IFPA Takes on Tech

Vonnie Estes, PMA:
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. vice president of technology for 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 in developing and adopting new solutions to industry problems. Thanks for joining us and for allowing us to serve as your guide to the new world of produce and technology. My goal of the podcast is to outline a problem in the produce industry and then discuss several possible solutions that can be deployed today.

Vonnie Estes, PMA:
Stout industrial Technology collaborates with customers to build and launch industrial technology solutions that are designed to last. The smart cultivator combines a proprietary agriculturally proven mechanical platform with Stout true vision technology to eliminate weeds and cultivate ground in a single pass visit stoutagtech.com that's, S-T-O-U-T-A-G-T-E-C-H.com to learn more. Hello today, we are changing things up and I'm the one on the other side of the microphone. This episode is a conversation I had with the modern acre recently. Listeners of this podcast will remember my interview with Tyler and Tim Nuss on regenerative ag episode 10 on December 8th.

Vonnie Estes, PMA:
I was also a guest on one of their early podcasts. I love talking to Tim and Tyler about their podcast, their family farm, and growing up in the produce industry. Besides being involved with their family farm Tim works for Apeel, a PMA member focused on reducing food waste and featured in episode six. And Tyler works for Rivian an electric truck and SUV company in Southern California. You will hear some reference to me seeing an electric SUV in the wild at the end of the show. Make sure you check out the modern acre. They have nearly 170 episodes and cover a lot of topics around ag tech and they were an inspiration for me to start PMA takes on tech. Let's jump into the conversation with Tim and Tyler.

Tyler Nuss:
Vonnie is a great friend of the show and it was great to have her back on. We talk a ton of different areas that we wanted to just dive in and get her perspective on. She's really an expert in the space. And so, we talked about her starting her podcast. We talk about the million- or billion-dollar question that is ag tech exits. And so she really gives an overview of what specs and why they're getting so popular. And they're so hot right now in the space and the companies that are choosing to exit and IPO via SPAC.

Tyler Nuss:
We also get into carbon markets and just the emphasis on carbon with the regenerative agriculture movement. So, we hit on all the fun stuff today guys. And Vonnie, I think, brings a ton of great insights into it. And we finished this show, talking a little bit about her seeing a Rivian in the wild. So, it's pretty fun as well, but without further ado, let's jump in. Bonnie. It's great to have you back on the podcast. We've built a relationship over the years we've been on your podcast. Want to start there, since we talked to you last on our podcasts, you've started your own. So, want to just talk about how that's been for you, what it was like starting, starting a podcast for you and what you've learned so far.

Vonnie Estes, PMA:
Thanks so much for having me on. You guys were an inspiration to me. And I think we started the podcast last June and it's called PMA takes on tech. And my idea was, especially during COVID, since I couldn't go out and talk to members or travel that I would start, this was a way to continue conversations that I wanted to keep having during COVID. And so we started last June and it was... I was a consumer of podcasts. Your podcast was the first one I listened to in the ag space. And I thought, well, I'll just give this a shot. And we had no idea if it was going to work or not like who is going to listen to this and all the learnings of buying the right microphone and all the things that come with it. But we just dropped today our 20th episode.

Vonnie Estes, PMA:
So we've done 20 and we are in spitting distance of a hundred thousand listeners, which is really exciting. It's quite amazing that we've gotten that many people to listen to it. And the format that I use is usually bring in someone to talk about a problem or a region overall. And then I bring in two or three companies to talk about solutions. And I've recently been doing a lot of work in other regions outside of North America, which has been fun for me since I can't travel, but it's really, I've learned things I hadn't expected and, and looking at these different regions. But yeah, it's really been a great thing to work on and I've really enjoyed it. And just love that I have a following and thanks you guys for being my inspiration.

Tim Nuss:
That's been really fun watching you kick that off and listening. It's a big milestone to hit 20 episodes. It's a lot of work as I'm sure you're realizing, but it's cool to see you going down that path. And I think a really opportune time to get into this space with COVID and the lack of travel in a way to educate yourself, which is something that Tyler and I find super rewarding with the podcast is just talking to really smart people and learning about what's going on in the space.

Vonnie Estes, PMA:
Yeah, definitely. And I think working, I'm right now working on a Singapore episode and Israel episode and a Chile episode. And at this point really talking about how these ecosystems are developing and these other areas. And I wouldn't have asked the question that way. I've done also one in Brazil and Australia, but it's just how I'm thinking about during COVID and doing the podcasts of framing the question of like, what are the ecosystems in these different regions? How are these companies formed? How do they think about going global? In Singapore, if you develop a company and you get investment, you better have your eye globally because it's a pretty small country. So it's been really interesting just to hear about new technologies and how they're being started in other places.

Tim Nuss:
Yeah. I think that's super important. To keep the global lens not just focus solely on us companies. I think there's a lot of innovation like you're saying, out of Singapore where it's really centralized a lot of ag tech popping up there in the middle east and getting the holistic lens on what's happening. Well, Vonnie, we'd like to talk about something that's top of mind for us. We saw in the news recently that PMA and the United Fresh announced a merger. Can you give us any insights into the merger?

Vonnie Estes, PMA:
Yeah, sure. So I'm sure most of your produce industry listeners are aware of the PMA and United Fresh coming together to form one company. And that will start next year, January 1st, next year. And so both organizations will continue to run as they've been running this year. But we're really excited about the groups coming together. And many people have watched this over the years and thought this would be a good idea. I'm forming this new global trade association to serve the industry with the strengths of both organizations. So there's a transition team in place to make it all happen. So stay tuned and see how this all unfolds. And both organizations will continue to have their events that they planned for this year. And the new organization will form at the beginning of next year.

Tyler Nuss:
Awesome. No, really appreciate that update and definitely really exciting, I think, for the industry. And it'll be awesome to follow just that transition. It's definitely a big undertaking, but I'm sure it will be a lot of exciting stuff in the future. So we'll stay tuned for that. Vonnie want to dive into a few different topics that we've chatted about on the podcast. Want to get your take, obviously being in the produce industry and focusing on ag tech. One thing that obviously we talked a lot about in the podcast is regenerative agriculture and the focus on soil health and how that relates to sequestering carbon. So I know there's been just a ton of discussion on podcasts on big news publications. There's a lot of headlines surrounding carbon markets and especially with the new administration, there's been a lot of talks on about that. So we're just left to park here for a few minutes and talk about your thoughts about carbon markets and the emphasis and focus on regenerative ag.

Vonnie Estes, PMA:
Yeah, it's been really amazing. I mean, throughout my career, there's been a couple of big ideas or big things that have happened that have turned everybody and focus everybody's attention. And one of those early on in my career was genetic modification. And I got very involved in that at an early stage. Another one was biofuels and the biofuels industry, and there's a lot of learnings from that in this case, I think. And then I've worked more recently on gene editing and some of those technologies. And so this is another one where suddenly everybody's talking about it. And I think part of it is because of the change in administration and suddenly we're paying a lot more attention to climate and climate change. And then that's brought into looking at how do we sequester more carbon. So I think from an overview, there's just a lot of different forces.

Vonnie Estes, PMA:
We've got companies, we've got the government paying attention to it and starting to put money into it. We've got companies the major food and ag companies like Cargill and General Mills and some of the other big companies. They're saying we really want to talk about carbon friendly practices and regenerative ag. And then we've got consumers now saying, "We're really interested in you showing us that the way that you're growing and that this is good for the environment and that's the kind of food I want to eat." So I think what makes this moment different is that we've got all of those different interests of people saying, "Yes, we want this and we want it now." And then the rest of the market and this whole system is floundering saying, "Well, how do we deliver this? This is really complicated. And we're not even sure how to measure carbon in the soil. And over what period of time?"

Vonnie Estes, PMA:
And so I think it's really fascinating to look at how do we build the system and not. How do we just get a bunch of tools and stack the tools together, but how do we develop the system where producers don't take all the risks producers actually get paid and get rewarded and get supported for sequestering carbon. And that there are tools that are easy to use and that are verifiable. And that there's a system to sell the carbon credits and that's set up and there's a system to buy the carbon credits in that set up. And so that whole system needs to be put into place. And right now it's just a bunch of moving pieces that I think is confusing a lot of people.

Tim Nuss:
Yeah. It's a super interesting space. It still feels very early. Almost like the wild west where you read about these deals. Where it's hundreds of thousands of dollars for carbon credits. And I think the industry is going to mature here quite a bit. Tyler and I get asked about it quite a bit on the farm. Are we into carbon markets? And we've poked around a little bit, but we still haven't found anything for our particular size and scope of our operation that makes sense. We've talked to a few and in a lot of cases, just the cost to process the transaction is more than the value of the credit itself. So for us personally, I think we're viewing it as a nice to have. We're not building into our 2021 budget or next year's budget. But I think we're hoping that in the future that becomes a part and a potential revenue stream to supplement what we're doing with our actual crop revenue.

Vonnie Estes, PMA:
Are you having people approach you saying that they want to buy credits for you or they want to help you set up a way to measure? Are they coming to you and starting to offering you different systems?

Tim Nuss:
Not yet. We've reached out to a couple companies that you see that are popping up in this space us reaching out to them. We haven't really put ourselves out there as far as opening ourselves up to it. I'm not sure if there's a marketplace that exists like that. But I think that could be interesting where farmers that are interested and you can almost start collecting a database of who's interested, who's doing what to understand the addressable market.

Vonnie Estes, PMA:
Oh, that's a great idea. It's a good business motto.

Tyler Nuss:
Hey, it's for sale guys. Anyone listening, hey, if you want to, if you want to approach us we'll figure out a deal. Don't worry.

Vonnie Estes, PMA:
Yeah. I think especially in the produce industry is, like you all are, people aren't really approaching us as much yet as they are corn and soy and then the more broad acre crops. But when you look at it, the crops that you guys grow, there's a lot of carbon in those roots. And so I think really thinking about the produce industry and how we can make this be a positive for people doing what they're already doing or making minor changes. And so I think it'll be really interesting to see how it plays out.

Vonnie Estes, PMA:
But I really see it as, they'll start being some really good pilot programs. And I think putting some government money into is good and some incentives is good and the government has to be involved to get this nascent industry off the ground a little bit but not set it up with a bunch of subsidies and not set it up with a bunch of unrealistic expectations and not have the government pick winners and losers, but just enable the market. But I think it's going to be at least five years before we really have something that that's working throughout the whole system.

Tyler Nuss:
Yeah. I think that's a really good point. One thing I think is important is just the technology. Right? I mean, I think most of these programs or companies are using the comment system, which has a lot of flaws. It's really clunky and it's based on a lot of assumptions. Right? So there's got to be a balance. And I think it's going to happen over the next few years, like you said, of the technology to actually measure this stuff, because I think that'll be a really critical piece of it.

Vonnie Estes, PMA:
Yeah. How do you measure it? How do you verify it? How long? How permanent does it need to be? I think there's a lot of questions there that we just... And then making sure that we're measuring the right thing and what we're doing is really good for the soil and good for the environment. I think you started off this piece, talking about regenerative ag and I think that's such an important part of it is... Yeah. Let's not all focus so much on carbon in the soil, but let's make sure that we're doing practices that actually are better for the soil better for the land and better for the food that we're producing.

Tyler Nuss:
Absolutely. Yeah, definitely really interesting space. We'll be obviously following very closely with what happens in carbon markets and regenerative. But Vonnie want to want to switch gears here and talk about ag tech exits and introductions to the market. So I think this has been a really common theme or question within the ag tech industry over the past five, 10 plus years of, what our exits going to look like? And we've seen a few recent companies going public via specs, as well as a few other exits in the space. So just want to get your perspective on what you're seeing the industry is trending towards right now.

Vonnie Estes, PMA:
Yeah. This is so exciting. I'm so excited about this. It's like exits, we're really having exits. And I remember when I first started working and what we started calling ag tech six, eight years ago. And I got asked to speak on a number of panels where people were saying, "Okay, is ag tech, the new clean tech, and is it going to completely fail?" And money was really nervous about, do we really want to invest in this and is this real? And then in 2017 we had blue river and granular we're two pretty good exits. Pretty positive for the companies. That's 2017. And I don't know if that there's been anything big since then. We still hold on whenever anyone says, "Well, what are the... Oh, there's granular and blue river." But that was 2017.

Vonnie Estes, PMA:
So I'm so excited this year that there's so much going on and SPACs has been, they've been amazing. And I'll just briefly, I'm sure most people know what they are, but there's special purpose acquisition companies. And they're created to raise money that will be used to take a private company public through a merger at a future date. So it's a new way of raising money and it's a little less risky for the company. And I know a number of companies have gone through this. They say, "Okay, if I do another raise, if I do my series D and I raise $400 million, what's my valuation going to be? Or do I do a SPAC and go public and get a much better valuation.

Vonnie Estes, PMA:
And so I think that's why a number of companies, both in our sector and other sectors are saying, "This is amazing. Let's go to market this way because it makes more sense. In my house my husband works for 23andMe and they just announced that they're doing a SPAC. So we're pretty excited about that as well. So it's happening. And it really brings in a number of different people that invest and a different way to go to market than has happened in the past. So there's been 306 SPACs that have gone public in all sectors this calendar year. And sometimes this is a better way of going, an ag may be part of this because the investors in SPACs are looking for more high growth and significant more long-term potential. And so that's pretty exciting. So it's a little background on SPACs.

Vonnie Estes, PMA:
And so app harvest was the first one in our sector that did a SPAC and they got $435 million in unrestricted cash from that. And so what they're going to do with that, they say, is just build more farms and it's a great infusion of cash for them to really be able to expand. And then the second one that we've seen is AeroFarms and their public offering, they're going to be valued at $1.2 billion and their IPO will close it the quarter two of this year. And that will leave the merged entity with over $300 million of unrestricted cash at close. And so AeroFarms again, will have this cash that they can use to expand, which is super cool. So those are the two SPACs that have happened. And then UpHarvest turned around and bought a Root AI. And so that's a great exit for the investors that people in Root AI. So that's another example of what's happening with the maturation of the market.

Vonnie Estes, PMA:
Farmer's Edge went public on the Canadian stock exchange. And so that's another great IPO of a company going forward. There's been some smaller companies that have come together, mergers like Flora Stat, and there's been some other exits of those types. So it really is this interesting maturation of the market. That's so exciting to watch, and it will bring more money to the market as investors see that, yes, we can invest in this space and we can get out and we can make money. I think we'll see more companies going public. This isn't based on inside information at all, but I wouldn't be surprised to see Plenty go public and Impossible foods has already said that they're looking at going public. So I think it's a great time for the industry. I'm super excited about it.

Tim Nuss:
Yeah. It's a super fun time in this space. It's like the saying, "Everything happens slowly then all at once." And it seems like everything's happening all at once in Q1 of 2021.

Vonnie Estes, PMA:
Yeah. While we're all sitting around staring at our computer screens. It's pretty amazing.

Tim Nuss:
It's been pretty cool. Well, the companies that you mentioned, Vonnie, UpHarvest, AeroFarms, Plenty, that you mentioned, all the common theme is that they're indoor farming companies. Anything that you think is unique about indoor farming and why now that all this money is being raised?

Vonnie Estes, PMA:
Yeah. I think it is pretty exciting that this has really caught hold. Especially at a time when it's still hard to show, given some of the high energy costs that we're going to make a lot of money in the U S with these types of farms. But I think they're driving costs down. A lot of the costs are going down with the inputs for indoor. And I think there's a number of things. I think the whole sustainability story around indoor that you're using less, you have to use a lot less crop protection products. They're using a lot less water. The footprint is a lot smaller. So I think that whole story of around sustainability for that sector, and also not having to transport product as far, because you can locate closer to markets. So I think that story is playing really well of investors and has really grabbed people's attention.

Vonnie Estes, PMA:
I think for the PMA members that are in Salinas and then other areas where we're growing a lot of leafy greens outside, I think that's still is a really important part of the market. And I think what the indoor ag growers are doing or are growing the market. They're making the pie bigger. So it's not taking anything away from those that are growing outside. And I also think a lot of the technology that's being developed indoor because the cycle times are fast. And because we're putting these really brilliant computer scientists in there to study how plants grow. I think there's going to be a lot of learnings that we're going to get. And a lot of breeding we're going to be able to do, that we're going to be able to apply to outside as well.

Tyler Nuss:
Yeah. That's really interesting. Taking those learnings where the money's invested there and bringing it outside, I think is really interesting prospects. Yeah. And I think in general, I'm super curious to see how the indoor farming, vertical farming movement compares to the regenerative ag movement and focusing on the soil. Right? And so I think it's going to be to two parallel movements to keep an eye on, for sure.

Vonnie Estes, PMA:
Yeah. I think they can certainly co-exist and people can love them both.

Tyler Nuss:
Yeah. And I think that's what Tim and I have long discussed. I think there's different use cases and I think there's not necessarily a right answer. I think there's there's room for innovation and different techniques and approaches within the space. And it's going to take a lot of work across the industry to push each other. Right? And where maybe indoor falls in some areas maybe regenerative falls short in other areas. Right? So I think it's going to be important to have that competition and innovation in these different approaches.

Vonnie Estes, PMA:
Yeah. And it'll be interesting to see what happens with Indoor beyond leafy greens. I know Plenty has been talking about their work they're doing with Driscolls and developing strawberries and other UpHarvest is greenhouse not vertical but they're doing mostly tomatoes and other crops. And so it'll be interesting to see how that grows and what other crops we can get into. And I think also overseas in areas that it may be harder to grow outside. How is that going to take off? As I mentioned, I've been talking to people in Singapore this week and it's a real push in Singapore. They import 90% of their food. And with the supply chains disruptions this year, they started thinking how do we really push forward and getting more food produced in Singapore if there's a larger supply chain disruption. And so they have a plan 30 by 30, which has produced 30% of the food that they eat by 2030. And so I think looking at other areas where vertical farms may be a better solution for lots of different reasons. Totally

Tim Nuss:
Well, Vonnie, as we start to wrap up here, what companies or trends are you following right now that you're most excited about?

Vonnie Estes, PMA:
So I think this goes with my trend when I was talking about exits and maturation of the industry. And what I like seeing is a lot of the companies that are starting to support these bigger trends. And I sit on this board of a group it's called IN2 and it's, NREL the national renewable energy lab in Colorado and the Danforth center in St. Louis and Wells Fargo came together and work with really early stage companies to just help support them. Both do the science, either at NREL or at the Danforth center and also with some funding to help them get going. And so we just finished up a program with them where it was all about indoor ag technology. So I think they started, I don't know how many applications they got, but they narrowed it down to 33.

Vonnie Estes, PMA:
And then we had to narrow, we the people on the board had to narrow it down to five. And it's typical pitch day where you sit there and listen to 10 pitches. But it was really fascinating to see all these different companies that are looking at different kinds of lighting and different kinds of water and systems and different kinds of breeding. And so I'm really seeing this maturation that we're starting to have companies develop and come up that are supporting the big trends like indoor ag. I think the, I'm always going to talk about genetics. But I think what's happening in breeding is really exciting when you've got a lot of companies like Pairwise and Vincent Hill and companies like this that are looking at using new breeding techniques and supporting the industry with new germplasm and new types of traits.

Vonnie Estes, PMA:
And I talked a startup company yesterday, which is coming out of the indie bio accelerator, and they've got a really interesting technology that's on the very front end of that to help people figure out genotype to phenotype. So do that very first step faster. And so two young guys that are looking at that differently. And so I love that we're starting to see just these supporting types of industries. One other one is around, I know you guys have talked a lot about around robotics and augmentation. And I think a number of the half step solutions, like burrow and some of those which are, get these little robots out in the field now. Get them working now. And then we'll get into the big, gigantic ones that are a little harder. But I love seeing that we're really getting things out that are being used.

Tyler Nuss:
That overview. And I think you're spot on. It's a lot of the infrastructure, the supporting spaces that I think is going to be where a lot of value is created. And hopefully a much of that value is going to the farmer. But I love that overview. Vonnie, this has been a ton of fun. We really appreciate your insight. You're always a wealth of knowledge. As we finish up I just want to ask, what was it like to see a Rivian in the wild? It sounds like you saw Rivian doing some on-street tests.

Vonnie Estes, PMA:
This was so cool. So I was walking down the dog park with my two dogs and I saw it and I was like, "Oh my gosh that's so cool. What is that?" And then I went up and I saw what it was, and it was the paint job was amazing. The whole... It was just amazing. But there was no one around. Yeah. And so I was just standing around and then I was walking back from the dog park and there was a guy and his dog and there's four people standing around. And so I let my dogs drift over so I could start the conversation.

Tyler Nuss:
Yeah. Very casual.

Vonnie Estes, PMA:
Very casual. And then like, "Those aren't even out yet. How do you even have this vehicle?" And so he was opening the door and show me the inside of it. And it was just-

Tyler Nuss:
Oh, that's awesome.

Vonnie Estes, PMA:
Yeah. It was so cool. And he didn't tell me the name of the company, I'm sure you know. But they said they designed the software and you're in Palo Alto. And so it was just this really amazing Menlo park moment where like the dogs were talking to each other and I'm looking at this car that isn't even really out on the street in many places yet. So I was psyched.

Tyler Nuss:
That's pretty awesome. I have not seen one in the wild yet. One of the test vehicles. So yeah, we're getting super close to launch them to the public. Definitely really exciting time for, for us as a company this year is going to be quite the adventure.

Vonnie Estes, PMA:
Yeah. Good luck with that. It was... I felt privileged. It's only because, well, they were asking me like how I knew about it. They're like, "How do you know so much? Because I was asking them about the customer service were you were saying that every vehicle goes out is going to have their own customer service person. And so I just knew way too much. How do you know so much? And so I mentioned you and it was just a very exciting moment. So yeah.

Tyler Nuss:
That's awesome. Well, Vonnie, thank you so much for the time. We really appreciate it. Thanks for being on.

Vonnie Estes, PMA:
Yeah. Great to be here.

Tim Nuss:
So Tye, what do you think?

Tyler Nuss:
We got to talk about all the fun stuff today. So that was really fun. I loved Vonnie's take. One thing I learned was, I've had a negative connotation towards SPAC stem. The connotation I have is, it's for companies that maybe aren't prepared to go the traditional IPO route. And so to get her perspective on actually a lot of the advantages of it, even from the company's perspective and the employee's perspective I think was, was really important. And I think they could fill a huge need within the industry. Especially in ag tech where historically it has been hard to go the path of IPO. So I think there's probably a lot of really strong companies that SPACs may be a fit for. But time will tell about if this whole spec model is really here to stay or if we're going to see a bubble.

Tim Nuss:
Yeah. I had a pretty similar takeaway. I thought that was an interesting perspective looking at it from, from both sides. And I think with the Coinbase IPO, that was a direct listing. I think there's a lot of nuance in how companies go public. And a lot of implications for existing shareholders, stockholders investors on what that means in the route they use to go public. So I think we'll probably see more of these creative ways to go public in the future.

Tyler Nuss:
We'll hope you guys enjoyed that. That was a lot of fun to just hit on some of our favorite hot button issues right now, carbon markets, regenerative ag, indoor ag. And so that was a lot of fun with Vonnie.

Vonnie Estes, PMA:
What a fun conversation. I hope that was interesting for my listeners to hear some of my background and thoughts on current hot topics. Please let me know if there are other topics you would like me to touch on in future episodes. I'm going to continue doing regional episodes. I have part two ready on Israel and I'm setting up focus episodes on Chile and Mexico. I'm also planning an episode on Floral and then of course taking my turn, talking about carbon. You can reach me at vestesatpma.com with any additional ideas. 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 our episodes at pma.com and wherever you get your podcasts. Please subscribe. And I would love to get any comments or suggestions of what you might want me to take on for now. Stay safe. Eat your fruits and vegetables, and we will see you next time.