Is the automation awakening afoot?

During the recording of Agri Investor’s upcoming podcast discussing covid-19’s impact on ag and the sector’s recovery, the need to embrace automation was a recurring theme.

In a wide-ranging discussion, Fiera Comox partner for agriculture Matthew Corbett and Benjamin Subei, principal at the Boston Consulting Group, said shortcomings such as the reliance on migrant labor and poor working conditions in food-processing facilities will largely be solved by increased mechanization and automation.

Where migrant labor is concerned, Corbett said, small-scale producers – roughly between 10- and 100-acre operations – will have been most severely affected, as they are more reliant on sporadically available labor. Investors with larger production operations like Fiera Comox have been less significantly impacted as they’re able to offer work throughout the year to local people who form a recurring and “permanent seasonal workforce.”

Additionally, Fiera Comox has been aided by having previously integrated automated irrigation solutions across its orchard and broadacre irrigated businesses, he said.

“We’ve shifted our irrigation from more manually intensive irrigation operations to more automated, remotely monitored irrigation operations,” explained Corbett. “And these things really have removed the need for migrant labor from many of our irrigated businesses where we’re able to irrigate our crops with almost no manual input.

“So the impact on our businesses has actually been relatively small. This crisis will push all producers, including investor-led producers, to be pushing towards automation and mechanization to a greater degree than they would have prior to the crisis.”

Citing the concentrated outbreaks of coronavirus at meat-processing facilities, which in Germany led to 7,000 people in its North Rhine-Westphalia state being placed back into lockdown, Subei said “the only answer will be a higher level of automation. It is very difficult to allow sufficient space at the processing lines between the different workers.”

According to the non-profit Food & Environment Reporting Network, 39,629 workers at food-processing facilities (of which 32,151 work at meatpacking plants) had contracted covid-19 as of July 6.

The other factor that will be a driving force for wider implementation of automation in processing facilities, added Subei, is a need to find solutions to the widely criticized working conditions that migrant workers at some plants are forced to endure.

Peter Schmidt, the head of international affairs at the German food workers union NGG, told the Guardian in June: “The working conditions in these plants are the absolute worst; cold, close together, working at high speed. And the housing, it is like in slavery times. When we were looking at it, we found that people were having to share beds. You do a 12-hour shift and then you change over.”

Also taken from this ethical angle, said Subei, “a higher degree of automation and less dependency on migrant labor will be the key answer for the meat-processing industry.”

According to Agfunder data, farm robotics and mechanization only accounted for $179 million (1 percent) of the total $19.8 billion invested into agtech companies in 2019. More positively, farm management, sensor technology and IoT received $887 million, or a 5 percent share, of the investment outlay, but still lagged far behind the $3.9 billion attracted by eGrocery solutions.

Clearly, investment in mechanization and automation will have to be ratcheted up significantly if it is truly set to solve the workforce issues exposed by the pandemic.

Fiera Comox’s experience suggests the outlay required to establish a mechanized infrastructure is certainly worth it. “Our output per unit of manual labor input is already very high,” Corbett said. “We have a relatively small labor workforce relative to the output of our businesses.”

Whether or not the pandemic will inspire a significant number of investors to pursue a similar strategy will take some time to reveal itself.

But as we move into the post-covid world, a telling question will be: how quickly, if at all, will investors consider automated processes an essential business ‘must-have’ before sanctioning an investment?

Write to the author at: Binyamin.a@peimedia.com

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Look out for Agri Investor’s podcast on covid-19’s impact on agriculture, set to be available within a fortnight.