Over the last few years we have come to recognize that the federal government plays an important role in food and agriculture policy, and the future of our food system. Given this, we wanted to share our perspective on how Congress can use the next coronavirus economic relief bill to make smart, targeted investments that will reinforce the resilience of the food and agriculture supply chain and support a critical anchor of the U.S. economy.
By and large, even during a global pandemic, the U.S. food and agriculture supply chain has worked, continuing to produce and deliver healthy, safe food. The underlying factors that define how we grow and eat food, however, are being challenged by this crisis. We recently released a new report, titled Everyone Eats – The Future of Food in the Age of COVID, which includes insights from epidemiologists, healthcare professionals, farmers, entrepreneurs, philanthropists and other investors on the implications of COVID-19 on food and agriculture and how trends and practices may change as a result.
The pandemic is highlighting pressure points in our centralized food production system, stressing logistics networks and reinforcing the importance of labor. We have seen concerns about the rise of food nationalism and access to labor, thereby redefining the nature of food security from global to national systems. Prior to the pandemic, changing consumer behavior coupled with new innovation were driving increased market changes and pressure. Several trends that were in motion pre-COVID will be further accelerated by the pandemic. Broadly speaking, our analysis finds that impacts on globalization, supply chain efficiency, immigration and access to labor are being felt today. Longer-term concerns, including the future profitability of traditional commodity systems, volatility as a result of climate change and increased healthcare costs, have all come to the fore as issues that must be solved if we are to fully recover from this pandemic – and ensure that our nation is more durable against future crises.
The potential common thread that could bridge us to the future is technology and entrepreneurship. From farm management platforms to indoor agriculture, to safety and traceability technologies, to restaurants and food delivery platforms, entrepreneurs are developing new and innovative technologies that solve these issues and more. There are thousands of small businesses across the food and agriculture supply chain focused on these areas. As Congress considers the next coronavirus economic relief bill, we believe they should consider the following policies, which support the development, deployment and scaling of critical technologies and innovations, to the benefit of farmers and ranchers, the food and agriculture supply chain and ultimately every American.
Build a Nationwide Internet Structure and Ensure Nationwide Broadband Internet Access, Including in Rural Areas
We believe investing to ensure nationwide broadband access should be a top priority for Congress – and that addressing this issue can actually drive progress on a wide range of other issues. The lack of access to high-speed internet in some areas of the country has compounded the health, business and economic impacts of the coronavirus pandemic. According to the Federal Communications Commission (FCC), 18 million Americans lack high-speed internet access1, although another analysis suggests that the number may be as much as twice as high, at 42 million2. Building our nation’s internet infrastructure now is an investment not only in better connecting the country, but in better preparing for and minimizing the impact of future crises. Ensuring access to high-speed internet better positions hospitals, schools, small businesses and other essential services to respond and pivot in future crises. High-speed internet access helps rural businesses and start-ups to grow, thrive and create future-proof jobs, which will be critical to the nation’s long-term economic recovery and supports a healthier, diversified American economy. Digital technologies can also help to speed the ongoing modernization of the food and agriculture supply chain, making it more resilient against disruptions. Universal broadband access is the shot in the arm that our economy needs. We urge Congress to prioritize funding in the next coronavirus economic relief legislation to address broadband infrastructure gaps and incentivize telecommunications companies to bring broadband connectivity to all communities.
Innovation in Access to Capital and Risk Management
For the past decade, American farmers and ranchers have been harnessing the use of technology and data to reinvent how they manage their land. From sensors to satellites, producers across the nation are monitoring their operations in real-time, helping to reduce mounting pressures, while increasing their economic and environmental opportunities. Yet, this same type of real-time decision making has been limited when it comes to addressing financial resources and tools. Now, as we face the new headwinds presented by the coronavirus pandemic, we believe it’s time to close the gap between agriculture and the fintech sector. Fintech is a promising area for innovation and can go a long way towards making sure farmers and agricultural operations have access to the right types of financial tools that they need to be successful like capital, insurance, and credit. It is critical that we continue to focus on policies that support new innovations in financial products that improve long-term cash flow for farm businesses, increase access to cost-efficient capital, and help agricultural operations better manage risk. As Congress considers the long-term economic recovery from the pandemic, we support the advancement of innovative financial tools and resources for farm businesses.
Ensure Support for Businesses Operating in Essential Industries, Including Small Innovative Food and Agriculture Companies
Food and agriculture has been deemed an essential industry by the U.S. Department of Homeland Security (DHS). In its declaration, DHS cited the “special responsibility” food and agriculture businesses have to maintain operations during the pandemic. In particular, small businesses, including our portfolio companies and farm and ranch businesses across the country, are essential in order to ensure that U.S. citizens will continue to be able to feed their families during uncertain times. As job creators, they will be essential to the nation’s economic recovery. As such, it is critical that those businesses have access to temporary resources that can help them remain fully operational in the coming months. We urge Congress to make clear that as part of an essential industry, all small food and agriculture businesses no matter of affiliation, including farms, ranches, are eligible and prioritized for the wide-array of assistance made available in future relief legislation.
Support for New and Innovative Technologies in Food and Agriculture
In food and agriculture, one key area of focus must be on supporting a supply chain that is better equipped to weather future crises. We need a wide variety of production methods and approaches in order to meet the growing global demand for healthy, safe and affordable food. That was true in a normal environment, and the need has only become more pressing during the pandemic. Small businesses, including S2G’s portfolio companies, are focused on developing innovative products and services that support a food and agriculture supply chain that is more stable, more diversified and better able to deliver healthy food where it is needed most each day.
Recognizing the importance of these private sector efforts, in the 2018 Farm Bill, Congress created the Office of Urban Agriculture and Innovation Production at the U.S. Department of Agriculture (USDA). The office is designed to support new and innovative agriculture production and help small businesses like our portfolio companies navigate federal programs and resources. We urge Congress and USDA to continue to support the office through funding and staffing resources. Having dedicated staff at USDA, especially during these uncertain times, would provide much-needed coordination and advocacy for new and innovative forms of agricultural production.
Increase Resources for Nutrition Education and Research
The coronavirus pandemic has brought the impacts of chronic diet-related disease into even sharper focus. Prior to the pandemic, diet-related illnesses like obesity, Type 2 diabetes and high blood pressure were already on the rise. According to a recent CDC report, chronic disease is a key risk factor for COVID-19 hospitalizations. Nearly 90% of patients hospitalized as a result of COVID-19 had one or more underlying health conditions3. The most common include, among others, hypertension, obesity, diabetes and cardiovascular disease. The U.S. already spends hundreds of billions each year on obesity-related healthcare costs. The total economic and human costs of the coronavirus pandemic have yet to be determined, but they will be staggering.
Prioritizing good physical health and supporting healthy food choices will be a critical aspect of national preparedness in anticipation of future crises. S2G has invested in food and agriculture technology companies focused on the concepts of “food care” – food as a treatment of chronic disease – and “personalized food” – which combines e-commerce, food, medicine and technology to enable food prescriptions – which we believe will become even more prominent as more Americans think about their health in new ways as a result of the pandemic.
These technologies and approaches are exciting, and they complement other efforts happening across the food system. We believe they are most effective, however, when paired with strong federal nutrition education and research programs. We encourage Congress to prioritize improved coordination and collaboration across federal agencies conducting nutrition-related research efforts as well as additional funding for nutrition education programs at the U.S. Department of Agriculture and the U.S. Food and Drug Administration.
Rarely in the history of our nation or our world have we faced a crisis of this magnitude – but often, crises can fuel innovation. Recovering and rebuilding in the wake of the coronavirus will require all people and all sectors to bring to bear solutions that not only help us to adapt but to build a better future. The solutions outlined above are ambitious but they are necessary if we are to not only rebuild industries, but apply the lessons of the coronavirus to build an economy that is better, stronger and more resilient than before.
On behalf of S2G and our portfolio companies – and in support of the thousands of other small farm, ranch and agricultural businesses across the country – we appreciate the continued leadership of our legislators in Washington. Now is the time to think big, build more resilient systems and create a stronger economy, and we are excited to be a partner in this process.
— Aaron Rudberg, COO & Managing Director