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S2G Ventures has been investing in ag and food tech for eight years and looks ahead at the new year

Willie Vogt

January 4, 2022

5 Min Read
Food-trends-NatalyaBurova-GettyImages-1345446274 SIZED.jpg
LOOKING AHEAD: S2G Ventures is involved with many startups and evaluates dozens more. From this information they've lined up key trends impacting agtech and food tech into the new year.NatalyaBurova/Getty Images Plus

It's a week of tech news whether from CES in Las Vegas or across the ag industry. This week venture capital firm S2G Ventures revealed 10 trends shaping the future of food and agtech in 2022. The firm, focused on investing in food, agriculture, ocean, and seafood markets, released its new report ahead of the 2022 CES, where Food Tech will have a growing presence this year.

Farm Progress talked with Aaron Rudberg, chief operating officer, of S2G about the report. "We have the benefit of seeing somewhere between 1,500 and 2,000 different ideas or entrepreneurial innovations every year," Rudberg observes. "As we go into 2022 probably the biggest surprise is just the increase in the number of innovative ideas and companies that people are trying to start in food and agriculture."

Rudberg acknowledges that agriculture is commodity based and has long adoption cycles but that's not slowing down the pace of innovation across many areas covered in the report. "We're seeing people coming out of traditional industry, coming out of the tech industry that are really trying to innovate the food and ag space. And I think that's what's most exciting."

On the ag side, Rudberg says he sees two areas that are related to digitization in financial technology. He groups the two because one enables the other. What he's seeing is innovation in finance and crop insurance that are enabled by technology and data. "I think it is super exciting and we're on the cusp of that. You've seen fintech change the education market, change the consumer lending market, we're going to start to see that bleed into the agricultural market," he says.

The second ag-focused area where S2G Ventures sees innovation is biologics. "They've been around for a long time and adoption still has a ways to go," he says. "There's a significant amount of companies in the space and I think we'll see some consolidation in the next 12 months. We're goinig to see some new innovation quickly around what we highlighted – RNA – in our report. You'll see RNA really come from the healthcare space into the agricultural space."

He adds that this is exciting because it will open a new avenue of products and "for stability, which has been a challenge within the biologics market."

In the report, S2G ventures grouped the 10 innovations into three categories, which the firm named: The 4th Industrial Revolution Comes to the Farm; Supply Chain Disruption Accelerates Innovation; and Food Technology Advances Health and Consumer Choices.

Here's a look at the 10 within those groups.

The 4th Industrial Revolution Comes to the Farm

Farmers face a lot of challenges today but they're also creating conditions for innovation and adoption of new technologies. These four fall into this first category:

  • Robots will increase efficiency while reducing labor needs across the food system.

  • The rise of ESG (Environmental, Social and Governance) will help to digitize the farm. This trend toward ESG includes stewardship, regenerative agriculture and other practices, which might bring new income sources.

  • Fintech will transform opportunities in agriculture, just as it did for the student loan and mortgage markets.

  • RNA technology that saved lives during Covid-19 will be applied to farms to save soils. Startups are already looking at RNA tools to enhance biological effectiveness.

Supply Chain Disruption Accelerates Innovation

Supply chain disruptions have had major impacts across agriculture in the past two years, which has also created a sense of urgency to develop solutions to make those chains more nimble, sustainable, localized and less wasteful, the S2G Ventures report notes. This includes:

  • Fermentation will power the next generation of alternative protein products.

  • Cellular protein will provide consumers around the world with safe, sustainable food. While controversial in the animal protein space, this technology is gaining traction for some markets.

  • Adoption of food waste solutions will be recognized as both a good business practice and an essential tool for feeding the world. It's estimated that more than 40% of food produced in the U.S. is wasted according to Feeding America.

Food Technology Advances Health and Consumer Choices

Declining national health will drive growing interest in dietary changes, which S2G Ventures sees to include holistic diets, food and nutrition startups using cutting edge science and artificial intelligence and machine learning to develop nutrient dense, functional and personalized food products.

  • AI and machine learning platforms will unlock greater understanding of and use cases for plants and fungi.

  • Food will become central to the effort to prevent chronic disease and improve health outcomes.

  • Food brands and grocers will have to “personalize or perish.”

What do these trends mean for farmers? "If I'm a farmer and I'm evaluating what's happening at the consumer side and in food tech I think it starts with profitability," Rudberg says. "As a producer I want to really tap into trends that allow me to make an incremental, either a few cents on a bushel or a dollar a bushel, because I provide things like traceability, transparency and can tap new markets."

The consumer is demanding more information about their food, yet the margins in the supply chain are tight, Rudberg acknowledges. He says these food trends are changing a commoditized market into a disaggregated market offering premiums for farm products. "The faster you can tap into some of those kinds of disaggregated markets, you have an opportunity to make that incremental dollar that wasn't necessarily available five or 10 years ago."

The tech trends outlined here are an indication of what may be ahead for the tools farmers use and the market opportunities too. You can check out the full report online.

About the Author(s)

Willie Vogt

Willie Vogt has been covering agricultural technology for more than 40 years, with most of that time as editorial director for Farm Progress. He is passionate about helping farmers better understand how technology can help them succeed, when appropriately applied.

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