Ex-VC Eyes China for Big Push in Ag-Tech

A lot needs to be done

The shortcomings that need to be overcome are formidable:

• Average farm size for 98 percent of rural China is 2 acres! A typical US farm of 400–500 acres is equivalent to the total farmland for a 200-household village. The smaller farm holdings and lack of sufficient rural finance mean that investment in large scale agriculture technology is not economically viable.
• In China, “compounding factors of economics, prestige, and culture have seen a brain drain from rural regions to cities. The farming population is not digitally savvy and finds navigating new technology and farming techniques difficult.”
• The Internet has only a 38 percent penetration rate in rural China.
• Advanced digital technology is hard to adopt with such weak foundations. China does have a “Digital Agriculture and Rural Area Development Plan 2019 to 2025,” but is still far off from shoring up the overall a weak foundation.
• The population of agricultural producers in China is 75 times larger than the United States, but China has less than half the arable land available for farming.

Li writes: “Agriculture is not a magnet for talent. People usually work to escape farming and not return. In China, compounding factors of economics, prestige, and culture have seen a brain drain from rural regions to cities.”

China once had 700 million farmers (twice the population of the U.S.!), but now has about 400 million. Farmers took off for the cities at the rate of 30 million per year for 10 years. That’s like the entire population of Venezuela packing up and leaving every year for 10 years.

It’s easy to see from the above why China needs the likes of Jack Ma getting into the solutions process for the future of farms. JD.com, the nation’s largest retailer, is bringing its digital technology to rural China, and its tech is making a positive difference for both farmers and rural poverty. But, as Li points out: “JD has their farm projects at least 50 percent funded by government subsidies.

That JD.com’s tech can make such a positive difference is not lost on China’s brain trust. “Inflection points can be reached in a few ways,” Li points out. “It requires young talent infusion in the sector, large landholding structures, technology needs to mature and government-based mass investment into the space.”

“Many startups are still in small scale pilot mode, with academic frameworks that propose new types of farming initiatives. A common theme with agriculture tech is that hardware installation will prove to be a key driver of data collection, which will require access to finance and personnel to deploy properly.”

The most prominent needs on the to-do list: Sowing seed, fertilizer, de-weeding, pest control, and harvesting vegetables and fruit.

In both the U.S. and the EU, robotics for sowing, fertilizing, and de-weeding are well established and robust. Government subsidies and training would be a logical next step for to acquire the tech. Harvesting certain vegetables is a can-do, while some other vegetables still need some tech attention; fruit, although promising, is still elusive.

For example, China is the world’s largest apple producer (48 million tons), which means billions of apples need to be picked by hand. With a labor shortage of any kind, getting the apple harvest in apple by apple, one at a time, may well become a more tedious than necessary chore.

Although Li posts a chart in her article showing some two dozen startups involved with various aspects of agricultural production, she says: “The reality with agriculture is that it is still nature. It will take time to see results.”

With the likes of Jack Ma prowling greenhouses, with other tech mega-stars similarly getting involved in agriculture, and the government ready to finance much of it, a true inflection point may well be arriving sooner than later.