The Western Growers Global Harvest Automation Initiative turns four in February, coinciding with the Tulare World Expo, in fact. A lot has happened since the launch. Some of the automation startups the WG Innovation team works with have successfully raised additional funding, others have entered the U.S. market from abroad, and some have partnered with equipment manufacturers and equipment dealers to scale their go-to market and reach more customers. Certain segments have made more progress than others.
Weeding, thinning, harvest assist and spraying robots are already in the market and gaining traction. Our estimates show the U.S. market will make over $100 million in purchases in 2024 and will make over $500 million in purchases from 2024 to 2026. These products range from Carbon Robotics’ $1.4 million LaserWeeders to Stout’s $400,000 mechanical weeders, along with Burro’s harvest assist robots, available in three sizes priced between $15,000 and $30,000 each. Additionally, GUSS offers sprayers in three formats, priced from approximately $220,000 to $350,000.
Capital has declined in the agtech space (and in all tech segments, in fact) for two years in a row. For agtech as a category, the $53 billion in funding in 2021 dropped by 70 percent in two years to $15 billion in 2023 and stayed there with $7 billion in the first half of 2024. There are macro reasons for this – limited partners who write checks to help venture capitalists get their fund tarted are disenchanted with years of poor returns from VCs and are limiting their investments, and there are now more private company unicorns ($1 billion valuation) than public company unicorns.
So the dynamics of getting capital into and out of venture funds has been transformed in a bad way for all of the key players. There are also agtech-specific reasons for capital struggles. Automation startups require a lot of capital to get machines built and iterated and require a lot of time to get the machines fine-tuned and market-ready for customers.
The capital constraints have forced the WG Innovation team to focus on the later stage commercialization efforts for automation startups. While we recognize the potential of startups at every stage of the innovation funnel, we are concentrating our time and financial resources on those with products at the 1.0 stage or beyond, focusing on expanding their market presence and scaling operations.
Specifically, WG is focused on delivering field trials for automation (and our second large initiative, biologicals) across all three stages: case studies to provide examples of grower economics, economic templates that growers can use self-service or DIY style, and WG Assist where WG provides a resource (i.e. a fractional financial analyst) to help growers evaluate automation solutions as they would integrate into their particular growing operations. It turns out that the type of crop (conventional versus organic), the type of labor (domestic versus H-2A) and the type of equipment ownership (buy versus lease) all impact the ROI for automation equipment.
We’ve released our first two case studies featuring Carbon Robotics and Stout Industrial Technology. Our next case study will be on GUSS sprayers. We believe that helping growers understand how the math for each solution will work in their operations is one of the most valuable services we can help our members with, and we are glad to be focused on this process. If you have any questions on field trials, case studies, economic templates or WG Assist, please reach out to anyone on the WG Innovation team.
Over time, we anticipate the number of economic templates will increase and that the templates for different types of automation and biological solutions will vary as we learn more from growers about how to evaluate the solution for their operations. We also anticipate we will add different WG Assist resources to the WG Innovation team, including some with expertise in automation and others with expertise in biologicals.
WG provides multiple late year options for seeing some of these solutions in demo environments. FIRA USA was October 22-24, and this year we were at Yolo County Fairgrounds after one year in Fresno and another in Salinas. We had more international and first-time startups at FIRA USA than the previous events, so by the time you read this growers will have had a chance to see from and talk to over 20 exhibitors in real-world conditions.
Similarly, we are partnering with YCEDA to deliver the Desert Difference in Yuma November 13-14. As with FIRA USA, there will be live demonstrations of automation solutions both days. To those who joined us in Yolo County, we hope you got great value out of attending and that you will share the feedback with other growers who can attend in the future. To those who can join us in Yuma next week, we appreciate your support and have put a great program together for you.