President Donald Trump’s get-tough attitude on immigration is spurring a surge of high-tech investment in America’s heartland, where farmers are scrambling for new ways of coping with labor shortages and slumping profits.
Finding people for the sometimes back-breaking tasks of planting and harvesting crops has become more and more difficult in the U.S., where the industry has relied on cheap immigrant labor for generations. Since taking office in January, Trump has compounded the problem with actions to limit foreign workers. But that’s also encouraged some investors to bet that growers will increasingly need new tools to cut costs and boost productivity.
In the first quarter of 2017, a surge of cash has poured into agricultural technology companies, including some big-time investors such as the Bill and Melinda Gates Foundation and Sam Altman’s Y Combinator. Startups received $200 million through 29 deals, the most of any quarter since researcher CB Insights began tracking the data in 2012. Other recent backers include venture capitalist and Sun Microsystems Inc. Founder Vinod Khosla and Alexandria Real Estate Equities Inc. Chief Executive Officer Joel Marcus.
“With the new administration and the emphasis on deportation and immigration, that has really heightened things,” David Slaughter, a professor of biological and agricultural engineering at the University of California in Davis, said in a telephone interview.
Farming Technology
Technology isn’t new to agriculture. Since John Deere invented the steel plow in the early 1800s, farming has embraced new tools from tractors that use global positioning systems to genetically modified seeds. But even though much of the $400 billion U.S. farm economy is mechanized, fresh produce and dairy remain heavily dependent on human labor. Much of that comes from immigrants, both documented and unauthorized.
Even before Trump arrived, worker shortages were intensifying because former President Barack Obama had stepped up deportations. There’s also been a decline in arrivals from Mexico, traditionally the main source of migrant workers. More than half of U.S. farm workers are undocumented, according to the American Farm Bureau Federation. The U.S. Department of Agriculture estimated 2.6 million jobs were on domestic farms in 2015.
As labor supplies tighten, American farmers are increasingly under financial stress because of low crop prices and global surpluses. The USDA estimates farm income will drop in 2017 for a fourth consecutive year, the first time that’s happened since the 1970s. The Bloomberg Agriculture Subindex has dropped 33 percent in the past four years.
Meanwhile, farmers are trying to figure out how they will provide enough food to feed the planet as populations grow over the next few decades. Harnessing data is still one of the biggest challenges to boosting crop yields, Sam Eathington, chief scientist at Monsanto Co.’s Climate Corp. unit, said in a March interview at one of the company’s research labs in Woodland, California.
The United Nations estimates that the world’s population is set to expand 35 percent by 2050 to about 10 billion people. Climate change has left arable land subject to extreme weather events like drought that place an emphasis on water, chemical and fuel use.