out of curiosity, can you get a little technical with us here, on like how does it work?

Aiden Mouat:
Yeah. Oh, absolutely. The way that all of Hazel's products work and Avolast is a fine example of this is we provide an atmospheric control that allows us to regulate the metabolism of the crop and extend its shelf life during the storage and transit process, but also after that storage and transit process as well. In this case, we're using a technology that's been referred to generally as ethylene inhibition, which is a bit different from the approach of the industry in ethylene management with the fan type systems, or the absorber type systems. In this case we're actually using our sachet based technology to introduce a small amount of ethylene inhibitor into the atmosphere around the avocados. What that does, it alters the metabolism and the breathing rate of the avocado. We're able to take control of it. We're able to slow it down so the avocado respires more slowly, loses less water, is less susceptible to disease and ultimately then take it through the storage and transit process. Once that avocado gets into a ripening environment, or once that ripening process starts to take place, that regulated metabolism actually results in a higher quality fruit after the fact as well.

Aiden Mouat:
This is where that two to four days of ripe shelf life enhancement that Patrick was talking about comes from. We have a fairly cool, non-invasive biotechnology here that allows us to mimic the natural biochemistry of the avocado, but in a way we're able to control very selectively, to target very specific ripening parameters, very specific dates, very specific times and temperatures, and be able to deliver ripe window to the retailer and ultimately the consumer.

Vonnie Estes:
That's great. Thank you for that explanation. I'll have to read more about it, but I appreciate hearing that use of the technology.

Aiden Mouat:
Well, admittedly I tried to leave off the PhD level organic chemistry.

Vonnie Estes:
I might call you up on that later.

Aiden Mouat:
Yes.

Vonnie Estes:
That's a different conversation. All right you guys. That is about it. I really applaud you both on finding each other and working together to make sure that we get to use these new technologies in the industry. Thank you very much. I wish you the best.

Vonnie Estes:
That's it for this episode of PMA takes on Tech. Thanks for allowing us to serve as your guide to the new world of produce and technology. Be sure to check out all of our episodes as PMA.com and wherever you get your podcast. Please subscribe. I would love to get any comments or suggestions on what you might want me to take on. For now, stay safe and eat your fruits and vegetables. We'll see you next time.

Description:
Vonnie Estes explores the labor shortage in produce production with guests Dr. Phil Martin, John Purcell and James Terry. Dr. Martin discusses labor issues in produce production while John Purcell explores breeding solutions and James Terry talks about integrated hardware and software in-field solutions.

Vonnie Estes:
Welcome to PMA Tech, the podcast that explores the problems, solutions, people, and ideas that are shaping the future of the produce industry. I'm your host Vonnie Estes, the Vice President of Technology at the Produce Marketing Association. I've spent years in the Agtech sector, so I can attest, it's hard to navigate this ever changing world. Thanks for joining us and allowing us to serve as your guide to the new world of produce and technology.

Vonnie Estes:
This episode we take on labor, the understanding of labor issues in the produce industry and a couple of solutions. I have three guests:

• Dr. Martin, from UC Davis will talk to us about what is happening with farm labor in the US.
• John Purcell from Bayer will talk about some innovative breeding solutions.
• Finally we will talk to James Terry in Australia about what is happening there and labor solutions he is developing.

Vonnie Estes:
Labor's a big issue in the produce industry and there's been many trends around labor that are becoming bigger and bigger problems over the last couple of years, and COVID-19 has even made some of these trends worse. So here to talk to us today about this is Phil Martin. Dr. Phil Martin is Professor Emeritus at the Department of Ag and Resource Economics at my favorite school, my alma mater, UC Davis. Welcome, it’s very nice to have you.

Phil Martin:
It’s nice to join you.

Vonnie Estes:
So let's just jump right in here to get some idea on kind of the overview of the produce labor market, which, as we were discussing before, is really complicated on how you describe it. Just give us kind of a field of, in the U.S., what the market looks like.

Phil Martin:
So the farm labor market in U.S. agriculture includes about 100,000 employers who employ an average of about 1.5 million workers. That's the average employment number. The total number of people who work on farms for wages sometime during the year is higher, probably about 2.5 million. Of all the employment in agriculture, about three fourths of it is on crop farms, and most of the employment on crop farms is in fruits, nuts, vegetables, melons and horticultural specialties. So when we're talking about employment in the produce industry, we're talking about roughly 50 to 60,000 employers who are employing between 700,000 and 800,000 workers a year. That's the average. The total number of workers will be higher. The overview is that we've got a big agricultural labor market that matches many workers who are employed seasonally with jobs that last anywhere from a few weeks to many months.

Vonnie Estes:
So no wonder it's so complicated to try to add all those up. A lot of people have been asking the question for this year and various different issues: do we have enough farm workers to harvest crop?

Phil Martin:
Well, it's always the question of how do you define enough? Employment in crop agriculture has been going up, not down. The reason for that is, as fast as we mechanized the harvest of one crop, so about 30% of the raisin grapes were harvested by some sort of machine last year, we plant more of another crop, say blueberries or sweet cherries, that are primarily picked by hand. So we have offsetting effects. The new plantings are actually slightly offsetting the mechanization to leave us with slightly increasing farm employment. There's always a worry about whether there will be enough workers, and roughly 10% of all the jobs in crop agriculture right now are filled by H-2A guest workers. The guest worker program, the H-2A program, is expanding, it's up about 10% so far in 2020, over 2019, and I expect it to continue expanding.

Phil Martin:
When I look at the farm labor market, I sort of say, there's a race in the fields between machines to save labor, migrant guest workers to replace U.S. workers who are getting older and exiting, and then imports, because remember, we import half of our fresh fruit, and about a third of our fresh vegetables. And those import shares have been rising over the last decade.

Vonnie Estes:
So when we look at some of the trends that you just mentioned, what has changed with COVID-19 and what effect do you think it will have coming out of this?

Phil Martin:
Well, COVID-19 has had the short-term effect of raising costs for employers who have to do physical distancing and provide personal protective equipment, and increased fears among workers that they will get the disease and spread it to their families and their communities. So in the short-term, there is higher cost and more uncertainty in the labor market. I think the one thing we can say so far is that even though the unemployment rate went up enormously, from less than 4% to over 14%, we don't anticipate a lot of jobless non-farm workers returning or taking seasonal farm jobs. Instead, this notion that the H-2A program is expanding at the same time that the unemployment rate is so high, seems to suggest that there are not a lot of expectations of getting the U.S. workers, or new U.S. workers into farm jobs. Instead, it goes back to that one, two, three choice of machines or more guest workers or imports.

Vonnie Estes:
So I've read some of the things that you've written about what is the tipping point of looking at machines versus getting the price of machines down and when the cost of labor is so high and the machine cost goes down, then we'll mechanize more? Can you talk a little bit about that and what you're seeing out in the field?

Phil Martin:
Well, it's supply and demand, like everything else, two blades of the scissors. With the cost of labor going up, and with the price of machine substitutes going down, there will be a tipping point, but the tipping point varies by commodity and a whole lot of other factors. Fruits are more labor intensive than vegetables. If you look at the fresh fruit industry, when one is a planning a new orchard, the planning is typically for dwarf trees and fruiting walls, all things that make harvesting easier, whether it's done by hand or by machine. What has happened, especially in California, is that the minimum wage is scheduled to rise to $15 by 2022, there are new overtime rules coming into play that will increase the cost of hours after eight a day or 40 a week, there's new rules on paying for travel time and other things.

Phil Martin:
So anyone looking at labor costs is going to be looking at rising labor costs. If we're not going to get U.S. workers back into these jobs, then we know that the cost of H-2A workers is typically, right now, in the $20 to $25 an hour range, and that's likely to rise, as well. With the labor costs on an upward trajectory, the question is, how does one think about the future? And I think most people who are making investments in vineyards or orchards are thinking that when these trees or vines come into production, will this commodity be profitable at labor costs that could be 10 or 20 or 30% higher than they are today? For vegetables, it's often an annual planting or several plantings a year, and the real question is always, do you work with plant breeders to make the commodity easier to harvest by hand? Or do you stress getting the commodity to ripen uniformly so that it could be harvested with one pass through the field?

Phil Martin:
So you could have tall-stalk broccoli, so that people wouldn't have to bend as much to cut it. Or you could say, if we now get 70% of the commodity in the first pass through the field, can we raise that to 90% and then use a machine to harvest in one pass through the field, because selective harvesting typically is more expensive and doesn't work well under field conditions. So in thinking about mechanization, it's not the idea of “there's a machine sitting in the shed and we bring it out and decide to put it to work.” Mechanization in agriculture, it's a process; it's not an event. You start with the plant breeders, you then change your planting and management system, you work with the packers and the buyers, and it could be, for example, that if we get a machine that works well in harvesting, say, fresh peaches or nectarines, maybe at the super market, instead of having organic and conventional, we'll have machine harvested and hand harvested, and they may be of two different prices.

Phil Martin:
So there's got to be changes in the entire supply chain, in many cases, before machines sort of become widespread. Machines are taking off, there's been a lot of labor saving change in the pre-harvest for vegetables, with the planting tapes and the thinning and hoeing, or the thinning machines replacing hoers, and there will likely be many more in the next 10 years. But there are different strategies, there's different time horizons, and it's not that there's a coordinated effort, in some way coordinated, let's say, by the government or by any kind of industry association of which I'm aware that is saying we've got to have a machine to harvest iceberg lettuce within five years. That's what happened back at the end of the Procera program in the 1960s. People knew the program was going to end, and so the plant scientists at UC Davis got together with the agricultural engineers, they developed a kind of tomato that would ripen over 90% uniformly, a machine to cut the tomato plant, shake the tomatoes off.

Phil Martin:
Then, of course, the processing facilities had to switch from taking 50 and 60 pound lugs of tomatoes to taking 25 ton truckloads, so it had to be a coordinated effort throughout the supply chain, and that's a role that both the federal and the state governments played back with the processing tomato industry. And we don't yet have that central coordinating agent that is working in the fresh produce industry today. There are a lot of industry associations, individual growers, but not that coordinated overall look, as we had back in the 1960s.

Vonnie Estes:
Yeah, I love that idea that it's a process, not an event, because you just can't take one part of the whole supply chain and change that and not expect it to change everything else. So I think that's a really good point. I've seen a number of the breeding technologies, both in the broccoli, so you don't have to go harvest as many times, but just for soil compaction and less labor, and you can also mechanize it so you don't have as many people out there, as well. And I've also seen it with some of the iceberg lettuce that stand up higher, that they can cut more easily in the field. So there is this coordination event, you're right, it's just not really happening across the whole industry yet, but there certainly are pockets, like you mentioned. There are breeders that are working with growers to try to come up with that.

Phil Martin:
The direction of change is clear. The speed of change, and exactly how it comes about, is something that we almost have to look at commodity-by-commodity, and area-by-area. So we know which way things are moving, but I can't tell you exactly how fast things will move in any particular commodity and area.

Vonnie Estes:
Yeah, that is definitely true. Well, Phil, thank you so much. I really appreciate you taking the time to enlighten us in this area and this is really interesting and will continue to be an area that we all watch. So thanks again and take care.

Phil Martin:
Thank you.

Vonnie Estes:
Joining me now is John Purcell, the Head of Vegetable Seed R&D at Bayer Crop Science. John, the last time we saw each other was at your innovation center in Woodland, and then, I think the time before that, we saw each other on stage in Amsterdam. This is a lot less exciting, but it's really great to have you.

John Purcell:
It's great to hear your voice, Vonnie. And it's been an honor and a pleasure to share some stages with you. And you're a tough act to follow, I know that from Amsterdam.

Vonnie Estes:
Thanks. So our topic today is labor and we just heard from Dr. Martin, from UC Davis, about labor issues in specialty crops. And, unprompted, he mentioned that plant breeding is a possible solution to some of the labor issues. And that's not where most people would go first, when they were thinking about solving the labor problems. Can you give us your thoughts on that?

John Purcell:
First of all, I want to say, your conversation with Dr. Martin was really informative. He really did a great job of talking about the dynamics at play, about the complexities of some of the labor situations when it comes to produce or more broadly the agriculture industry. Now, Vonnie, I'm obviously very biased talking about, whenever you ask me is breeding a possible solution or how does genetics play. I obviously head R&D for a company that sells seeds, and sells other solutions for farmers, as well. As a biologist, I firmly believe genetics, plant breeding have a major role in addressing labor challenges, as it does in addressing other challenges growers face.

John Purcell:
I do think Dr. Martin's example of processing tomatoes, kind of the classic example, which was really it was that interaction between the plant genetics and the mechanization of the development actually required both. You had to look at traits like uniformity, plant architecture, because all of those are critical for enabling mechanical harvest. And what you find is, you have to kind of co-develop the mechanics with the biology, with the genetics, and I think that's a great historical example, but there's other examples at play now, because of the acute challenge we face around labor.

Vonnie Estes:
Yeah, I think, as you said and Dr. Martin said as well, with most of these solutions in our industry, technology has to fit into an existing system, you can't just come up with some great new something and then just plop it in and expect it to work. So a lot of the new technology and the new solutions really require collaborations across the value chain, so that whoever you're selling to, it fits into their system, they know how to use it, and also, having them give you feedback about what it is that they need and what's going to make their life easier. Can you talk a little bit about your collaboration with Church Brothers and how that came about and how long it took to actually have a product that was useful to them, and kind of what the result was?

John Purcell:
Yeah, absolutely. First, just a general comment, I was told, way back when I first came into the industry, a very wise guy, wise person told me, "Don't fall in love with the science and technology, fall in the love with the solutions." And it has to work on a farm, right? I think I know, whether it be our family operation that my brother and I have, or whether it be a person with thousands of acres in Salinas Valley, you have to make sure that whatever solutions, whatever technologies or innovations you're trying to bring, they actually work on the farm. In the end, the solutions don't mean anything if they don’t work on the farm. And so, it's got to have actual value as far as playing out in a real life scenario.

Vonnie Estes:
Yeah, I think that some of us that have backgrounds in science, it is really interesting to fall in love with the science. And so, I think that's a really great piece of advice that you got, and I try to think about it all the time, too. It's “yeah, that science is really cool or that company is really cool, but what problem is it solving?” So those are great points.

John Purcell:
Yeah, and does it actually work on the farm, right? I think the collaboration with Church Brothers and High Rise broccoli is a great example. This was a broccoli that was amenable to mechanical harvest, but it took some iterations, I mean it was a very iterative process over four to five years, when we were working on really honing genetics. And Church Brothers was working with the machine harvesters, the companies, to kind of put together how would it actually work in their operation. Because in the end, that's what it was, it went from that concept to actually, really does it work? And I think it's that combination, where you put together the seed companies with their genetics, the automation mechanization companies and the growers, because they have to be partners in that process of bringing that innovation to the farm, bringing that innovation and demonstrating that it actually does work.

John Purcell:
But those kind of collaborations when they work, let's say you go through several iterations, several years, but in the end, that's how you get those new varieties that address any challenge, including labor challenges. And I will say, Vonnie, you and I get the pleasure going out to a number of different meetings, and I think it's really cool to see how even the ecosystem of innovation, how it's evolving, really thinking about more holistic solutions, bringing in new kinds of technologies, in innovation. And you guys do great events at PMA, and other groups do great Agtech events, where you're seeing a whole different combination across those diverse innovation companies that are out there. And fortunately, we had our own.

John Purcell:
I think everybody has to play a role in this, how do you bring together all these diverse players to really talk about solutions? But as you know, you were a speaker, thank you very much; you graciously agreed to give a talk at our Ag innovation showcase last year. We brought together the scientists, the team at Bayer, we talked about our seeds, our crop protection, and our digital tools. But we had 20 other vendors there, and they were probe companies, drone companies, robotics companies, and all the different players that can bring innovation to the marketplace. And I think, that's modern Ag, and that's modern food production right now. We really do need to foster these kinds of environments where collaboration opportunities can really be fostered and collaboration opportunities can really take off.

John Purcell:
And I think that's what it's going to take to really address the challenges that are out there, labor and other, to really bring focus to the fruits and vegetables that they want and to do it in a sustainable manner.

Vonnie Estes:
Yeah, so it's really about getting quality product, high nutrition and high value product off per acre. And so where it used to be companies would think about, I'm selling a molecule, I'm selling some kind of crop protection product, I'm just selling something into it,” and then the rest of it is separate. As we're starting to look more and more at really what we care about is what is coming off the field and how can we, in a coordinated fashion, do that in a sustainable way, like you said, and have the highest value product. And I think, as opposed to, a lot like corn and soy, where it's so much about yield, yield is the most important thing and how do we get yield up. I think in our products, it really is about quality and safety and what are we getting off the field in a sustainable way that the farmer can stay in business, too?

John Purcell:
No, I hear you.

Vonnie Estes:
That's an important piece.

John Purcell:
No, any definition of sustainability has to have farmer economic sustainability, as well. I know from my brother's operation, believe me, it's a challenge for growers and ranchers all over the world. And so, that economic sustainability has to be a part of the equation. But yeah, I agree, and I think what's happening not just at Bayer, but across the industry really is this movement from a very product oriented, as you've laid out, to a solutions oriented. And that's where these partnerships and collaborations really come together, because you're thinking about what is that challenge that's being faced, and let's think about the solutions that we can provide as a company, but also who else needs to be partnering in this to bring about the solutions.

Vonnie Estes:
You have lots of farms around the world; you're doing lots of research, any new things coming through the pipeline that you can tell us about?

John Purcell:
Yeah, I think what's really quite remarkable actually, historically, as Dr. Martin talked about, we have the crops processing tomatoes that have employed mechanic harvesters and other processing crops are natural peppers, et cetera, broccoli and lettuce turning more and more to that with products that are being offered and the kind of solutions that are being offered. But I can tell you, the grower events, it's amazing. It's hard for me to think of a grower that doesn't ask about amenability of genetics for mechanical harvest right now, because the labor situation is just so acute. I mean, it's really diverse crops: onions, melons, watermelons, it doesn't matter. Virtually everybody is struggling and it's not just in the US. It's in Mexico, it's in Europe and it’s in Asia. I mean, it doesn't matter where you are, it's not just the cost of labor, it's actually getting warm bodies, actually in the field, because it's a real challenge with that's going on there.

John Purcell:
And so, I think what we're looking at is a pretty broad based approach to really explore opportunities for collaboration, look at our genetics, and how do we bring solutions that bring efficiencies. And we talked earlier about uniformity, which is really important for mechanical harvest, obviously, if you're bringing a machine through the field. And plant architecture, which helps drive that. But that's not just important for mechanical harvest; think about hand harvesting, right? I mean, if you can reduce the number of trips through the field, well that helps on your labor situation, that increases the efficiency of the harvest, but I think the labor situation is just in such an acute position, that I think we and other seed companies are all looking at what can we do to help in that situation, and how do we have the genetics, but then what are the partnerships we need to really drive new products across a number of different crops.

Vonnie Estes:
So we're hearing a lot about some of the new breeding technologies, and do you think that there's a place for new breeding technologies in produce and a place for bringing some of the traits that you're interested in and bringing it to the market?

John Purcell:
Oh, absolutely. I think it's been cool seeing the evolution within the breeding world and within the tools of modern biology over the last 30 years. The way I look at it is, any technology that allows us to bring products to market faster, helps. As you well know, it takes six to 10 years to develop new varieties and bring them to the market. So anything we can do to accelerate that innovation rate, accelerate the product development cycles, that's a good thing. So when I think about what modern breeding is now, the shift from having to make all your selections into the field, to really doing much, much more in silico. You're kind of started with molecular markers, which are ways to test in a laboratory for certain traits. But now, as you get into really predictive breeding genomics approaches, which are even much more powerful than markers, that'll definitely help.

John Purcell:
I think even the way we assess new traits, things like remote imaging phenotyping, where instead of the walk in the field you have drones or you have other systems that allow you to assess what your breeding pipeline is delivering, all helps. And then don't forget the existing suite of technologies we have. I mean, things like molecular markers, double applicants, all of these tools that have been in use, their efficiencies are being gained, and they're being applied to more crops, and more markers, and more genetic information is flowing, and so all of that allows us to reduce the time it takes to bring new products and bring innovations to the marketplace, absolutely new breeding technologies. And then you got emerging technologies like gene editing. That could be extremely valuable in accelerating breeding efforts. So with all the great advances that are happening in other fields, biology's marching on.

John Purcell:
And believe me, breeding is a very different world than it was 25, 30 years ago, thanks to the genomics, the genetics, the high throughput sequencing, all the applications that are coming out of the biology revolution over the last 25, 30 years.

Vonnie Estes:
Yeah, those certainly weren't the things I learned in school.

John Purcell:
No, no, don't age me. Don't age me Vonnie. I'm older than you are. Exactly.

Vonnie Estes:
So as the last question here, as you're out and about, and maybe out and about somewhat virtually now, but what other labor solutions are you seeing and what are the things do you think is going to help the industry?

John Purcell:
Yeah, what I think is cool is there are new technologies flowing and it used to be you came into Ag from a lot of sort of defined disciplines, if you will, but I think what's cool is, those of us who went to Ag schools and I was an insect guy and there were yield people and there were agronomics and there were breeders and there were soil, and you had different disciplines, if you will, that all played into that. But I think now, the diversity of disciplines that are being applied to food production and agriculture is really cool. You and I go to some of the very same events that look at that innovation. We talked about modern biology, where that's driving, but this confluence of technologies now. We continue to make the advances on the biology front, but boy, you think about the digital tools, that automation, the robotics and you combine that with genetics. It's a really cool future.

John Purcell:
I like to think of it is Silicon Valley meets Salinas Valley, and that's really what's happening. I mean, you really do just have this confluence of technology and innovation and just a lot of smart people now really thinking about how do we continue to drive innovation within the food and Ag space. A couple examples I think about is, first of all, are around data. It's a data intensive world out there, and certainly the tools now to manage crops digitally, really thinking about the agronomic tools. Growers have a lot of tools in the toolbox now. I mean, my dad was a carpenter, he always said, "Don't leave for a job unless you got the right tools in your toolbox." And I think farmers think the same way, ranchers think the same way. It's like, "I got all these tools," but how do you help them now utilize those tools most effectively. And I think that's where the digital crop management comes in.

John Purcell:
As I always tell people, it's not your grandparents tractor anymore, we think about all the information that flows into that, soil probing, weather data, yield data, the imaging data that comes in now, all being used to develop models on what to grow, how to grow it, how to manage your crop. How do you manage your resources? How do you manage your inputs? That's a really cool world. And I think that's where the digital crop management is really going to pay off in the future. And then the other one I really think has huge opportunities and we're seeing great progress is the use of technology like UAVs or drones, right? Where you have, rather than walking a field to do your scouting, you have a drone or UAV fly over that gives you back the information. It gives you it in a digital manner, too, versus somebody's eyeball looking at it.

John Purcell:
Rather than driving into a field to apply a crop protection solution, there's systems in place now where UAVs are applying those, so you're able to detect diseases early and apply fungicide early, for example, using a UAV. That's the kind of labor savings that are out there. So I think you combine that digital with some of the automation and mechanization and then the UAVs and drones and other remote kinds of systems. That's a lot of cool innovation happening. I always joke with my team, I say, "Man, I can't wait to see what this is like in the next 30 years. I think it's scarier than thinking of a 90 year old me up there in the field." But, no, I think about the last 30 years have been amazing, the next 30 are just going to be there, too. Just the level of innovation. And it's so cool, too.

John Purcell:
I think another cool thing, Vonnie, is it's drawing a new source of brain power, new source of people entering into the field of agriculture that, because of the digital, because of the remote, the drones and all this stuff, it's cool again, right? So you have a lot of people from a new career. I know PMA does some great events on career and young students and all this, but it's fun to see not just kind of the traditional Ag disciplines, but the modelers, the IT people, the engineer, robotics students coming through who are interested in Ag now, and that's a really cool thing to think about what the next 30 years is going to bring.

Vonnie Estes:
Yeah, I think it's great with those new talent sets coming in, too, because it's people that have been trained in these different talent areas. But they actually want to work in something that just isn't another website. They want to do something that has an impact and food, certainly, like you said, food is cool again.

John Purcell:
We tell people all the time, you want to write an app to help people meet each other, or do want to help the world grow more food? Your choice, right?

Vonnie Estes:
Yeah, exactly.

John Purcell:
Let's think about where you want to apply yourself, right? Because it's the same skills. It's the same skills. You think about the modeling, the programming, the coding and all that do something that really means something. And for a lot of them in this generation, that's really important for them, which is really cool to see.

Vonnie Estes:
Yeah. Well, we need to wrap up here. And I've heard you say many times when we've been together that you have the best job in the world, and I agree, this is so cool to be able to work in this industry and work with these technologies and work with people like you. So thank you so much for being willing to talk with me and hope to see you again in person soon.

John Purcell:
Vonnie, thank you so much for the opportunity. It's always a pleasure.

Vonnie Estes:
It's always great to talk to John about plant breeding and how it can help with labor issues. We will now jump to Australia, to hear about some other labor managing and saving technology. Whereas this company is not the complete jump to robotic harvesting of the future, CloudFarming is developing tools that can be used today to help bridge the gap of labor shortages. We have with us, James Terry of CloudFarming in Australia. Great to have you on today, James.

James Terry:
Great. Thanks. It's nice to be here.

Vonnie Estes:
Before we jump in, why don't you tell us a little bit about yourself? You have a really interesting background.

James Terry:
Yeah, thanks. So I grew up on a mixed family farm in Tasmania, livestock and cropping farm. And after sort of growing up there, I developed a real passion for agriculture and innovation and the intersection of those two has always been the area that I wanted my career to be in. So I studied agriculture science at the University of Sydney, worked for a couple of different companies, but one of them was a large asparagus vertically integrated company growing, packing and export. And three years ago, I wanted to run my own business. So I've always wanted to run my own business so I left and now have my own asparagus farm and have started CloudFarming.

Vonnie Estes:
So this particular episode of the podcast is about labor, and I talked earlier to Dr. Martin at UC Davis and he talked about the real and building problem of labor shortages in the horticulture industry. A lot of his focus, because he's here was on the US, but I was wondering if you could talk a little bit about how things are in Australia around labor shortages.

James Terry:
Yeah, labor's a huge issue in Australia as it is all over the world. But, I have, obviously, a lot of experience in the Australian market and a pretty deep understanding about the issues that exist. And they are very similar, to my knowledge, of what is happening in the US, rising cost of labor annually, cost of goods sold is not increasing at the same rate as the cost of labor is increasing, so margins are getting squeezed for horticultural producers. Also, around finding and accessing good labor, so a lot of people are now having to house people under the seasonal worker program from Pacific Island countries on the farm. So it's been a huge change in the dynamic around the employment of the people and where they're sourced and, I guess, how they're treated.

James Terry:
From years ago, relying on one contract to be able to ring up and say I need 50 people tomorrow and you'd be able to have those 50 people. But the working rights and the legal issues around those 50 people may be questioned, I guess, and that became a real issue in the Australian work force, and now farmers are slightly changing away from the contract based system to direct employment, which is a huge issue for a lot of businesses that are not geared up to do it, with a payroll system, with a human resources system, but slowly that transition is starting to happen in the Australian market.

Vonnie Estes:
Oh interesting. So when people come from out of country to work to do harvesting, do they then stay in Australia? I mean, do they immigrate there and stay there or are people moving back and forth some?

James Terry:
No, they're normally, pre-COVID anyway, they're on short working visas, to come and work for a set period. It started off being a minimum of 14 weeks, I think, and a maximum of six months, and now it's been extended, I think out to 12 months that they can stay in the country without having to go back home. But they're for purely the purposes of farm work in Australia, and most of that farm work is centered around horticulture harvest, which had been where the pain point has been for a lot of growers in finding the labor and finding good labor that's able to harvest and pick in a timely fashion when they need it to be picked.

Vonnie Estes:
So your company, CloudFarming, is looking at this issue, and you're developing some global solutions to assist in labor management. Can you tell us about what you're working on and what you're doing?

James Terry:
Yeah, so this issue really started, well it didn't start, but I sort of saw the brunt of the issue on my farm where we used to pay workers on a piece rate, and legislation changed and we weren't able to pay piece rates anymore, we had to be able to individualize what each person had picked and when they'd picked it or how much they'd picked in a given day. And I didn't have a solution that was able to achieve that, so I set about building a small innovative robotic transporter, to work just in front of a small team of three or four pickers in a paddock. So the robotic platform moves itself just ahead of three or four pickers. The pickers work behind, and then every handful of product they have goes in a crate, and that weight is recorded at exactly the time and the position in the paddock and by who it was picked.

James Terry:
So then we can get accurate information throughout a whole day or a whole life cycle of a crop about who's picked what, where it was picked and the cost involved in doing that. And some really good analytics that are possible from that around yield mapping, yield forecasting and the traceability throughout an entire supply chain from the harvest process, which is a critical step as we identify the horticultural process, the harvest process.

Vonnie Estes:
That's so cool that people can go and look at the field bot on your website. It looks very cool. What size is it? It's hard for me to tell from the website.

James Terry:
Yeah, so its about two meters by two point four meters. So two meters wide by two point four meters long. So it's capable of carrying around 500 kilos of products along the rows. And then it would deliver to the end of rows and then it can be collected.

Vonnie Estes:
So what crops have you worked with on it at this point?

James Terry:
So me being an asparagus farmers myself, that's the immediate crop that we've started to focus on, but we're trying to build it so that it can be used across a range of crops. So: asparagus, field strawberry, or field grown strawberries, broccolini, chilies, snow peas, peas, field grown tomatoes. So anything that's relatively lightweight that's grown on a row. And we're trying to then develop, or we have future plans to develop a smaller machine called the field bot mini, which will be for row crops such as table grapes, blueberries, raspberries, where you need a smaller machine to go between rows of crop, not over rows of crop.

Vonnie Estes:
So where are you in the development as far as are you selling any units yet? Are you testing on your farm, I'm sure, and other farms? Or where are you in development?

James Terry:
So at this stage we've developed our second prototype, which is in the final stages of refinement with plans in our spring, the US fall, to really refine that and incorporate the changes from the second. Build our third prototype, and then look to commercialize at some stage later in 2021. Developing of hardware is a challenge and we're trying to make our field bot, our machine, to be really reliable and robust, so that any farmer is able to incorporate it straight into their system. So there's a huge amount of field testing required to get to that stage, so that will be happening over the next 12 to 18 months before actual commercialization happens.

Vonnie Estes:
I assume you'll start in Australia and then start looking at other geographies, as well.

James Terry:
Yeah, so target is to, definitely start in serviceable area from where I'm based in Melbourne, which is where my farm is and where I have a number of close farmers that I'm working with, and then try and expand from there, globally, once we have a really simple, efficient and robust platform that can be expanded very quickly and very easily.

Vonnie Estes:
And how many people do you have now?

James Terry:
How many staff?

Vonnie Estes:
Yeah.

James Terry:
Yeah, so it's myself and I have two others in my founding team and then we're relying on casual and contract staff to assist with the robotic development. So the other two founders, I have an engineer and I have a data scientist on the team.

Vonnie Estes:
Wow. Yeah, it's cool to look at you're doing both the hardware and the software, and just one of those is hard. So doing both of them are very different skill sets, right?

James Terry:,br/> Yeah, it's a huge challenge and the way we're sort of looking at it is that to get into the market we require the hardware, but the software is our long-term big play for us. The ability to capture the data around the harvest process, and around the work and the efficiencies that can be gained and then using that information and data throughout the next years crop, as well. So incorporating what we've learned from this season and put it into next year, into changes and how we can make the process more efficient of harvest, and also the process of growing, to increase the yields. And then, from a marketing stance, as well, we think we can, over time, once we've collected enough data, do some really cool things around crop yield forecasting.

Vonnie Estes:
All right. I think that's all the questions I have. Is there anything else that we should know about you or the company or what you're thinking about?

James Terry:
No, just the next year, for the next 18 months it's a really critical time for us and we're trying to do a round of fundraising in the next six to nine months, which is going to be a real challenge, given the coronavirus situation. But we're all open to learning the new experiences and the challenges of the world that we're currently living in, but I guess I'd also say that we have identified, yeah, the problem exists in Australia, we see it exists in the U.S., and it's virtually the same wherever you go around the world. We're encountering similar labor based issues, even in developing worlds, actually. There's a huge management issue, that management oversight is key, and the ability to look from a cloud and see exactly, or on a dashboard, where those machines are, what each person has picked, is really cool technology that we can see having a huge impact in the future.

Vonnie Estes:
I think now with all the issues around COVID-19 and travel and export, like we were talking about before, export and import, I think it's becoming even more of an issue. So even though it might be a hard time to raise money, I think the spotlight on this problem is good, and that should be helpful, because the problem's only going to get worse, and a lot, as well, around worker's rights and just people's ability to travel, we're just going to need to have less humans in the field. So I think it's really great technology you're working on.

James Terry:
Great. Thanks. It's nice to be on.

Vonnie Estes:
All right, well I think that's it. So thank you so much, and we will speak again.

James Terry:
Cheers. Bye.

Vonnie Estes:
That's it for this episode of PMA Tech. Thanks for allowing us to serve as your guide to the new world of produce and technology. Be sure to check out all of our episodes at pma.com and wherever you get your podcasts. Please subscribe and I would love to get any comments or suggestions on what you might want me to take on. For now, stay safe and eat your fruits and vegetables. And we'll see you next time.

PMA Takes on Tech: What food and Agtech venture capitalists are thinking now
PMA Vice President, Technology, Vonnie Estes is joined by Sanjeez Krishnan with S2G and Rob Leclerc of AgFunder in a conversation about how the Ag and food tech venture capitalist sectors look today. Among topics discussed are what investors are saying and doing, what are the current needs and solutions, and what is going on with startups.

Vonnie Estes:
Welcome to PMA Tech, the podcast for fresh produce professionals that explores the people, companies, and technology solutions that are shaping the future of the produce industry. I'm your host, Vonnie Estes, vice president of technology for the Produce Marketing Association, and I've spent years in the Agtech sector, so I can attest it's hard to navigate this ever-changing world. So thanks for joining us and allowing us to serve as your guide to the new world of produce and technology.

Vonnie Estes:
Today, I'm talking with two highly successful and well-respected venture capitalists in the Ag and food tech sectors, to discuss how their world looks today. What are investors saying and doing? What are the needs and solutions? And what is going on with startups? We will start with Sanjeev Krishnan with S2G and follow with Rob Leclerc of AgFunder. You will get great insights into the world of tech and investment. Let's get started.

Vonnie Estes:
We now have Sanjeev Krishnan, the chief investment officer and managing director of S2G on. So happy to talk to you, Sanjeev, welcome.

Sanjeev Krishnan:
It is great to be with you today, Vonnie. I am excited to talk and share what we're doing, and learn what you're doing as well right now.

Vonnie Estes:
Great. I don't miss all the constant travel that we all were doing, perhaps now with a different lens, maybe we were doing too much. But I do miss talking to people like you and I miss going to your event, to really hear what's happening in innovation and new technology in the companies and a conversation with you is always filled with all sorts of interesting new topics and new innovation. So since we can't get together in person, this is a good second way to do it.

Sanjeev Krishnan:
Yeah. I think my second home is now Zoom. It was United Airlines and now it's Zoom. So I'm getting acclimated. The food is just as bad, or just as good, at the end of the day.

Vonnie Estes:
Between United and Zoom, those are two hard things to choose between. So for our listeners that don't know about S2G, why don't you tell us a little bit about who you are and what you do?

Sanjeev Krishnan:
We are a food Ag fund, really anchored around the changing consumer and then the ripple effects of the changing consumer across the U.S. food system. We try to make investments that nudge the food system in the U.S. towards sustainability and health. So we invest across the value chain, so we do Ag tech, food tech, supply chain tech, but also investments are processors, brands, restaurant and retail concepts. We have over 45 companies in our portfolio. We also invest multi-stage. So do C-stage investing, venture investing, growth investing, or even open to doing buyouts as well.

Sanjeev Krishnan:
We have about 15 colleagues in Chicago and an outpost in San Francisco. And divide the world into an investment team and a platform team. The platform team just really helps post investment with things like talent, corporate development connections, marketing, a number of other value added services that really help manage the three risks that we see when investing in food and Ag innovation, which is really adoption risk, financing risk and syndicate risk. We've been around since 2014, and continue to be very active in the market, even during this pandemic crisis.

Vonnie Estes:
I think S2G, as opposed to some of the other investors, really looks across the whole supply chain and hits all the areas that the Produce Marketing Association is really active in as well. We really work all the way from seed to fork, and so it's always interesting to see how you look at things because you're looking at the whole food system, instead of just what's happening on the farm.

Sanjeev Krishnan:
That's right. I mean, I think it's always been an area of uniqueness for us, that we've tried to take advantage of, in terms of linking downstream companies with upstream companies and vice versa. Or seeing trends in an upstream company that we can invest downstream in, and vice versa. But this crisis has highlighted even the greater importance of supply chain linkages and we see very interesting bird's eye view, just given the fact that we have over 45 companies across that value chain and could go into that if it's of interest.

Vonnie Estes:
Well, we're not only seeing supply chain linkages, we're seeing supply chain breakages. So that's been one of the really interesting things in this whole COVID-19 world of how things are really connected together. So one thing I wanted to ask you about, which was a funny thing for me, last week I had two firms who called me, one very large multinational investment firm, and another one very small from across the other side of the world. It was on the same day and they asked me the same question, which is, what are we at PMA seeing around perishability in the supply chain? What's happening with being able to keep fresh food fresh longer? What are some of the technologies to reduce waste, is how I think a lot of us were looking at it before, but I think now with COVID-19 and where the supply chain is needing to stretch, and people are looking at differently how they buy their fresh produce, what's happening in that space?

Vonnie Estes:
I know that you have a number of investments in that area, and it's an area that you've looked at. So I wonder if you could share with us your thoughts about your companies, and then what else you see might be coming to fix some of these supply chain issues.

Sanjeev Krishnan:
It’s a great point and we've been very actually bullish on the perishable sector. I know center store has had a little bit of a revival, but we still think perishables is a great place to invest and see growth. But obviously in the produce sector specifically, you're effectively, or anytime that you're doing in a perishable space, you're effectively inventory manager business, is the view we have. And so keyed in inventory management, I think is, data and digitizing some of that supply chain. So you know beyond either the picker, shipper, packer or the DC, how do you digitize your supply chains so you have a more holistic view of where issues occur, particularly even post COVID-19, if climate change impacts or other impacts that will come to impact the produce supply chain, the sooner you know, the more you can plan, I think.

Sanjeev Krishnan:
I think what we're seeing is, both midstream, grocery and food service, when they come back, we're much more interested in digitizing the supply chain to manage shrink and to manage food waste. The secondary that we looked a lot at it and made a few bats in as well, is post-harvest shelf life extension. So we've got Appeal and Hazel as investments in that area. Those are materials science platforms that I think are really compelling, and both companies are getting great traction from a distribution perspective and a business model perspective are around extending shelf life of fruit and veg. The third tool kit, if you will, that we invested in that's a little bit different perhaps, is we also see the role of indoor and vertical as a potential way to manage inventory and shelf life extension, we think that sector will probably have some tailwinds.

Sanjeev Krishnan:
They still have some work to do in terms of cost per pound, capital cost per square foot, and then ensuring the cap x cycle, such that they can serve as grocery and food service alike. But we have a holistic approach to how we think about shelf life extension manager, I think there's another dynamic that we're very excited about and I want to make more investments, is really around packaging solutions, that could be compliment material science, but we think there's going to be a lot more smart packaging that is both sustainable and can help with some of the shrink issues as well. So we're excited about exploring those foreign innovation areas.

Vonnie Estes:
That's great. I think there's so much going on in those areas, a lot of trends were happening before COVID-19 and now they've just been sped up. But I think around indoor, there are so many people that want to buy local now, that's become really important to them. So places where they can buy local, if there's an indoor vertical farm close to them. I'm doing that myself, I feel very fortunate that I can get really fresh local indoor greens, so I think that's a great area. Around packaging, another area that we've been thinking about, is that right now there's this increase of use in single use plastics because everybody wants to have a plastic barrier. So we're going back to using different plastic bags and we're putting apples in bags and everything in bags. I think as you guys start looking at, there's going to be some increase in packaging, I think, coming out of COVID-19, but I'm sure you're looking at technologies that aren't plastic, that are other kinds of ways to put some physical barrier in different kinds of packaging, that doesn't come from fossil fuels.

Sanjeev Krishnan:
Exactly. I think packaging probably has a new dimension to it, which is beyond the sustainability argument, is a health argument or at least a contact, minimizing contact or transferability, clean, if you will, clean packaging that helps mitigate some concerns that the consumer may have. So absolutely, it's how do you plan both? So we're just starting our journey in that area, but hopefully are going to make more investments in packaging this year and next year.

Vonnie Estes:
Great. So in the report that you recently came out with, which was an amazing report, Everybody Eats, which I suggest anyone get their hands on it that can because it's just a great view of what's happening during COVID-19. Then you look at the other areas, that technology and innovation, coming out of this. And one of the things that you say in the report is that pandemics cause innovation. So what kinds of new technologies are you seeing and do you think these things will be adopted quickly?

Sanjeev Krishnan:
So the reason for the report is twofold. One, we were trying to figure out what mentality was best to approach it with. So a lot of it was ‘08, ‘09 or 9/11 or World War II. But we decided that doesn't really fit what's happening as much as pandemic economic history. So it's a niche genre, it was just probably popular right now. But one of the things you see consistently from the Justinian Plague, to the Bubonic Plague, to the Spanish Flu, to the major pandemics that have happened in human history, is that it's an interesting pattern because it's all of them happening in different historical time periods in human history, is innovation comes out of those.

Sanjeev Krishnan:
After the Bubonic Plague, people think that it's one of the things that led to enlightenment, the advancement of medicine as we know it today, really came out of the Spanish Flu, in terms of just a greater respect for science and technology and medicine in particular. This pandemic, I think, will be similar in a sense that innovators and entrepreneurs have a tremendous opportunity to invent and invention is necessity, things that will help with some of the core issues in our food system. I think one of the things that we see is the fragility of labor and logistics, and you've seen it obviously in the meatpacking sector, but I think you've also seen it even pre-COVID-19 in the produce sector. I think there's going to be, whether it's automation, robotics, digital tools, etc., I think there's scope here for folks across the produce value chain to benefit from.

Sanjeev Krishnan:
I think the other thing that is going to be interesting is, challenging the nature of globalization and the notion of food security. We have some investments outside the U.S. and that is a key area of concern for a lot of governments and nation states across the globe, in terms of if you're importing a good amount of your produce or calories in general, how do you make investments to at least have increased domestic self-sufficiency? We think that's going to be a key thing, I mean, innovation has a role now, and it's not just indoor Ag or others, but I think there's going to be a wide variety of ways to enhance food security and insure domestic self-sufficiency. So that's another implication that comes out of this.

Sanjeev Krishnan:
The other one I think is really around channel digitalization, which I actually think has some really interesting potential for produce. But two or three years ago we looked at a very clichéd word that venture capitalist's like me uses, disruption. We define disruption as changes in market share. And we looked at, the last 25 years, what industries have had the greatest changes in market share and why. And the biggest the biggest correlation that we found is when the channel gets digitized. So you see that in very quoted statistics on Netflix and video, or music and Spotify, and consumer batteries and Amazon. Amazon went from zero to number three in batteries, once people started buying batteries online.

Sanjeev Krishnan:
This grocery movement is going to be super interesting in terms of the second order consequences and the order consequences it has, because we've gone from five to seven percent, online grocery to, I think it's going to be, well, four to five times, if not higher than that. A lot of folks who we spoke to in grocery, who always thought there was a little bit of a behavior change element to online grocery, and therefore we wouldn't really get it launched, and changed their minds, in this crisis. I think for produce companies, how you build maybe direct to consumer channels, like you couldn't before, and what does that whole world look like? So I think that challenge is going to have impacts, not just in how producers and shipper, packers get things to market and the optionality they have, but also even in genetics, like if you wanted to grow unique varietals, differentiation's a lot, potentially quite compelling in an online digital world. So I'll pause there, three impacts I could see for the produce sector.

Vonnie Estes:
Those are really interesting. Thanks for sharing that. I think around digitization, one of the things that I've been thinking about and looking at in the industry is that a lot of the information just isn't shared all the way through the chain. We're starting to see through things like the IBM Food Trust and companies, the retail companies, reaching back and getting good traceability information coming towards them. But that retail information isn't going back to the grower, for the grower to really have the same amount of information and for that chain to really be connected with each other. One of the things I'm really hoping for coming out of COVID-19 is that we start doing better forecasting and not just using the telephone and Excel spreadsheets, but actually have some good chains that are set up and some good demand and supply forecasting, that in itself is going to help a lot around reduction of food waste and shrinkage.

Sanjeev Krishnan:
There was some good data that I saw yesterday around the volatility of the S&P 500 versus produce. Produce was significantly more volatile than the S&P 500. And the S&P 500 is at the most volatile as it has been the last 10 years. And so it's just interesting to your point, obviously there's a moment in time that's unprecedented, but going forward, I think I always thought about the produce to be one of the first that have traceability, because there's always an issue of who pays in traceability. I always thought food safety and food recalls, that was a great ROI for whoever pays in that, the grower is made to pay or whoever pays. And now even things like surety of supply and surety of supply at a certain price point, digitizing the whole chain is going to be, I think, valuable for whichever stakeholder you are, just so you don't have a net short or you understand your selling price or your buying price.

Vonnie Estes:
I think information is power and I think as we get more data and the balance of power throughout whole chain, it's just going to make things go a lot more smoothly. Well, I really want to thank you for spending time with me, and it's so great to hear your voice. I look forward to sometime when we can actually stand somewhere and have a conversation, whenever that will be. It's great to keep in touch and I love the work that you guys are doing, so keep it up. Thank you very much.

Sanjeev Krishnan:
Thank you for having me. Thanks for your partnership in general, and would love to work more with PMA and you, in terms of how we invest innovation and how that gets deployed. So thank you again.

Vonnie Estes:
Today I'm sitting with Rob Leclerc, he's the founding partner of AgFunder and it's so great to actually see you and talk to you. This is one of the things I miss the most about our new world, is not getting to catch up with people who I love talking to. So thanks for being here.

Rob Leclerc:
Thank you very much Vonnie.

Vonnie Estes:
So there will be some people, shocking, as it seems, that don't know who AgFunder is, that are listening to this podcast from possibly in the produce industry. So why don't you talk a little bit about AgFunder and when you got started and what you guys do.

Rob Leclerc:
Sure. So AgFunder, we consider ourselves a digitally native venture capital platform. We started back in 2013 and at the time there wasn't a lot of interest in technologies that related to food and agriculture. I remember going to a cocktail party and you chat with somebody and their eyes would roll back in their head and they would grab the nearest accountant that would walk by and say, "Get me out of here." And so what we realized is that this was such an important industry and that maybe it was framed the wrong way, that there was an opportunity to get a lot bigger engagement and that there were so many technologies and some of the most cutting edge technologies in the planet, could be brought to this industry. So if you love technology and were a futurist, this was a place to spend some time.

Rob Leclerc:
Our theory on how we would get people engaged was through a lot of media and research. And so in 2013, we started AgFunder News, today we've published over about 2,500 articles on the space and try to just generate a bit of a narrative around the most cutting edge tech, the leading investors in this space, the most talented entrepreneurs and try to tell that story. And then in 2015, as we were struggling to come up with a real coherent thesis on investing in the space, we said, "Well, look, we really need to map out this market." So this started a long journey of putting together research reports, investor reports, that would really frame the sector. And so we started in 2015, I think there was $2.3 billion that was raised in 2014. And then the previous year, that was three times over that year. And so it was a huge jump and people really paid attention. And then now fast forward to our last report, we just published, where we calculated almost $20 billion in funding.

Rob Leclerc:
So it has been an incredible journey to see this industry really mature and see capital coming and solving problems for technologies that affect the bottom of Maslow's hierarchy of needs. And if we can do that, I think that can have incredible impact. In 2017, we launched our first venture capital fund. So we've launched a series of, we'll call it micro VC funds, to invest in this space. Today we're one of the most active investors, we invest in North America, clearly we're based in Silicon Valley, but we also invest in India, Australia, Brazil, Europe and Asia. So we really are looking to find the companies that are going to transform the future of agriculture and really look at and meet those founders who are living in the future.

Vonnie Estes:
That's so great, the way you talked about really creating and starting the narrative. I've been working in Ag biotech and Ag tech before it was called Ag tech. And when you first started AgFunder News, you guys were the only ones that were writing about technology that was affecting agriculture. And I loved it. I started throwing articles your way as well, because there was no place else to even send articles.

Rob Leclerc:
And thank you for all your contributions, as well.

Vonnie Estes:
Thank you. You guys did really start creating that narrative and have people start thinking about Ag tech and what the different innovations coming from all over the world. So thank you for doing that.

Rob Leclerc:
Thank you.

Vonnie Estes:
So how are things looking in your world right now? Just what are you talking about, what are you seeing, what are things like?

Rob Leclerc:
Certainly things are pretty crazy right now. We sent out a note to our portfolio companies, I think it was March 3, trying to frame what we were seeing in the world and some of the risks. I think we're seeing what many people are seeing and some of the challenges around operating in this environment. But I think when we speak to our portfolio companies, because almost all of our portfolios are supporting the food and agriculture industry, they are operating as essential services. And then the next question is, what does their activity look like and do customers even care about what they're doing? And what we're finding is that when technology was coming in, it had the potential to make our food and agriculture system much more resilient.

Rob Leclerc:
There was some slow adoption, sometimes it was hard to tell that story and why there's value there. That is becoming much more evident now. So we're investors in a couple of alternative protein companies, we're investors in a couple of automation companies, we're investors in some, we'll call it digital marketplaces. And in all of those cases, their customers are seeing, we're seeing far more demand for those products because they're really helping fill in problems that were always there, but could be papered over. For instance, if a greenhouse goes down or people get sick on a farm, that could be hundreds of thousands of dollars in lost value. And so automation is very important in an environment like that, where a tractor that's autonomous is not going to get sick. And the more people there are in a farm, for instance, the higher the risk there is. So what we're seeing is these clients are starting to really speed up their adoption and their seriousness around innovation because of this.

Vonnie Estes:
Oh, that's fascinating. I think a lot of the trends that were happening, were already happening before COVID-19 and then it did definitely speed up a lot of things that people were looking at. I talked to one startup that does a lot of forecasting and data analysis, and she was saying that she feels like Cinderella now, that everybody wants her at the ball, it's before people were thinking about it.

Rob Leclerc:
Yeah. No kidding.

Vonnie Estes:
Yeah. It is really interesting to see, and that's one of the things that I wonder how things will look on the other side, as we move through this unusual time. So what are you telling your startup companies, the ones you've invested in and other people, how to get through this time and depending on where they are and raising money and ones that are going to come back to you and need more money, how are you dealing with that part of it?

Rob Leclerc:
Financing risk is probably the biggest challenge, right? So you have operational challenges, but most of the companies are working through those. Then you have the commercial challenges and if anything, as I mentioned, the companies are seeing more demand for their products and services, they may have more trouble getting them to the customer or working with the customer, but there is far more demand. The biggest risk though, is in the venture capital market and evacuation of capital from that market and this creates a lot of additional financing risk. What we're telling our companies is basically, be prepared for a long winter, because even if you have significant commercial success and you are maybe modeling a two times or three times growth over the next year, and you're at four or five times growth, that may not be sufficient to raise funding next year.

Rob Leclerc:
This is what we saw in 2001 and 2008, capital really evacuated the market, it was very difficult for founders. And so what we're saying is, and even what we said back in March 3 was, "Look, if you're going to make cuts, you want to cut early and you want to cut deep, at least you give an opportunity for the employees of those companies to find new jobs while there is still a market for jobs." So maybe that time has now passed. We said, "Look, you really want to manage your burn rate, try to extend yourself out 18, 24 months. If you can have 36 months of runway, great, close bridge rounds, don't feel that you're not in fundraising mode.” I think if there's capital available it's time to take it and ultimately think about survival rather than growth, right?

Rob Leclerc:
So normally in a more frothy market, when the capital is available, we say, "Look, put on the gas, grow as fast as you can, and capital will be there." Now we're saying, "Look, we don't know if the capital will be there. So what you want to do is build yourself to survive in the worst case scenario, really focus on revenue right now, to minimize your burn rate, don't spend as much money and time on R&D for instance.”

Vonnie Estes:
Do you think this is going to result in more MNA and exits that are different than what people wanted? Do you think there's going to be companies that just aren't going to make it, but had great technology and someone will pick them up? Do you see that happening?

Rob Leclerc:
Yeah. I mean, you have these market instabilities and this creates opportunities for some buyers and some of those buyers, may be some of the better funded startups as well, but I guess it comes down to who might be the buyers in those markets. And if Bayer and Corteva or others are also hurting, they may be focusing more on their core as well.

Vonnie Estes:
They're taking your advice as well.

Rob Leclerc:
Yes, exactly. We've been speaking to some corporates and they were told to put a chill on all hiring, all investment, all MNA, and they're going to revisit this on a quarterly basis. So those types of things may inhibit those opportunities and so, we are actually doing a second close of our third fund because we wanted to be investing in this period. We know that valuations have come down. We know that there's tremendous opportunities emerging in this market. We are more bullish on this sector than ever, we see what the future looks like. And we're investors in venture capital, not the next quarter or next six months, but for the next 10 years. And so we see that opportunity to be investing today and, others who have that long-term view may also be able to weather that as well. But sometimes when you're a publicly traded company, you really need to watch your bottom line, you may need to be more careful.

Vonnie Estes:
Yeah. Are you seeing many companies pivoting and trying to figure out how to change their business model so it may make more sense now or is that happening? Rob Leclerc: We’re seeing very little of that. I mean, just because alternative proteins was a theme for us in plant based proteins and the companies in our portfolio that are in market, are seeing three to four times growth. So their challenge is how do we produce more when we're operationally constrained? So that would be one. Some go to market strategies are challenging, so we're investors in one company and their plan was to launch in food service with some of the largest food service providers. They were just basically ready to sign those contracts and now that's gone, restaurants are gone and that was an avenue for them to launch. So now we're trying to get creative about how do you connect with consumers when you can't really get time with them and in front of them and get that really intimate, personal experience.

Rob Leclerc:
So some of the go to market strategies have certainly changed. As far as automation companies, their clients are beating down their doors. And some of that is because, their clients have investors as well, people who have lent them money, who are worried that this operation is going to go out of business. So for them to tell a story about how they're now speeding up automation to ensure continuity of their business and therefore continuity of those investor payments is really important. Digital marketplaces, similarly, as you saw this shift in the supply chain away from restaurant and more to grocery, digital marketplaces were really able to adapt quickly because they bring both buyers and sellers to the market. Those buyers and sellers don't need to have a preexisting relationship; it can coordinate a market very quickly. So from that perspective, we're just seeing a lot of opportunity there.

Vonnie Estes:
That's fascinating. Yeah. I think the way that we get our food will be changed for a long time. And certainly we're seeing a lot of people moving to buying online, that had never done that before and that's likely to not go away. So it'll be interesting to see what innovations come up around buying online differently. Then a number of the meal kit companies, some of those, I thought they were not going to make the quarter, but now I think with what's happening now, they've got a new vision on life and it'll be interesting to see how people respond with that as well.

Rob Leclerc:
Yeah. A lot of these companies, they needed to hit a critical mass to become profitable. And they hit that in the last month and a half, and now they can really explore, the cost of customer acquisition really dropped and we'll see if people remain using these products and services because that initial adoption can be really slow. With Instacart, my wife and I would stubbornly just go to Costco every weekend and now we're looking at it and say, "Geez, we're saving a lot of time. This is pretty nice not to have to go and spend three hours every Saturday going to Costco, buying stuff and we can just get it dropped off." And so that's quite convenient.

Vonnie Estes:
That's interesting. We haven't made that leap yet. I mean, I make the list for nine days of meals and my husband dutifully goes and implements the list at the grocery store. So we're still doing that. He went this morning, and it took several hours and if you're worried about infection, that's your highest risk place. You go in an indoor place with a bunch of people for two hours, you know?

Rob Leclerc:
My heart rate is elevated; I've got my N95 mask on. So we've made a couple trips to the grocery store, but it's not a pleasant experience, that's for sure.

Vonnie Estes:
No. It's not at all. So one of the things you mentioned in the opening, is that you do have investments all around the world. You guys have done a really good job of sourcing deal flow in companies throughout the world. So are you seeing big differences in different parts of the world and how people are responding and what's happening?

Rob Leclerc:
I think the challenges are mostly the same, I think the differences become when you're in either emerging markets or you're in developed markets, right? So in developed markets, there's operational challenges everywhere, but, I think the biggest demand drivers, as I mentioned, were really an automation. In developing markets it's been digital marketplaces because their supply chain is not very strong, it's not centralized, it's not efficient. They were doing things in a very ad hoc way, lots of farmer's markets before. So that has been a massive accelerant in those markets.

Vonnie Estes:
Well, I could talk to you for a lot more time, but this is about the time that we have allotted. So it's great to see you and talk to you and hope to be able to have a cup of coffee at some point soon.

Rob Leclerc:
Let's do a happy hour one Friday night over Zoom.

Vonnie Estes:
Definitely. That's it for this episode of PMA Talks Tech, thanks for allowing us to serve as your guide to the new world of produce and technology. Be sure to check out all of our episodes, along with other important content at pma.com, untill then stay safe and we'll see you next time.

PMA Takes on Tech: What do we do with all these onions?
PMA Vice President of Technology, Vonnie Estes introduces PMA Tech, the podcast for fresh produce professionals that explores the people, companies and technology solutions that are shaping the future of the produce industry. Later, Estes sits down with Shay Myers and Michael Helmstetter to discuss the impact that COVID-19 has had on the industry and what solutions have been created and utilized.

Vonnie Estes:
Welcome to PMA Tech, the podcast for fresh produce professionals that explores the people, companies and technology solutions that are shaping the future of the produce industry. I'm your host, Vonnie Estes, Vice President of Technology for the Produce Marketing Association. I've spent years in the ag tech sector, so I can attest that it's hard to navigate this ever changing world. So thanks for joining us and allowing us to serve as your guide to the new world of produce and technology. We have two guests today: Shay Myers is a third generation producer in Oregon and Idaho and Michael Helmstetter is from TechAccel LLC. Shay is going to talk to us about the current issues he's facing with supply chain disruption on the ground. Michael will discuss, from an investor point of view, what problems and solutions he's seen now. So let's get started. We've got Shay Myers on the air and he's a third generation farmer in Oregon and Idaho, who's had a big impact from the COVID-19 pandemic and has mostly sold into food service. So why don't you tell us a little bit about yourself and your operation?

Shay Myers:
I'm third generation farm kid, been around the operations my entire life. Left for a few years and somehow ended up back here. I'm not sure exactly how that all happened other than I had a really huge appreciation for my grandfather and what he had started. And at that point in time, it didn't look like anyone was going to come back and that seemed like a bad thing to me. I've also got a lot of farmers in my family, but not a lot of marketers, not a lot of people that look at the business through a marketer's eyes, and I've always enjoyed that side of the business. There was an opening for me to come back and to help sell and market our asparagus and onions and now we've got sweet potatoes and a few other things in the works. The family saw that I kind of had the skill set and they took the risk on me and let me make a bunch of mistakes and almost a decade and a half later, here I am.

Vonnie Estes:
Well, I didn't know that about your background in marketing, but that's really shown through in the great coverage that you've gotten in the last month or so, and really became the face, in some places, of some of the problems that growers are having right now, due to the supply chain disruption from COVID-19. Can you explain a little bit about what's happening on your farm and why that's happening?

Shay Myers:
Sure. I'm going to speak specifically to onions right now because that's where the impact is the most significant, and because it's a low margin, high volume commodity as well. With the closure of the restaurants. So we, we typically are a 70-30 to 60-40 producer, and that's really food service to retail. And so that supply chain is established. It's something that we built and that's what our plantings are based on. That's what our sales are based on. That's what our packing line and equipment is based on. That's what our refrigeration and storage is based on and is what that historical data and that historically has taught us over all of these years. And it's all out the window, right? The restaurants with the closure. And I mean, some will argue that the restaurants aren't closed. I think if you talk to most restaurant owners, they will say that they're closed.

We certainly feel in our industry as if the restaurants are closed, and with those closures, we have lost that 60 or 70% of our business almost completely. It's gone to virtually zero. There's a small amount of product shipping, but I mean, what we would normally ship in one week has taken us six weeks to sell of the restaurant type of onion, which is a larger size profile, larger pack onion than what would go to retail. The ramifications of that are it's the end of our storage season. We have the capacity for refrigeration, but it doesn't really matter. Where we've got a crop that you can store for seven or eight months, we're at the end of those seven or eight months. And so that it's kind of like milk. You can put it in the refrigerator, but once it's expired, it's still expired. And you might get an extra 10 days. You might get an extra seven days on that milk, but essentially you're past that expiration date. That's where the onions are today in the Northwest. So a lot of those are getting thrown away by the millions and millions of pounds. That cycle, frankly, will continue. I'm in California with one of our grower partners here now. And that cycle will continue here in California as well.

Vonnie Estes:
Because they’ll just be old enough that it's just time for them to go, and there's no place for them to go right now.

Shay Myers:
Right, and here they don't store, but it's 105 degrees today. And once the canopy is down, there's a certain amount of time until you can harvest and sell that crop. So if you're only selling 40 to 50% of the norm, the other 40 to 50% is going to get plowed back into the ground.

Vonnie Estes:
There's been some talk that I've heard about people saying to you, "Well, why don't you just give this away? Why don't you just give it to the food banks?" And I've heard you give a very good answer to that. So why don't you let our listeners know some of the complexities around that?

Shay Myers:
Sure. There's a multitude of reasons, but the most significant one is simply the fact that these onions right now, whether it's here in California or they're in the Northwest are not packaged yet. And there's an additional cost of roughly three to four dollars per unit of sale to convert those into something that you can sell. And that's one additional cost that you have to incur, and then you also have to freight the product to the destination. So it's essentially, instead of losing three to four dollars per 50-pound bag, instead of losing four or five thousand dollars an acre, if you were to donate that with zero financial support, you would triple that number. And so you hemorrhage that much faster and we're already losing. So it's a really, really easy decision to make on many levels.

Vonnie Estes:
Yeah, that's tough. I've also heard now that a lot of the food banks are full. So you wouldn't, even if they were willing to take that hit, there's no place for it to go right now.

Shay Myers:
That has been the case. The food banks, as of about the last 10 days to two weeks have started to open up. They really do need product and they are willing to, in some cases, we shipped the load out yesterday that went to a food bank. They covered the freight and they also paid our packing costs. They didn't pay anything for the onions towards the growing costs whatsoever, but they paid our packing costs and our freight. We loaded the truck and sent it to Portland yesterday.

Vonnie Estes:
That's great. So what do you do now? How do you move forward as a producer? What do you think about next year? Or can you even think about next year yet, but kind of what happens now?

Shay Myers:
So, we've already made our bed for the 2020 season because the onions are planted in March and April. So when this was barely beginning, we were already in our planting process. We essentially have made zero changes from a planting, from an acreage standpoint or from a volume standpoint. That wasn't really by choice or by strategy. It was by circumstance. And so unlike the wet veg guys or the leafy greens, they're on a 60-day to 90-day cycle. They can make some corrections, we are going to deal with the ramifications of over supply on an unprecedented level this fall, what we have wasted in the 2019 crop is nothing compared to what will likely be wasted in the 2020 crop. It's a lot like what we're seeing in the protein industry right now, in the meat industry. Their losses are just beginning and they're going to be massive. Right? They weren't felt before now, but now that that ball's rolling, it's just going to be worse and worse and worse. That's what we're going to see. I mean, if we lost probably 10 to 15% of our entire onion crop in the Northwest, that number will probably be double or triple what I would guess for the 2020 season, for what we harvest this fall.

Vonnie Estes:
Well, I know you're really busy and you have to get back to many fires to put out. So I have one more question for you that fits in with what you're talking about. So what systemic things should happen external to your farm, like outside of what you can do, that can help your business and get the supply chain working again? Is there any call to action or anything that you would suggest that an external force could help you?

Shay Myers:
Yeah, I've alluded to this in some of the videos and some of the conversations that I've tried to have online and through the media, and that is there's really two things that we can do. Number one, we really do need to figure out how we're going to turn the economy back on, and quickly. Obviously safety is a priority for all of us, but we also have to think of the long-term ramifications. Some of these ramifications are just, especially for in agriculture, are just, dauntingly massive. So I think that's number one. We do need to say, "Okay, what's the risk from a health standpoint, but what's the risk economically? And to a supply chain as a food producing nation, how long can we hold off? And what will the ramifications be? So let's turn the economy back on as soon as we feasibly can."

Two, and I keep mentioning this, I feel like if I could make any requests and I've said this before this event happened, but hopefully the consumer, when they're at the grocery store, is thinking a little bit more consciously about where their food is coming from and how it's grown and the efforts that are made, the risk that is part of that supply chain and that food. And can we take a step to prioritize American grown produce? I'm not saying eliminate imports. I'm not saying anything like that, but we do need to protect, this is a good time for everyone to kind of pay attention to that. We really need to protect the infrastructure that allows us to grow and provide our own food. And that call to action is as simple as requesting America first. There's some programs already established through the USDA for supplying schools where produce is required to first be sourced from the United States. Canada does a really good job with this, and they actually, at retail, require Canadian product first. They prioritize Canadian product before they can outsource. That could make a massive impact both financially and from a supply chain standpoint in the long-term, if we could request, require, solicit that change from a political standpoint.

Vonnie Estes:
Those are really great points. And I certainly see consumers paying a lot more attention now and for the first time really thinking about, "Now that I may not be getting my food, where is it coming from?" I think people are paying a lot more attention. So I really appreciate that point of view of supporting our growers. So with that, I am going to let you get back to work, and I really appreciate your time and your thoughts and your production. And my daughter has asked me once she's grown, but she moved away from home, and she said, "I just realized that not everybody starts every meal with an onion." So I support you.

Shay Myers:
I'm glad you do, and I'm glad that's a tradition in your family. I appreciate you giving me the opportunity to share and to talk about what the industry is facing and what we as Americans are facing. I hope that all of us are mindful of that and that we can make a small change if not a more significant one.

Vonnie Estes:
Great. Thank you so much, Shay.

Shay Myers:
Thank you. I really appreciate it.

Vonnie Estes:
We just talked to Shay Myers, he's a West Coast producer, about the issues that he's facing in the supply chain and how he's solving them. We're so grateful for people like Shay that are still producing our food and getting our food transported at this time. But now we want to hear from a different lens, from someone that doesn't have to be out in the field every day harvesting food, and has the luxury of looking through a longer lens of this situation of what's happening around the supply chain and also looking into the future and what this is going to bring. I have with me Michael Helmstetter, and he's the CEO of TechAccel. And I'm really happy to have you with us today, Michael.

Michael Helmstetter:
It's great to be here, Vonnie. Thanks for having me.

Vonnie Estes:
Great. So if you could talk a little bit, we've got Shay's view of what's happening, literally boots on the ground. If you could talk a little bit about just what you're seeing happening now around supply chain and food supply, that'd be helpful.

Michael Helmstetter:
Sure. I'll maybe make a comment about what Shay's going through and I think everybody can kind of put it in perspective. He's a farmer of a lot of different crops, but one of his major crops is his onions, and restaurants and food service are obviously the major consumer of his onions. Those are, the majority of them are shut down or slowly coming back to life as things open up. But you think about it, we don't do a lot at home with onions. We do cook them with them, but it's not really that sort of staple vegetable that's kind of sitting in our fridge. So that's a perfect example of how a farmer can get hurt because it's really focused on the direct consumer, but they're focused on us getting somewhere and eating those onions in those restaurants and such. So, I feel for him and the impact that he's going through. So I'm seeing kind of two pieces to what's going on today.

There's sort of the social side of things, the food safety side of things and concerns. Then that second piece is the sustainability of the food systems. We were watching the tussle right now as to whether the Tyson plants are going to be closed or open from the poultry side of things. I mean, prior to sort of this push from the administration in Washington, something like 20 plants were being shut down between Tyson and Cargill and Smithfield. I mean, a major number of plants being shut down. The president's pulling the Defense Production Act and trying to get them up and running to continue to kind of maintain that food system side of things. But I don't think the general consumer realizes that when you produce a hog for food or you produce a broiler chicken for food, you cannot maintain them for very long after they're at a stage where you would normally put them into the production pipeline.

Dairy farmers are saying something like four million gallons of milk are being dumped down the drain a day because they're not being consumed. So that's really that sustainability sort of the food system and that balance of wasting food versus getting it into the supply chain and making sure the consumer side of things are there I think is really important. I think it's not just that processor side of things. I mean, you think about the folks that are supplying the grain, the feed to feed those hogs and feed those chickens. And now the orders of those things aren't being placed, it really has that kind of effect downstream. Then I think ultimately, consumers start getting hit with higher prices and empty shelves and those kinds of things that really stress sort of our societal system.

So that's, for me, that's kind of what you're saying is this really push and pull on, say, food. People worried about contaminated food, but also having enough food, the sustainability of the food system to satisfy our expectations because US consumers are not going to not have food. Our country will not be in that situation, but we're very used to having a glut of food and we're not seeing that. I don't think people realize that sort of chain back to Shay and back to farmers and ranchers who are getting grain, etc., and people that are normally storing it and now it's going to waste, realize a lot of that stuff happening behind the scenes.

I do think a lot of really good stories are coming out of this, Vonnie. You see things like Publix down in Southeast, the grocery store chain. They're buying up tons of meat and dairy and donating it to those in need and various charities. Seaboard, our local, one of their major products is pork. They've donated hundreds of thousands of servings of pork that normally would just, in the stage of the environment today, be food waste. And so I think there is that positive of what this country is all about kind of occurring at the same time. But yeah, it's a tough time and it's a shock to our system and it's having an effect on a lot of people. And I don't think we've really seen the true impact of it yet. I think that's still to come.

Michael Helmstetter:
The farmers are constantly working to maintain a resilient food supply chain. I mean, they're doing things all the time to get us clean, good, healthy food, and not so much always in the easiest environment. So yeah, there are a lot of things well before the COVID-19 issue and what we're seeing in food, there are things that were just sort of systemic and have existed for some time and are going to continue to exist in the future. Beyond things like declining wild fisheries and biofuels competing for crops, there are maybe three or four that I think of all the time in our business and the impacts they have. But to me, the most dramatic is climate disasters and associated stress on crops. Agriculture requires weather, climate, water, all those kinds of good things, but we're seeing more extreme weather events, more powerful storms and greater droughts sometimes back to back to back to back.

We saw that in the Midwest last year, where you just had massive rainfall that dumped water on these crops, just destroying acres and acres of crops or delaying plantings. Then months later, that's followed by a massive heat wave and drought. So trying to tackle those kinds of stresses at sort of the farm level is not particularly easy. And again, in the Midwest last year, we really saw the impact of that. And it doesn't just destroy crops. It lowers production volume. You end up with food shortages, prices go up, as you and I have talked before, disrupt supply chains in a significant way. And then you end up with spoilage because of the fact that you've got this chain of events that you often have spoilage in large storage facilities. So I think that natural disaster and that enhancement in it and the frequency increasing in those disasters and that climate is, to me, kind of top of mind of one of those things is behind the scenes.

Another one is biosecurity. Your listeners may not be totally familiar with that, but that's really about, keeping diseases, keeping pathogens, bacteria, funguses, viruses, parasites away from crops, food, people, and all those kinds of things. So again, behind the scenes, biosecurity is a major aspect of a farmer's life. They've got to take measures to vaccinate animals. They've got to produce fresh feed for their animals, dispose of waste properly. We've been pretty lucky as a society that we go to the grocery store and kind of take it for granted that our fruit looks good. It's usually not contaminated. And occasionally we have a contamination event in this country, but we tend to have things that are well grown and protected. Modern tools are used to fight pests, but a slip up, a change in climate; a movement in a certain direction can cause massive disruption. Last year, African swine fever hit China and they lost 50% of their pork herd, of their hogs. And that's 30% of the world's supply and that's a single disease that occurred.

I think right now, one of the reasons to talk about biosecurity is it's exactly what all of us are dealing with at home. The fact that we're doing social isolation, we're washing our hands, we're keeping our six feet, that's biosecurity for us as people. And that's a major challenge down at the farm and the rancher level to make sure that your crops are virus free, to make sure that your animals are disease free. It's just a really sophisticated, ongoing battle that requires innovation and requires costs. And it requires the farmers to really kind of implement that kind of change. So that's a second one that's big.

Two more that are just kind of behind the scenes is vector born diseases. So just like with biosecurity, you've got diseases that are brought in by vectors, like mosquitoes and ticks and fleas and lice and those kinds of things. Again, they have to be protected against. If there is an impact at that ranch or at that farm level, it can be absolutely devastating. And so again, farmers have to be in a situation where they're protecting and that they don't have the budgets to do it. If the innovation isn't there to have the vaccine or have the treatment yet, all those things can add up to real significant issues in the production and supply chain of kind of what we take for granted and the stores.

The last one is sort of the social pressure, the consumer preference side of things, the anti-GMOs, the traceability, I want longer shelf life, I don't want to eat a brown piece of fruit. Keeping pricing logical. So you're trying to do all of those other things I listed earlier and provide this perfect product at the right price point for society because society is growing increasingly worried about this whole food security.

There's almost a food insecurity these days that people want to know the traceability of "Where did this come from? I want to see how it made its way through the system so I know pesticides weren't on it, or I know it wasn't touched a certain way, or I know it's not a genetically modified crop." So they have that side of things and then they have that sort of expectation of a perfect product on the shelf when they go to the grocery store and that nutritious food and all the things they're looking for. So that would be four that really they were there before COVID-19, they're going to be there after COVID-19 and the financial challenges of COVID-19 on farmers are just going to put more stress on their ability to be able to mitigate these kinds of things and be able to satisfy consumers at the same time.

Vonnie Estes:
I think all those things are really true. I think COVID-19 has really exacerbated a lot of these issues and, like you said, really put the pressure on. What I'm trying to do with this podcast and there's always plenty of problems to talk about, but is to really shine a light on what are the issues that producers are facing, which we've done. Then look at what are some of the solutions that are coming that we can kind of have either a silver lining, maybe we found some solutions that we wouldn't have looked for because of COVID-19, but that there are a lot of really smart people out there continuing to look for solutions to some of these issues. And I think you're, with TechAccel, in a great position to see a lot of the solutions that are starting to come along. And so I'd love to hear your thoughts on that.

Michael Helmstetter:
Sure. Yes. As you said, that's what TechAccel is all about is really kind of identifying that next generation of innovation that can really have a positive impact on all of these food, crop, animal, and even companion animal challenges and find those early. So we're willing to take really high risk on very early, discovery-based technology and work at getting those to the marketplace to consumers as fast as we can. So we do, Vonnie, as you said, we see thousands of technologies every year. We have what we refer to as a very significant deal flow pipeline and really see some innovative and creative things that we feel and we invest in are going to be able to address some of these kinds of challenges and such.

So here are some of the areas to discuss. So I talked about this sort of perfect product in the grocery store, and I think one of the most significant emerging areas right now is sort of that food waste reduction side of things and trying to ensure that we have a longer shelf life associated with fruit. We have much less waste that occurs. And so there's a lot of companies that are sort of emerging with technologies that are coatings or an additive to a shipping box to be able to really drastically slow ripening and spoilage in foods and kind of have that increased lifespan on the shelf. You know, one example company is Apeel. They've actually come up with an edible coating that's a bunch of natural materials that they've figured out how to kind of put this powder over a vegetable or crop and be able to provide that barrier that really, their numbers are, it doubles the lifespan without refrigeration, which is obviously really significant.

There's another company similar to Apeel called Mori, where they actually are using silk-based coatings, so natural silk. And again, they look at water evaporation, they look at cell respiration, all these things that occur within the crops that they're dealing with. Their focus is on really slowing ripening and, the spoilage of those products. So there's a number of companies that are really trying to figure out that post-harvest side of things, that when we get these apples, when we get these pears, how do we maintain them in an environment when they end up on the shelf, they look like what the consumer expects, but to be able to do that at a longer period of time, to have more shelf life where they're not becoming waste in the grocery store. So that's a big area we're focused on.

I think a lot of great companies are out there and there's, dozens that I could talk about. Another one that is probably our greatest focus of sort of effort is in crop breeding and genetics. So developing crops that will be resistant or resilient to the kind of things that I talked about earlier, and our focus is on not genetically modified organisms, not that we're opposed to investing in those because I think they're important, but we really focus on what's called gene editing. I know that's something you're extremely familiar with in your background and some of the discoveries you've had in that area, where you're not dealing with a genetically modified crop, but you're starting to do just sort of fundamental gene editing within that crop species itself. And so we've invested in a number of companies.

One of them is called Epicrop. They have what's called an epigenetics platform. It's instead of sort of going in and dealing with genes inside the crop, you're actually changing the way they express themselves, how the genes sort of talk to what they want to do. And so we're working with them on canola, on berries. They're very focused on soy and tomatoes, and it's just another way to produce a more resilient crop, higher crop amounts. So per sort of unit seed, you get more biomass on the backend. So there are more crops that are there and more value that's there and doing it in a non-GMO short of way.

Another company in California, that's Sound Agriculture, that's relatively new, that we recently invested in, and they're focused in that epigenetics area as well. And so we're working with them on that, but they've also got some other sort of sprayable in the field crops on seeds and others that give real protection to those seeds and also enhance sort of that germination life of the plant.

So there are a number of companies, Benson Hills, another one we're invested in that's very focused on corn and moving in some other areas. So lots of companies that are trying to figure out, these farmers are dealing with drought, these farmers are dealing with viruses, they're dealing with all these other things. How can we give them seeds for their crops that when those plants mature, they're resistant to that drought, they're resistant to the excess water, they're resistant to the viruses? All of those pieces that can be there just by creating a better and stronger seed.

A third area I think is really important is this sort of indoor farming. Because again, I'm not trying to say that's great in terms of directly competing with the natural traditional farmer out on the field, but you've just got a lot that's going on indoor that just really allows you to use less water, not use pesticides. It's not genetically modified. You have really superior food safety because you're in this controlled environment. Less environmental impact because again, you have this internal indoor controlled environment. So lot of people probably that are listening to this podcast are familiar with Plenty, which is one of the largest, if not the largest indoor vertical farm, or there's AeroFarms is another big one that's out there that they have gone to not only these controlled indoor environments, but they have gone to robotics where they can have robots that go around and get evaluations of good plants, bad plants, make sure everything's going the way it's supposed to be going. So it's very automated as well. And that can tend to kind of drive the backend price of sort of this perfect indoor crop down to something that can be accepted by the consumers. So those are probably three areas where we're thinking about things.

Our biggest focus really is on that plant trade improvement, that ability to produce more resilient and robust plants that can deal with some of these things that just aren't going to go away. The diseases will not go away. The climate change challenges and the disasters are not going to go away. So the only real outcome of that is that you've got to develop some crops that can be more tolerant and some animals that can be more tolerant to some of these diseases as well.

Vonnie Estes:
Great. Thanks, Michael. That's a great overview of many of the topic areas that I love and I'm interested in, and I think are going to really bring some great solutions to producers. If we can just get out of this COVID-19 situation and talk about other technologies, I'll be really excited, but I want to thank you for your time today and your insights. I'm excited to continue to look forward in the breeding area and the indoor ag and a lot of the post-harvest work that you talked about. Those are all areas that we at PMA continued to look at and that are really going to be important to our growers pulling out of this. So again, thank you very much for your time. And I look forward to speaking with you again.

Michael Helmstetter:
Great Vonnie, thanks for having me and for everybody out there listening to this, please stay safe and well and healthy and be smart about this disease as we march our way through. Good talking with you.

Vonnie Estes:
That's it for this episode of PMA Tech. Thanks for allowing us to serve as your guide to the new world of produce and technology. Be sure to check out all of our episodes along with other important content pma.com. Untill then, stay safe and we'll see you next time.