March 3, 2017

Land O’Lakes has launched a challenge for tech innovators to develop a complete drone solution — including both hardware and software — for farmers. Land O’Lakes, which has partnered with HeroX and the University of Minnesota for the challenge, will award $150,000 across a single grand prize and a pair of runners-up who meet the coop’s requirements.

The Arden Hills, Minn.-based coop, whose member reach extends to 300,000 farmers and ranchers across the United States, has issued the challenge in an attempt to advance the ag-tech sector beginning with its own member farmers, who will be the first to gain access to the drones and who until now have been unable to earn an ROI from drones in the field.

Mike Macrie, chief information officer at Land O’Lakes, took some time to discuss the details of the contest with GAI News.

The Challenge

Land O’Lakes is already in the business of collecting data for farmers, and the drone challenge is an extension of that process. For instance, the company’s WinField United business makes the R7 Tool that for the past four years has leveraged satellite imagery for farmers. Land O’Lakes purchases and downloads data on a daily basis from a number of constellations, and that data is then provided to farmers in real time.

“They get alerts to problems on the field. It’s a powerful tool,” said Macrie.

The problem that Land O’Lakes has been facing is a dependency on satellites that are sometimes blocked by clouds, which in part served as the inspiration for the drone challenge. The other component had more to do with a market segment that lags its potential, something that Macrie observed firsthand through his frequent visits to Silicon Valley.

“One area we felt was not making great traction in the agriculture business was drones. We think there is a bunch of potential and tons of applications to benefit American farmers once drones mature. We already invest in imagery, and believe there is a lot of potential when combining that with drones, which are a portion of the future of agriculture. We are launching the challenge to encourage the drone marketplace to develop something that the farmer can benefit from,” said Macrie.

While drones have made advancements in other industries they have not been hitting the mark in agriculture, evidenced by a lack of returns that farmers have been able to generate from them.

“The drones require handholding and a lot of effort to the point where they’re fun to fly but not great working tools for farmers’ businesses. We want to change that and make drones a reliable part of their operations and design them in a way that is integral to the way they farm,” said Macrie.

Land O’Lakes is expecting a complete drone solution, but they are willing to carry the award over into the following year if necessary.

“Our intention is to pay out the award, but we’re not sure if someone will get there in one year. It may take a couple of years to meet our requirements. At the end of the day we’re looking for a viable solution in the marketplace and something we can bring to our coop members and farmers,” said Macrie.

Ag-Tech Capital

Land O’Lakes’ drone challenge was launched amid a downturn in ag-tech funding, evidenced by a nearly 70 percent drop in drone technology investments in 2016, according to AgFunder. Macrie is not deterred. Instead, he said, he is very comfortable with the levels of funding, which has led to a “filtering out of the noise and startups that don’t have much of a future” so the industry can focus on the big opportunities.

Macrie pointed to the long-term investment horizon that agriculture commands coupled with weak commodity prices as culprits for the downturn in funding. “Venture capital funds have no tolerance for the length of time that returns take in agriculture,” said Macrie, adding that some “investors are not familiar with agriculture commodity price volatility, which chased certain outfits away from investing.”

Land O’Lakes is doing its part to fill that gap and has capital earmarked for innovation that is directed in one of two ways each year: either toward what the coop considers game-changing business opportunities, or toward innovative ideas. “This falls under the latter category. We are trying this and we will see what comes back, and if we can move the entire industry forward,” said Macrie, adding that Land O’Lakes is not asking to own the intellectual property.

“That remains with them, and that is a unique aspect of this challenge. We believe that to have a healthy ag-tech and drone-based ag industry that it’s going to happen by selling to more people than just [our network] to make it viable,” said Macrie.

Submissions  

The competition is open to anyone, whether it’s a multi-billion dollar defense company, which incidentally has already expressed an interest in the contest, or an aspiring entrepreneur tinkering in their backyard. “We have had over 58 innovators show interest to be part of it. We’re excited to see what happens. We can’t guess who is going to win this, but it’s literally open to everyone,” he said, adding that college student teams are among the many different groups and individuals who are interested and likely to participate.

The deadline for the drone challenge is Aug. 1, and the application can be accessed here.

-Gerelyn Terzo

Gerelyn is a regular contributor to GAI News. She has been writing about institutional investing and asset management for the majority of her career and has developed a focus on agriculture given the global scale of the industry’s relevance and importance.