Author J.D. Vance made the case for rural America in his 2016 book, Hillbilly Elegy, sparking a months-long debate about the role of city vs. country in our economy, our lifestyles and our politics that is still ongoing.
We learned the full scope of that debate on Election Day 2016.
But the fact remains, rural America is a key part of American society and of the nation’s economy, encompassing the vast majority of our landmass as well as millions of people. That role looks to only increase in the coming years.
Why? Because rural America remains primarily focused on one industry: agriculture. And that industry has been getting chopped to pieces in recent years.
Worldwide, farmers are planting more corn and wheat, creating price pressure that is driving down commodity crop prices here in this country. This will most likely become a permanent trend. Technological advances are automating the field, allowing well-funded operators to leap ahead of their competitors, leaving those unable to afford these new technologies further behind.
Despite all this, there is massive opportunity in agriculture technology right now as well. Consider the possibilities.
It is no secret that many shoppers today prefer organic products — for a variety of reasons — and are willing to pay a premium for what they consider to be a premium product. But when a shopper does that, they are left with less money in their bank account. This is particularly acute among the organic-loving millennial generation. So acute, in fact, that the federal government has been researching new ways to reduce the cost of organics to cut the price premium that consumers have been paying, seeking parity with the rest of the market.
Now, ag-tech startups are stepping up to address this problem.
One example is Kultevat, a company that is working to create an industrial product, natural rubber, using an easily grown and plentiful strain of dandelions. By delivering a high-value crop to the farmer that is not a low-priced commodity like corn or wheat, Kultevat is opening up a new income stream to struggling farmers, allowing them to shift from sugar beet farming, let’s say, to dandelions with significant upside. This would allow them to eventually grow and sell complementary organics alongside at lower cost.
Benson Hill Biosystems is another example. By developing new seed technologies that increase yield and reduce drought loss, they are helping farmers realize savings right out in the field, further helping to reduce costs and overhead. Cheaper, higher quality organics will be the result.
Agriculture is approaching its “1980 moment,” a date we in the venture capital community speak about often as a tipping point when a product, the personal computer, went from niche to mainstream seemingly overnight. That is where we are right now in agriculture, and the opportunity is huge.
The country today faces real problems and is working to create a more diverse, inclusive economy. The solution will not only be coming from the software, manufacturing or healthcare industries. In fact, the transformation of agriculture into a 21st century economic force, led by ag-tech companies like Benson Hill and Kultevat, is already under way.
Carter Williams is the CEO and managing director of iSelect, an early-stage venture capital fund.