[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]



 
   HIGH-TECH AGRICULTURE: SMALL FIRMS ON THE FRONTIER OF AGRIBUSINESS

=======================================================================

                                HEARING

                               before the

             SUBCOMMITTEE ON AGRICULTURE, ENERGY, AND TRADE

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                            OCTOBER 5, 2017

                               __________
                               
                               
                               
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                               

            Small Business Committee Document Number 115-038
              Available via the GPO Website: www.fdsys.gov
              
              
              
              
                             _________ 
                  
                U.S. GOVERNMENT PUBLISHING OFFICE
 27-037                 WASHINGTON : 2018      
              
              
              
              
              
              
                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        TRENT KELLY, Mississippi
                             ROD BLUM, Iowa
                         JAMES COMER, Kentucky
                 JENNIFFER GONZALEZ-COLON, Puerto Rico
                          DON BACON, Nebraska
                    BRIAN FITZPATRICK, Pennsylvania
                         ROGER MARSHALL, Kansas
                      RALPH NORMAN, South Carolina
               NYDIA VELAZQUEZ, New York, Ranking Member
                       DWIGHT EVANS, Pennsylvania
                       STEPHANIE MURPHY, Florida
                        AL LAWSON, JR., Florida
                         YVETTE CLARK, New York
                          JUDY CHU, California
                       ALMA ADAMS, North Carolina
                      ADRIANO ESPAILLAT, New York
                        BRAD SCHNEIDER, Illinois
                                 VACANT

               Kevin Fitzpatrick, Majority Staff Director
      Jan Oliver, Majority Deputy Staff Director and Chief Counsel
                     Adam Minehardt, Staff Director
                     
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Rod Blum....................................................     1
Hon. Brad Schneider..............................................     3

                               WITNESSES

Lisa Benson, Ph.D., Director, Rural Development, American Farm 
  Bureau Federation, Washington, DC..............................     4
Mr. Kevin Heikes, Co-Founder and Chief Operating Officer, IN10T, 
  Lenexa, KS.....................................................     6
Mark Kester, Ph.D., Chief Scientific Officer, AgroSpheres, LLC, 
  Charlottesville, VA............................................     8
Mr. Joe Guthrie, Senior Instructor, Agricultural Technology 
  Program, College of Agriculture and Life Sciences, Virginia 
  Polytechnic Institute and State University, Blacksburg, VA.....     9

                                APPENDIX

Prepared Statements:
    Lisa Benson, Ph.D., Director, Rural Development, American 
      Farm Bureau Federation, Washington, DC.....................    16
    Mr. Kevin Heikes, Co-Founder and Chief Operating Officer, 
      IN10T, Lenexa, KS..........................................    20
    Mark Kester, Ph.D., Chief Scientific Officer, AgroSpheres, 
      LLC, Charlottesville, VA...................................    26
    Mr. Joe Guthrie, Senior Instructor, Agriculture Technology 
      Program, College of Agriculture and Life Sciences, Virginia 
      Polytechnic Institute and State University, Blacksburg, VA.    29
Questions and Answers for the Record:
    Questions from Hon. Lawson to Lisa Benson and Answers from 
      Lisa Benson................................................    32
    Questions from Hon. Lawson to Kevin Heikes and Answers from 
      Kevin Heikes...............................................    35
    Questions from Hon. Lawson to Mark Kester and Answers from 
      Mark Kester................................................    37
    Questions from Hon. Lawson to Joe Guthrie and Answers from 
      Joe Guthrie................................................    39
Additional Material for the Record:
    Statement from Paul T. Dacier, Executive Vice President & 
      General Counsel, Indigo Ag, Inc............................    43
    Statement from Martin Bremmer, Windcall Mfg. Inc.............    47


   HIGH-TECH AGRICULTURE: SMALL FIRMS ON THE FRONTIER OF AGRIBUSINESS

                              ----------                              


                       THURSDAY, OCTOBER 5, 2017

                  House of Representatives,
               Committee on Small Business,
     Subcommittee on Agriculture, Energy and Trade,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:15 a.m., in 
Room 2360, Rayburn House Office Building, Hon. Rod Blum 
[chairman of the Subcommittee] presiding.
    Present: Representatives Chabot, Blum, Comer, Bacon, 
Marshall, Lawson, and Schneider.
    Chairman BLUM. Good morning to everyone. I call this 
hearing to order.
    Crazy day voting on budget. So congressional members will 
be in and out throughout our hearing.
    At our March Subcommittee hearing on family farms, we heard 
about many challenges America's small farmers are facing, 
including burdensome and uncertain regulations and excessive 
taxation. The Subcommittee is here today to examine how agtech 
entrepreneurs and farmers can work together in a way that can 
benefit both small businesses and small family farms.
    Agtech or agritech is a broad term describing a diverse 
range of innovations and technologies, including agricultural 
bioscience, data-enabled agriculture, automation and robotics, 
supply chain and logistics, and alternative business models. 
These innovations in technologies have the ability to 
definitely increase farm productivity, reduce resource use, 
which is so important, and boost profits, which is also 
important. Additionally, agtech entrepreneurship activity may 
spur rural revitalization with agtech innovations in America's 
heartland and other agricultural areas attracting talent, 
dollars, and jobs to those regions.
    We want all entrepreneurs from all walks of life to 
consider careers, businesses, and startups in agriculture. 
Private sector participation in agtech research and development 
has surged in recent years.
    There are currently over 100 different vehicles to develop 
agtech entrepreneurs and small businesses. Many of these are 
funded by corporate and angel investors with trade 
associations, land grant universities, State and local chambers 
of commerce also getting involved to connect entrepreneurs and 
innovators with startup capital. However, the most important 
stakeholder in any discussion of agtech are the farmers 
themselves.
    Small and family farmers cannot risk their time and 
resources for experimental innovations and technologies that 
may or may not work. But if risk is minimized, or even 
monetized, they can offer invaluable feedback to entrepreneurs 
about the technology and innovations that are most useful and 
most likely to increase profits. Think of farmers as a real 
life focus group.
    Farmers themselves may be budding entrepreneurs developing 
new technology to improve their farms, but may need some help 
connecting with investors and mentors to bring their ideas to 
market. Our witnesses today will discuss how farmers and 
industry can work together to ensure that both benefit from the 
rapidly expanding innovations and technology today's 
entrepreneurs are continuing to develop. We will also hear 
about the challenges that startup companies face in raising 
capital and navigating the regulatory burdens to market.
    I want to thank all of you for being here today, and we 
look forward to hearing your testimony.
    My ranking member, Mr. Schneider, I understand is on his 
way over for his opening remarks. So I will yield to him when 
he gets here. In the meantime, I would like to introduce our 
witnesses.
    Our first witness is Dr. Lisa Benson, director of Rural 
Development for the American Farm Bureau Federation, commonly 
known as Farm Bureau. The Farm Bureau recently initiated the 
Rural Entrepreneurship Challenge, which is the first national 
business competition focused exclusively on rural entrepreneurs 
working on food and agriculture businesses. The Farm Bureau has 
also published principles for companies to adopt in regard to 
the use of farm data. Thank you for being here today.
    Our next witness is Mr. Kevin Bikes--Heikes, I mean. Rhymes 
with bikes, right? Freudian. I won't forget your name now--the 
chief operating officer and cofounder of IN10T--I got that one 
right, correct?--a digital agriculture small business in Kansas 
and St. Louis, Missouri. Among other services, IN10T operates 
farmertrials.com, an online platform that allows farmers to 
sign up for paid field trials with agtech companies 
facilitating mutually beneficial relationships. We appreciate 
your testimony and thank you for being here today.
    And I understand Dr. Alice Robinson, the chief analytics 
officer of IN10T is here today also. Right there. Thank you for 
being here, appreciate it.
    Our next witness is Dr. Mark Kester--did I get that one, 
right, Kester? Excellent--chief scientific officer of 
AgroSpheres, a biotech startup located in Charlottesville, 
Virginia. AgroSpheres started as a multidisciplinary student 
project in the Kester lab at the University of Virginia. After 
winning several prestigious competitions, it is now a real 
world agtech startup. AgroSpheres works closely with local 
vineyards to trial a system to degrade pesticides using 
enzymes. Most fascinating. Six other members of the AgroSpheres 
team are here, including the two student cofounders are with us 
today. Right here. The two student cofounders. Excellent. 
Welcome. And congratulations.
    And right on queue, the ranking member, Brad Schneider. We 
are ready for your opening testimony. And you can also 
introduce Mr. Guthrie as well when you are finished with that. 
Sorry.
    Mr. SCHNEIDER. No, that is okay. Thank you.
    Good morning. Before we begin, I do want to take a moment 
to express my condolences to all those who lost loved ones 
earlier this week in Las Vegas, and send our prayers for 
recovery to those who were wounded. I want them to know that 
the American people are grieving with all of Las Vegas, all who 
were hurt and killed. And I am incredibly grateful for the 
extraordinary professionalism that we saw and the bravery of 
our law enforcement and first responders during that attack.
    Bring it back to this hearing, I want to thank you all for 
being here and taking the time to share your thoughts, your 
perspectives, your insights with us about high-tech 
agriculture. I also want to thank Chairman Blum for holding 
this hearing today. I think it is very important to use this 
forum to highlight the technological needs of the agriculture 
industry.
    The global population is expected to exceed 9 billion by 
2050. While concerns about population growth are not new and 
warnings of increasing food pressures on global technology has 
been and will continue to be essential to reducing these 
concerns, addressing these risks. However, this challenge is 
exacerbated by a number of problems.
    The most dramatic and urgent factor is climate change. 
Agriculture is highly dependent on a stable climate. As we have 
seen in recent weeks, there is no denying that our planet is 
experiencing more frequent and more damaging, more powerful 
natural disasters. We saw with Hurricane Harvey, Irma, Maria, 
and Jose, four in less than a single month. The people in 
Puerto Rico and the U.S. Virgin Islands continue to face 
scarcity of resources that threaten their lives. We have also 
seen this with increasing wildfires in the west and 
California's 5-year-long draught devastating our farms, 
ranches, and forests. Extreme weather continues to reverberate 
off our coast. These often result in scarce supplies, 
decreasing nutrient levels, and other factors that threaten the 
continuing success of the agriculture industry.
    As the planet warms, weeds, pests, and fungi that thrive in 
warmer temperatures are expected to force farmers to spend more 
than $11 billion annually to combat them. However, technology 
can help us overcome the combined effects of growing demands 
for food and extreme weather and climate changes. Technology 
will hold the key to remaining competitive, and we should look 
to it as we consider ways to put food on the table and reduce 
environmental factors for our Nation's small farms.
    Many experts claim that agriculture technology, or agtech, 
can reduce the amount of dependence on fossil fuels, 
fertilizers, water and land requirements without--and I will 
repeat, without hindering our economic growth. The time is now 
for the U.S. to show its leadership and invest in agtech. Doing 
so not only contributes to rural America, but also engages all 
aspects of our economy, encouraging job creation and 
innovation. America has always been a country of invention. We 
must harness that skill today and find the balance between 
government oversight and technological advancements without 
hindering business opportunities.
    I look forward to today's discussion and to learning more 
about the challenges facing the agricultural community and the 
role technology can serve to help our producers thrive. I would 
like to, again, thank all of our witnesses for being here today 
and providing us your insight.
    And, with that, I will turn to the introduction.
    Chairman BLUM. And we have already done them. Mr. Guthrie--
--
    Mr. SCHNEIDER. Okay. So sorry to make you wait.
    But it is my honor and great pleasure to introduce Mr. Joe 
Guthrie. Mr. Guthrie is a senior business instructor in the 
Agricultural Technology Program within the College of 
Agriculture and Life Sciences at Virginia Tech. He taught 
courses on business communications and leadership since 2007, 
and brings over 25 years of agriculture business management 
experience to the classroom. Through this, he has helped 
educate a new class of innovators in the agriculture field with 
the skills and resources they need to succeed.
    Mr. Guthrie holds a bachelor's degree from Virginia Tech in 
agricultural economics and a master's degree as a Fulbright 
Scholar from Massey University in New Zealand in agricultural 
economics and international trade. It is my pleasure to 
introduce Mr. Guthrie. Thank you for being here.
    Chairman BLUM. Thank you, Mr. Schneider, and well done on 
the run.
    Mr. SCHNEIDER. Thank you.
    Chairman BLUM. I would just like to take a second to 
explain our opening statements and the timing lights that you 
have in front of you.
    If Committee members have an opening statement prepared, I 
ask that it be submitted for the record.
    You, the witnesses, will each have 5 minutes to deliver 
your testimony. The light will start out as green. When you 
have 1 minute remaining, the light will turn yellow, and, 
finally, at the end of the 5 minutes it will turn red. And we 
ask that you try, if possible, to adhere to that time limit. I 
know you are thinking green, yellow, red, something in Congress 
makes sense, correct?
    And, with that, I recognize Dr. Benson for 5 minutes.

STATEMENTS OF LISA BENSON, PH.D., DIRECTOR, RURAL DEVELOPMENT, 
 AMERICAN FARM BUREAU FEDERATION; KEVIN HEIKES, COFOUNDER AND 
   CHIEF OPERATING OFFICER, IN10T; MARK KESTER, PH.D., CHIEF 
 SCIENTIFIC OFFICER, AGROSPHERES, LLC; AND JOE GUTHRIE, SENIOR 
    INSTRUCTOR, AGRICULTURAL TECHNOLOGY PROGRAM, COLLEGE OF 
 AGRICULTURE AND LIFE SCIENCES, VIRGINIA POLYTECHNIC INSTITUTE 
                      AND STATE UNIVERSITY

                STATEMENT OF LISA BENSON, PH.D.

    Ms. BENSON. Thank you so much.
    Good morning. I want to thank Subcommittee Chairman Blum 
and Ranking Member Schneider and members of the Subcommittee 
for inviting me to participate in today's hearing. My name is 
Dr. Lisa Benson, and I am the director of Rural Development at 
the American Farm Bureau Federation, which includes 50 State 
Farm Bureaus, Puerto Rico Farm Bureau, and nearly 6 million 
members across the country.
    In my role, I lead the Farm Bureau's Rural Entrepreneurship 
Initiative, which provides rural entrepreneurs with world-class 
business training, networks, and resources to help them 
succeed. My professional career has centered on helping 
beginning farmers, ranchers, and rural entrepreneurs grow their 
businesses, overcome obstacles, become more profitable, which 
is key, and sustain economic development in their rural 
communities.
    Farm Bureau created the Rural Development program and the 
Rural Entrepreneurship program because our leadership 
personally witnessed the decline of the rural communities. 
Their children weren't returning home after college, many of 
the local businesses were closing, and the infrastructure was 
deteriorating in those communities. Farm Bureau wants to 
reverse this trend by engaging on policies and creating 
programs that extend beyond the farm gate. We chose to focus on 
an area that sustains economic growth, creates jobs, and 
improves the quality of life for rural Americans. We chose to 
focus on entrepreneurship.
    As entrepreneurs grow their businesses, they hire their 
family, their neighbors, and their friends. Entrepreneurs tend 
to purchase goods and services from local businesses. So as 
they thrive and prosper, so too do those rural communities 
where they come from.
    Farm Bureau wanted a program where the rubber meets the 
road and a program that highlights the success of businesses 
that are located in rural America. This led to the creation of 
the Rural Entrepreneurship Challenge and the Rural 
Entrepreneurship Initiative.
    In 2014, we kicked off the challenge, which is the first 
national business competition that focuses exclusively on rural 
businesses and ag and food businesses. The competition helps us 
identify excellent rural entrepreneurs that have unique 
products and strong business skills. In the first year, we had 
95 applications. Now, in our fourth year, we had 471 
applications from 47 states and Puerto Rico.
    Over time, we identified a trend in the competition. The 
entrepreneurs that had ag tech businesses dominated our winners 
circle. These ag tech winners included ScoutPro from Iowa that 
offers an app to help scout fields; Levrack from Nebraska that 
developed a storage device to help expand your storage in farm 
shops; and Vertical Harvest Hydroponics from Alaska, my home 
State, that created a growing system engineered to withstand 
arctic conditions.
    Many of these ag tech entrepreneurs came from family farms 
or farming communities. They saw problems on their farms and 
then created solutions to address those.
    A hurdle that many of these ag tech entrepreneurs expressed 
to us was trying to find enough capital to scale-up their 
production to reach economies of scale. They considered 
reaching out to investors, but were reluctant to give up equity 
in their businesses and also weren't sure what terms to expect 
in a deal. To address this challenge, we created the 
Agriculture Investment Summit, and it brings together rural 
entrepreneurs with venture capital funds and accelerator 
programs that target rural investments.
    We brought together 35 rural entrepreneurs and 15 investors 
representing more than $300 million in investment funds. Two of 
those entrepreneurs are in negotiations now with investors they 
met at the summit.
    Through the Rural Entrepreneurship Initiative, Farm Bureau 
has supported more than 1,000 rural entrepreneurs from 37 
States, including Hawaii and Alaska. We have provided more than 
$500,000 in startup capital, mentorship, networking with 
investors, and publicity nationwide for those small businesses. 
Entrepreneurs have used those startup funds to refine their 
prototypes, to build greenhouses, hire staff, develop online 
marketplaces, and upgrade their production facilities.
    At Farm Bureau, we believe that supporting rural 
entrepreneurs is critical to enhancing and strengthening rural 
communities. We continue to work with rural entrepreneurs and 
help them overcome their obstacles and help them achieve their 
dreams for their businesses.
    Thank you for your time today, and I look forward to 
answering any questions you may have.
    Chairman BLUM. Thank you, Doctor.
    Mr. Heikes, you are now recognized for 5 minutes.

                   STATEMENT OF KEVIN HEIKES

    Mr. HEIKES. Yes. Thank you.
    Thank you Chairman Blum, Ranking Member Schneider, and 
members of the Subcommittee, for allowing me, on behalf of my 
partners, Dr. Alice Robinson and Randall Barker, to be here to 
talk about digital agriculture.
    Growing up on my family's farm and ranch in Colorado, I had 
the pleasure of learning the art of ag. Over the last 20 years, 
I have had the opportunity to learn about the science and 
technology of the industry through various experience in 
different agtech companies.
    IN10T is a small company. We were started with the simple 
belief that connecting farmers and businesses doing research 
grounded in data science was necessary. What makes our company 
unique is the founding leadership capabilities and our varying 
skill sets.
    Our team fuses the art and science of agriculture together 
into one small business. By working with farmers and 
agribusiness companies, we combine the strength of both groups 
through the application of science, data analytics, computer 
science, engineering, and service to improve how digital 
agriculture works today.
    IN10T is committed to ensuring farmer success and their 
engagement in the innovation process. We do this by guiding 
farmers through the IN10T product innovation process, while 
capturing their valuable perspectives. The most important thing 
that we have learned in this process is to keep talking to and 
keep listening to our farmer constituents.
    Here is what one of our Illinois collaborators, Bill 
McDonnell, shared regarding our company and our process. As 
both a farmer and a crop consultant, IN10T'S trialing process 
is great. It focuses on gathering data in a true commercial 
production field environment. It is some of the best data that 
we can use as farmers because it is implemented using realistic 
production data and it comes from our own farms.
    IN10T supports our clients or agribusinesses by ensuring a 
rigorous science is applied to all of our trials for both 
product performance and also customer sentiment. Agribusiness 
companies need realtime and real world information to compete 
and deliver farmer value in this digital and precision-driven 
world. Rather than more products, companies need better 
products in the right location or the right fields. Better 
products are a result of product feedback and also customer 
perception.
    The digital and precision world has arrived. We can capture 
more data and we can move it faster than ever. With each pixel 
of data and each piece of equipment, we can gather valuable 
insights, but it has to be managed properly. With the increased 
digitization of agriculture, more and more opportunities come 
for other small businesses to deliver solutions that weren't 
necessarily available yesterday.
    The number one question that we hear from farmers all the 
time is: How well did this work? How well did product X work on 
this field last year? IN10T establishes paid experiments 
linking business research with qualified farmers to capture 
this data, drive insights, and ultimately answer that question 
that farmers ask us. Since farmers are key to the IN10T vision, 
we needed a way to engage and recruit more farmers.
    When IN10T began, there wasn't an initial platform in which 
farmers could indicate their interest in field trial 
opportunities. We determined there had to be a better way to 
engage with farmers interested in participating with field 
research opportunities, so we created FarmerTrials. 
FarmerTrials is a simple concept in which a company can connect 
with agribusinesses--and our company connects agribusinesses to 
farmers. We can and do believe that farmers should be paid for 
this valuable research that they do at their farm.
    New technologies need to be evaluated on real farms to 
understand the value and utility. FarmerTrials is a place in 
which objective data and farmer feedback regarding new 
technologies can be used to drive faster and better innovation.
    With regards to the agtech industry, there are more and 
more solutions being introduced to the market by startups 
throughout the U.S. This is significant because agtech is 
receiving the capital and resources for needed advancement. To 
supplement this, data science and full field trials are 
necessary to understand product performance and efficacy. We 
also need to drive user adoption at the farm level.
    With respect to small business, we believe that small 
businesses work very well in agriculture. They must be part of 
the launching pad and also new products and services that are 
launched. Small business can be agile and move quickly and 
respond to the complexities that we see in agriculture today.
    Additionally, some small businesses can engage in expanding 
rural communities by growing businesses, employment 
opportunities, and also by deploying technology resources.
    On behalf of our small business, IN10T, thank you for 
allowing us to be here today to talk about agriculture, 
technology, and small business.
    Chairman BLUM. Thank you, Mr. Heikes.
    Dr. Kester, you are recognized for 5 minutes.

                STATEMENT OF MARK KESTER, PH.D.

    Mr. KESTER. Thank you very much.
    Good morning, Chairman Blum, Ranking Member Schneider, and 
distinguished members of the Small Business Committee. I am 
Mark Kester, the chief scientific officer of AgroSpheres, a 
biotechnology company in Charlottesville, Virginia.
    I would like to acknowledge six members of the AgroSpheres 
team behind me, the true student entrepreneurs behind this 
company who are with me today.
    We thank you for calling attention to agriculture 
technology entrepreneurship and for inviting us to tell the 
story of AgroSpheres. We would like to share what we have 
learned from taking this company from a student-run project in 
my laboratory to a standalone, business where we are going to 
change the way agriculture embraces technology.
    AgroSpheres is an ag biotechnology company based in 
Charlottesville, Virginia, working on, simply, nanotechnology-
enabled, environmentally friendly biocontrols. Let's break it 
down. All we have done is created a ``FedEx truck'' that is 
designed to deliver on time, all the time, to the plant. Simple 
as that.
    What we actually have done is utilized a bacteria and have 
engineered it to make a specific protein. And that protein is a 
biocontrol that let's plants thrive. Now, when the bacteria 
makes this protein, we also got the bacteria to divide. But 
this is where the intellectual property comes in. We got to 
divide the two cells, not 50/50, but 99 to 1. Ninety-nine 
percent of one of the cells has all the genetic material. The 1 
percent is just a membrane expressing the protein, the 
biocontrol, no genetic material. So we made genetically 
modified organisms without the genetic materials.
    And we did one other thing. We also got this 1 percent to 
actually express certain proteins on the outside that bind to 
plants. And just as the FedEx truck can deliver on time all the 
time, in the back of these trucks are packages. In our FedEx 
trucks there are packages, which are biocontrols. That is the 
AgroSpheres' product.
    So how did we actually develop this? Really, really 
quickly. But in all seriousness, it is said that for new 
businesses, it is about the thirds. It is one-third the gee-
whiz science, it is one-third the intellectual property, and it 
is one-third the team. That is the team behind me. They are 
student entrepreneurs. And, in fact, I am going to embarrass 
now Payam Pourtaheri, who actually graduated with pretty much 
the highest GPA in the engineering school of UVA. He applies to 
med school, doesn't get into med school. He gets into M.D.-
Ph.D. programs. Not only will they give him an M.D., they will 
give him a Ph.D., and they will pay him for it. Highest honor 
in that realm. He gives up that huge honor and opportunity to 
stay with AgroSpheres. That is the passion, that is the 
entrepreneurship, that is the commitment that hopefully will 
grow and nuture these new student-run businesses as we take 
them out of universities and take them to real world 
applications.
    As we developed Agrospheres, we have learned to engage the 
farmer early in the process. And we did that. Around University 
of Virginia in Charlottesville, there are multiple vineyards 
and apple orchards. And we worked with the farmers directly. We 
said, what is your problem? And the problem for our solution 
was that they have to put pesticides on their plants, and they 
cannot harvest that plant until the pesticide degrades--that is 
called the pre-harvest interval. And that plant is susceptible 
to blight, temperature, wind, storms, or if the grapes get too 
ripe too early, you can't harvest. They are at risk. What we 
have done is we expressed a protein that degrades pesticides. 
So what Mother Nature does in 6 to 10 weeks, we can do in 2 
hours. Wow.
    And what we learned from the farmers, also, is what they 
really wanted was biocontrols, ways to make the plants thrive 
using our FedEx trucks. So by engaging the farmer early, we 
were able to refine our product; that was critical.
    Since I have now a minute left--what are we asking for? 
What are our concerns? Where are the positives? Number one, 
accelerators and incubators. We have an accelerator incubator 
at UVA. It is called the Innovation Lab, i.Lab. This gave our 
students access to space, resources, legal, corporate, 
financial, and taught them how to be student entrepreneurs and 
then actually entrepreneurs in the community. That model of 
student entrepreneurialism should be strengthened.
    Number two, we have to work closely with the association 
partnerships, the trade organizations, not only at the State 
level, but at the local Level. One of our early grants was from 
the Virginia Wine Board. Without their funding, we don't have a 
company today. That is the funding that gets you to the data, 
which gets you in front of the angel capitalists and venture 
capitalists and truly can turn you into a real company.
    And, number three, SBIR grants, Federal SBIR grants. We are 
now seeing more targeted funding in the ag-space from DOD, DOE, 
National Science Foundation, as well as the USDA. What is 
really important is that we streamline how quickly we can 
evaluate these grants. When we put a grant in, it can take 
anywhere from 9 months to 18 months to find out if we are truly 
funded. And when we get a grant and we now want to take it to 
the next level for higher funding, we have to start all over 
again and take 9 to 18 months to find an answer. That is not a 
good way to keep a business thriving. So we want to suggest 
that we can make that process more expediential.
    Thank you very much. I would like to thank the Committee 
members for giving me the time to tell you the AgroSpheres 
story.
    Chairman BLUM. Thank you, Doctor. Absolutely fascinating.
    Mr. Guthrie, you are recognized for 5 minutes.

                    STATEMENT OF JOE GUTHRIE

    Mr. GUTHRIE. Thank you [off mic] on this very important 
topic and how agriculture is being changed by ever-advancing 
technology. I will talk to you both from a perspective of being 
a small business owner of a farm myself and an instructor in 
agriculture who was teaching the next generation of farmers and 
small business owners, who will comprise most of the 
agriculture industry, and to help keep America at the forefront 
of feeding a hungry world. As Mr. Schneider pointed out, that 
we will need to feed 9 billion people by 2050.
    Technology in agriculture has changed more in the past 100 
years than it has, perhaps, in all of human history combined 
before that. As an example of that, my father, who was born in 
1925, walked behind a horse that was pulling a plow, and 25--I 
am sorry. I didn't have the microphone on. I thought--oh, good 
enough. Well, I am using my teaching voice.--walked behind a 
horse that was pulling a plow. A quarter century later, he was 
driving a tractor with the power of 100 of those horses. By the 
time he handed the farm off to me, we weren't even plowing 
fields anymore, because we were using zero tillage techniques 
as a soil conservation measure. Just to show you how much 
agriculture has changed in a brief period of time.
    What will the next 25, 50, or 100 years bring? There is no 
way for us to tell that any more than people 100 years ago 
could have foreseen the advances we have now. But there is no 
question that precision agriculture is an all-important driving 
force in crop production, and it appears that it will be even 
more important in the future.
    Precision agriculture is a term used to describe several 
related technologies used together to decrease input cost and 
increase yields. Those technologies include soil and yield 
mapping with GPS, tractor guidance systems that allow for 
automated tractor operation in fields, and variable rate 
applications of fertilizer, chemicals, and seeds. Unmanned 
aircraft, or drones, are also often incorporated for many 
different applications as well into those systems.
    A USDA study released last year found that precision 
agriculture was used on 30 to 50 percent of America's corn and 
soybean acres in a 2010 to 2012 timeframe in which the study 
was done. No question that those acres have increased 
substantially since then.
    To give you an example of the use of precision agriculture 
and how it is transforming how we farm, I visited a dairy farm 
in central Virginia last year, where one of my students was 
doing an internship. And the farmer said, ``Joe, come back in a 
year and you won't see me sitting on the seat of a tractor 
planting corn. Instead, I will be sitting at a desk, in front 
of a computer monitor, watching five different tractors, with 
no driver on them, in five different fields, pulling five 
different corn planters at the same time, all using precision 
agriculture.'' Each one of those planters, by the way, would be 
able to change the rate and variety of corn seed to match the 
precise condition of the soil the planter is driving over.
    So the implications of this technology is, as you can tell, 
staggering, and so are the changes it might have on our 
industry. First, the technology, while designed to improve 
profits, has been found so far to be only marginally helpful in 
improving profitability because of the high cost of the 
technology itself.
    Another consideration is that the precision agriculture and 
other advances will make more sense on larger farms. And so we 
would tend to think that we would see more larger farms adapt 
them more quickly and that we would see a trend towards more 
large farms. And, indeed, we are seeing those trends. It is 
important to keep in mind, however, that even large farms in 
the U.S. are considered to be small firms. And, in fact, most 
are family-owned.
    Another important implication of precision ag is a 
reduction in the number of people needed for farm labor. You 
can imagine in that example I gave, there is no one driving 
those five different tractors. So that reduction in the need 
for farm labor is one of the benefits of the technology, but it 
has serious implications for rural communities.
    Another example of an innovation is so-called robotic dairy 
in which nobody actually milks the cows anymore. The cow walks 
into a stall. She is milked whenever she wants to by a robot. 
Again, we are seeing implications for that and what that might 
do to rural communities. And we are also seeing larger and 
larger dairies with fewer people on them, and, again, 
implications of that for our rural communities.
    Given the time limitations, let me just give you an example 
of what we are doing at Virginia Tech. We started a precision 
agriculture class 3 years ago using material and technology 
that was donated to us from a manufacturer. In fact, 
manufacturers are coming to us all the time asking to donate to 
us so that students can learn on that material. And I would 
advise that, you know, if you haven't done so already in your 
land grant universities, to consider that as well.
    Thank you very much.
    Chairman BLUM. Thank you, Mr. Guthrie. Fascinating, 
fascinating testimony. Thank you very much.
    I will recognize myself for 5 minutes now. I have too many 
questions and too little time. So I will throw them out to 
whoever would like to answer them.
    First of all, I am a small entrepreneur myself. So I love 
small business because I am one of them. I was just sitting 
here thinking about the major corporations that are players in 
the ag industry like Deering Company, they are very big in my 
district; Case; Monsanto, lots of big names.
    Are they involved at all in any ways with you all? Are they 
helping? Are they standing in your way? Do you see them as 
somebody that, once your technology catches on, that they would 
purchase your company? I would just like to hear about the 
interaction of these mega corporations.
    Mr. GUTHRIE. Sure. And I pointed out with the technology 
that we are using in the classroom that is being donated to us 
from some of those major corporations, some of which you named 
there, we are also seeing not only big corporations, but 
smaller companies that are starting up and are developing and 
selling technologies, opportunities for college graduates in 
things such as sales, and, you know, a lot of different 
opportunities. And keep in mind, even though those are large 
companies, they have a local presence as well. And so those 
companies, you know, are hiring people, you know, at the local 
level, at the local dealership. And so we are seeing some 
benefits from it already in having more professional, college-
graduated students in rural communities as a result of that.
    Chairman BLUM. Is there encouragement from the mega 
corporations? Because, you know, I know situations where it is 
just the opposite, they try to squash competition sometimes.
    Mr. KESTER. So let me just add to that. AgroSpheres already 
has a sponsored research agreement with a mid-size ag company. 
And for a company that is only 9 months old, that is pretty 
awesome. But we want to be a large business. So we have to 
partner with mid- to large-size ag to really get our product 
out there. So it is part of our business plan. These 
eventually, hopefully, will be our partners. We have to watch 
who we work with and how we work with them. But, at the end of 
the day, it has to be a partnership.
    Ms. BENSON. Let me just say that John Deere is one of our 
sponsors for the challenge competition. So there are many of 
these larger companies that have venture capital wings, and 
they see innovation as rising the level of the water for 
everybody, all the ships rise. And so I think, for them, the 
idea of having new technology gives them the opportunity to see 
what is coming down the pike, and they may not be as nimble as 
some of these smaller companies. So there is an opportunity for 
the entrepreneur to either grow their own business or to think 
about selling that technology to a larger company that can ramp 
up production. So, for us, we see it as diversifying how that 
entrepreneur can grow.
    Mr. HEIKES. And I would say that those are our clients. We 
are linking the multinational agribusinesses to farmers. So the 
point that you made is exactly right on. There needed to be a 
neutral platform, and that is the void that our company fills, 
is how do you provide a neutral platform where multiple 
companies can work with growers and different assets? And what 
we try to do is some farm research trials work better for some 
farmers and some work for different companies. Our job is to 
link those together.
    And I would say when you talk about agility in small 
companies, some of the things that we are doing on the data 
science element, we are able to move faster, be more agile in 
our approach. And so I think small business and working with 
farmers and linking those agribusinesses is the niche that we 
are filling.
    Chairman BLUM. Thank you. We have got a minute left.
    How interested is venture capital in agriculture these 
days? I have read and I have heard that they are increasingly 
interested. The money out west, Silicone Valley, very 
interested in ag. But I would like to hear from you.
    Ms. BENSON. Yes. Very interested. But, in my experience, 
they are still trying to figure out how to adjust to the 
different horizons that ag investments have. So people that are 
used to quick turnarounds with software, able to get in and out 
within 3 years and have a 10 percent return, you don't see 
those kinds of returns and that horizon with a business 
investment.
    But with the rural business investment companies coming 
through there are a brand new type of firms, what we are seeing 
is targeted investment in rural communities. So that has been a 
real, I think, boon in venture capital funds that are trying to 
go for ag tech and for rural investments.
    Chairman BLUM. Good to hear. I am out of time.
    And I would now like to recognize our ranking member, Mr. 
Schneider, for 5 minutes.
    Mr. SCHNEIDER. Thank you. And, again, thanks, everyone, for 
your testimony.
    I have one question off the panel. It is Pourtaheri, right? 
What did your parents say when you told them you weren't going 
to med school? That was a rhetorical question.
    Mr. KESTER. He has a great answer.
    Mr. POURTAHERI. I mean, at first, they were a little 
hesitant, but since I am doing what I love, they were happy I 
am doing what I love.
    Mr. SCHNEIDER. You are lucky to have the parents you have. 
That is a great answer. Do what you love.
    But I do want to touch on some of the things. And, Dr. 
Kester, you touched on a couple of things. You talked about 
accelerators and you talked about trade organizations and 
having access to connecting the entrepreneurs. And this is 
something we are working on here in Congress. In fact, we 
passed a bill earlier this year that I had the privilege of 
drafting and introducing in 2013 called the HALOS Act trying to 
allow those entrepreneurs to meet the investors. And we have 
something, Accelerate Our Startups Act, another bill 
introduced, exactly that. We would like to try to do more of 
that and look for ways to--and perhaps we can do in this 
Committee--to drive that into more agriculture and agtech where 
the opportunities in our rural communities are greater.
    Can you touch a little bit on how you have seen those 
affect or expand a little on your comments with the incubators?
    Mr. KESTER. Exactly. I think the key part is designing 
them, making them into boutique applications for the ag 
industry. There are many incubators, accelerators, trade 
organizations, et cetera, and they are really geared towards 
software development. I do a lot of pharmaceutical innovation. 
I have drugs in the clinic. That is where most innovation 
happens in terms of the incubators and accelerators. We need 
these research accelerators and incubators directly designed 
for ag. And we are seeing more of it. I mean, the outlook is 
very, very positive.
    Mr. SCHNEIDER. I think I am going to shift to Mr. Guthrie. 
I think, you know, it is the glamour, if you will. But when you 
talk about ideas, and the term you used, Mr. Guthrie, precision 
agriculture, it kind of talks technology is about getting more 
precise and getting exactly what we want, whether it is in 
medical technology, in computers, or agriculture.
    Can you expand a bit about exactly how precision 
agriculture technology is changing the techniques of 
agriculture? And you talked about zero tilling perhaps is one--
--
    Mr. GUTHRIE. Sure. And so what we are finding is a more and 
more sophisticated agricultural producer in the world today, 
one that needs to be able to adjust and to adopt, ever-
increasingly more complicated in advanced technologies. The 
entire point, though, Mr. Schneider, goes back to the most 
simple principle of economics, which is, you know, revenue 
minus cost equals profits.
    Mr. SCHNEIDER. Right.
    Mr. GUTHRIE. And the precision agriculture works on both 
sides of that side of the income statement in which it is both 
increasing yields to help us to increase the revenue side, and 
the precision side of it that allows for the decrease in the 
amount of inputs is helping us to work on the expense side of 
it as well. But then we have to offset that with the cost of 
the technology itself. And so that is where we really are.
    And I heard the word risk brought up earlier. And that 
certainly is something that is important to consider, 
particularly as you look at, you know, legislation here and the 
new farm bill that--you know, that has a lot to say about and a 
lot to do with farm risk, is, you know, the risks of this new 
technology. And Mr. Blum brought that up earlier. We can't have 
farmers that are, you know, spending a lot of money on 
technologies that are not going to work and are not going to be 
productive. And as these things, you know, come out and they 
are tried, only a certain number of them are going to be 
successful.
    Mr. SCHNEIDER. I speak as an engineer, part of engineering 
is trial and error.
    Mr. GUTHRIE. Sure.
    Mr. SCHNEIDER. And part trial. You want to find the error 
quickly in the process rather than at the end of the process 
after spending a lot of money, and certainly you want to find 
it before trying to take it out to the broad market.
    Mr. GUTHRIE. Sure.
    Mr. SCHNEIDER. As you were doing your initial remarks, the 
diagram I drew in my notes: Lowering costs----
    Mr. GUTHRIE. Right.
    Mr. SCHNEIDER.--increasing yields----
    Mr. GUTHRIE. Right.
    Mr. SCHNEIDER.--but much higher capital investment----
    Mr. GUTHRIE. Right.
    Mr. SCHNEIDER.--which is going to increase the size of our 
farms. Larger farms with fewer people working those farms----
    Mr. GUTHRIE. Yes.
    Mr. SCHNEIDER.--changes the entire economics within our 
communities. And that is probably a conversation for another 
time.
    Mr. GUTHRIE. Yes.
    Mr. SCHNEIDER. I am almost out of time. I wanted to give 
Mr. Heikes and Dr. Benson a chance to touch on these issues. I 
apologize for not getting to you, but if you have just a quick 
remark.
    Mr. HEIKES. Yeah, quick remark. Thank you for your interest 
in the accelerators and tech programs, because those are 
necessary. And I would say that as a small business, one of the 
things that we have identified is that you have to evaluate, 
when is the funding the right option. And I think one of the 
areas that we have touched on is building a small business is 
hard. But we have to always remember that we have to add value. 
And so when you start a business and you are building this, 
start with the value piece and then think about the investment. 
So we tell a lot of small companies that as they are getting 
started.
    Mr. SCHNEIDER. And I came late, so I missed the 
introduction. Where in Colorado are you?
    Mr. HEIKES. I grew up in southern Colorado, La Veta. But 
now our business is in Lenexa, Kansas, and St. Louis, Missouri.
    Mr. SCHNEIDER. Okay.
    Ms. BENSON. And I would just add when you talk about the 
changing dynamics when you have larger farms and more 
mechanization, how that impacts jobs within those rural 
communities. I would just say there is a diversity of 
businesses in ag or ag-related businesses that we are starting 
to see pop up. Craft beverage is a huge industry that is 
growing.
    Mr. SCHNEIDER. Right.
    Ms. BENSON. Ag tech is growing. Farm-to-table is, using 
apps and connecting consumers to their growers and to food in 
different ways.
    So while we see a shift happening in maybe traditional 
farming, we also see new opportunities in the ag production 
line across the spectrum of different sectors. So we always are 
looking to encourage the new types of businesses as well as 
more traditional.
    Mr. SCHNEIDER. Thank you. And I went too long. But I yield 
back. Thank you.
    Chairman BLUM. Thank you, Mr. Schneider.
    As you can see, votes have been called again. This is 
budget day. So welcome to Washington. It is a crazy time. I 
just would like--so we are going to conclude our hearing here.
    But I just want to say that, do not interpret the lack of 
attendance today in this Committee meeting as a lack of 
interest on Capitol Hill in what you all do, because it could 
not be further from the truth. People are extremely interested 
here, congressional Members are, in clean water, pesticides, 
weather events, plants that can sustain themselves through 
draught conditions. It is a frequent topic, and I know 
particularly water quality and runoff is. So people are very 
interested here. It just happened to be you have gotten to be 
here on one of those days where we have many, many budgets that 
we need to vote on.
    So, once again, I want to thank--I want to thank all the 
witnesses for their testimony.
    And as we heard today from our panel, agtech investment is 
driving rural revitalization in cities, States, and regions 
using agtech entrepreneurs to bring jobs and dollars into our 
local communities. All stakeholders--and we heard that today 
over and over again--must work together to make sure that small 
farms, family farms, can benefit from the many exciting 
technologies and innovations America's brightest entrepreneurs, 
such as your students, are developing.
    I ask unanimous consent that members have 5 legislative 
days to submit statements and supporting materials for the 
record. And I will encourage members to submit questions to the 
panel that you can respond to in writing, those members that 
weren't here.
    And, without objection, our meeting is adjourned.
    [Whereupon, at 10:59 a.m., the Subcommittee was adjourned.]
    
                            A P P E N D I X

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Good morning. I want to thank Subcommittee Chair Blum, 
Ranking Member Schneider and members of the Subcommittee for 
inviting me to participate in today's hearing. My name is Dr. 
Lisa Benson. I am the director of rural development at the 
American Farm Bureau Federation (Farm Bureau), which includes 
50 state Farm Bureaus, Puerto Rico Farm Bureau and nearly 6 
million members. In my role, I manage Farm Bureau's Rural 
Entrepreneurship Initiative, which provides rural entrepreneurs 
world class business training, networks and resources to help 
them succeed.

    My passion has always been helping rural communities 
thrive. I was born in Fairbanks, Alaska and grew up in 
Anchorage. My family still lives in Anchorage so I have seen 
firsthand the challenges and opportunities facing entrepreneurs 
living in rural communities.

    My professional career and research has centered on helping 
beginning farmers, ranchers and rural entrepreneurs grow their 
businesses, overcome obstacles, become more profitable and 
sustain economic development in their rural communities. My 
career began at the University of Florida, then at Virginia 
Tech and now at the Farm Bureau. I earned a doctorate in 
agricultural education and extension at Virginia Tech where my 
research focused on how beginning farmer programs contribute to 
rural economic development.

    Rural communities across the United States face diverse 
challenges in terms of income, education and infrastructure. A 
USDA Economic Research Service report found that rural 
communities have fewer adults with college degrees than urban 
communities.\1\ This lower educational attainment is linked to 
higher poverty and higher unemployment rates compared to urban 
communities. According to the Federal Communications 
Commission, 39 percent of rural Americans lack access to 25 
Mbps/3 Mbps service, compared to only 4 percent of urban 
Americans.\2\ Current and future generations of rural Americans 
will be left behind their fellow citizens if they are without 
affordable high-speed broadband service that enables them to 
tap into health care and educational services, government 
agencies, and new business opportunities.
---------------------------------------------------------------------------
    \1\ USDA Economic Research Service. (April 2017). USDA Rural 
Education at a Glance, 2017 Edition. Economic Information Bulletin 171. 
https://www.ers.usda.gov/publications/pub-details/?pubid=83077.
    \2\ Federal Communications Commission. (January 2016). 2016 
Broadband Progress Report. https://www.fcc.gov/reports-research/
reports/broadband-progress-reports/2016-broadband-progress-report.

    Farm Bureau leadership personally witnessed the decline of 
their rural communities back home in their states. Their 
children weren't returning home after college. Local businesses 
were closing. Infrastructure was deteriorating. Health and 
education services were declining. Farm Bureau leadership 
wanted to reverse this trend by having Farm Bureau engage on 
---------------------------------------------------------------------------
policies and create programs that extend beyond the farm gate.

    Farm Bureau chose to focus on programs to enhance 
entrepreneurship. Entrepreneurship can be a tool to sustain 
economic growth, create local jobs and improve the quality of 
life for rural Americans. When rural entrepreneurs succeed, 
rural communities thrive and prosper. As entrepreneurs grow 
their businesses they create jobs for their family, friends and 
neighbors. Entrepreneurs tend to purchase goods and services 
from other local businesses, which increases the prosperity for 
the entire rural community. Farm Bureau wanted a program where 
the `rubber meets the road' and a program that highlights the 
successful business opportunities located in rural America. 
This focus led to the creation of the Rural Entrepreneurship 
Initiative. For more information on the Rural Entrepreneurship 
Initiative, visit our website at StrongRuralAmerica.com.

    In 2014, Farm Bureau kicked off the Rural Entrepreneurship 
Challenge, the first national business competition focused 
exclusively on rural entrepreneurs with food and agriculture 
businesses. The competition identifies rural entrepreneurs with 
unique products and strong business skills. In the first year, 
there were 95 applications submitted. Now, in its fourth year 
there were 471 applications submitted from 47 states and Puerto 
Rico. The Challenge has also expanded into separate categories 
to highlight the diverse and emerging trends in food and 
agriculture. We offer awards for the best startup in the 
following categories: agricultural technology, craft beverage, 
agritourism, farm-to-table, farm and local product.

    Over time, we identified a trend in the Challenge 
competition. Entrepreneurs with agricultural technology 
businesses dominated the winners circle. Winners included 
ScoutPro, Inc. from Iowa that offers an app to help scout 
fields, Farm Specific Technology from Tennessee that developed 
a roller crimper to help break down cover crops, Levrack from 
Nebraska with an expandable storage device for farm shops and 
Vertical Harvest Hydroponics from Alaska that crated a growing 
system engineered to withstand arctic conditions. Many of these 
ag tech entrepreneurs came from family farms or farming 
communities rather than Silicon Valley. These entrepreneurs saw 
problems on their farms and created solutions to solve them.

    A hurdle many of these ag tech entrepreneurs faced was 
trying to access enough capital to scale up their production to 
reach economies of scale. Some of these entrepreneurs 
considered reaching out to investors but they were reluctant to 
give up equity in their businesses and were not sure what type 
of terms to expect in a deal.

    To address this challenge, Farm Bureau created the 
Agriculture Investment Summit that connects rural entrepreneurs 
with investors from venture capital funds and accelerator 
programs. We targeted investors from Rural Business Investment 
Companies and accelerator programs focused on rural and ag tech 
investments. We brought together 35 rural entrepreneurs and 25 
experts and investors representing more than $300 Million in 
investment funds. Investors participating in the Summit 
represented the following funds: Midwest Growth Partners, 
Innova, CVF Capital Partners and the Kirchner Group. We also 
had managers from the following accelerator programs: 
Techstars, Village Capital and The Yield Lab.

    The Summit provided Venture Capital 101 training to 
entrepreneurs on topics such as the right time to take on 
investors and how to protect your intellectual property as you 
meet with investors. Entrepreneurs shared their experiences 
with investors and investors talked about what they looked for 
in companies. Rural entrepreneurs had the opportunity to pitch 
their businesses to investors and engage in a question and 
answer period. After the Summit, investors remarked that they 
found the entrepreneurs thoughtful, passionate and down-to-
earth. Entrepreneurs said they received top caliber training 
and enjoyed networking with other entrepreneurs and investors. 
Two entrepreneurs are now in negotiations with investors they 
met at the Summit.

    Through the Rural Entrepreneurship Initiative, Farm Bureau 
has supported more than 1,000 rural entrepreneurs from 37 
states, including Hawaii and Alaska. We have provided more than 
$500,000 in startup capital, mentorship, networking with 
investors and publicity. Entrepreneurs have used the startup 
funds to refine their prototypes, build greenhouses, hire 
staff, crate online marketplaces and upgrade their production 
facilities.

    We continue to work with the entrepreneurs that 
participated in the Challenge to learn what obstacles they face 
and help them overcome barriers. Entrepreneurs told us they 
wanted to learn more about federal programs they could access, 
grant opportunities, and how to connect with investors. We 
developed an online, monthly newsletter called Ag Spark to 
provide ongoing support for rural entrepreneurs. The newsletter 
provides entrepreneur case studies, expert interviews and a 
calendar of upcoming opportunities. We promoted the USDA Small 
Business Innovation Research grant with articles from a 
previous recipient and grant reviewer. We also publicize USDA's 
Value Added Producer Grant program and Rural Energy for America 
Loan and Grant program. We have more than 1,600 newsletter 
subscribers and that number grows each month.

    American Farm Bureau also works closely with our state Farm 
Bureaus to cross-promote programs for entrepreneurs and 
beginning farmers. We work with the Iowa Farm Bureau to promote 
their Renew Rural Iowa program, a program that supports small 
business development in Iowa. This year, we are working with 
North Carolina Farm Bureau to launch the North Carolina Rural 
Entrepreneurship Challenge to highlight exceptional rural 
entrepreneurs in their state.

    At Farm Bureau, we believe that supporting rural 
entrepreneurs is critical to enhancing and strengthening rural 
communities. Through the Rural Entrepreneurship Initiative, we 
have educated more than 1,000 rural entrepreneurs and provided 
resources to make their food and agriculture businesses more 
profitable. Our Challenge competition and Investment Summit 
connect entrepreneurs to startup capital and investors who can 
help them take their businesses to the next level. We continue 
to work with rural entrepreneurs to help them overcome 
obstacles and achieve their dreams for their businesses. Thank 
you for your time today. I look forward to answering any 
questions you may have.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Good morning Chairman Blum, Ranking Member Schneider, and 
distinguished Members of the Small Business Committee. I am 
Mark Kester, the Chief Scientific Officer of AgroSpheres, a 
biotechnology company located in Charlottesville, Virginia. I 
would like to also acknowledge six members of the AgroSpheres 
team who are here with me today. We thank you for calling 
attention to Agriculture Technology entrepreneurship and for 
inviting us here to tell the story of AgroSpheres. We would 
like to share what we have learned during the process of taking 
our company from a student project in my lab at The University 
of Virginia to a real-world company that just closed a seed 
round of funding. AgroSpheres Inc, is an AgBiotech company 
based in Charlottesville, VA working on nanotechnology enabled 
environmentally friendly biocontrols.

    AgroSpheres is a true success story. In a very short time, 
we have taken a concept and turned it into a reality. When UVa 
students, Ameer Shakeel and Payam Pourtaheri conceptualized the 
technology, they realized that they had come across something 
special. They had a ``solution'' but needed to find a problem. 
Ameer and Payam initially wanted to target the pharmaceutical 
space with their nano ``solution''. I advised them that the 
runway was too long to develop a pharmaceutical application and 
that there was ``lower hanging fruit''. They took this advice 
and adapted the technology to make a pesticide-degrading spray 
to address the problem of residual pesticide contamination.

    Being from a region in Virginia rich in viticulture, we 
reached out to our local vineyards to understand how pesticide 
contamination was affecting our community. After visiting many 
sites, it was clear that the problem of residual pesticide 
contamination limited the capability of farmers to harvest 
premium quality products and posed a health risk to workers 
during the harvesting process. Farmers saw such great value in 
our technology that multiple vineyards and one apple orchard 
even agreed to allow us to run small-scale field trials and 
generate our first field-trial data for our technology. The 
willingness for small farms in our community to work with us 
was key to the early stages of our success.

    As we transitioned from a laboratory concept company to a 
company now in the marketplace looking for commercialization 
partners, we began to learn more about what we had developed. 
We learned that the market place and farmers were more 
interested in products that grant crop protection in a more 
environmentally friendly manner. With this new market 
information, we went back to the lab and developed a three-
stage approach to safer crop protection. First, we would make 
synthetic pesticides protected and targeted, reducing the 
amount sprayed, drift, and run-off. Second, we would look for 
partners that have currently developed biocontrols that are 
lacking field delivery mechanisms. Lastly, we would develop our 
won, next-generation biocontrols for crop protection to take to 
market independently.

    While exploring different uses for our technology, we 
continued to build on our initial assumption of the platform's 
versatility. We have developed a platform that has the ability 
to encapsulate synthetic chemicals, encapsulate or express 
biocontrols, and form a natural adhesiveness to plants for a 
more targeted delivery. We are most excited about the 
biopesticide industry because we are a one-stop shop that can 
create the biocontrols, encapsulate and protect the 
biocontrols, and engineer proteins on the outside of our 
capsule to target the intended plants. Our products are crated 
through bacterial engineering and produced through the cheap 
and scalable process of bacterial fermentation. Most 
importantly, the AgroSpheres product delivers the biocontrol 
without any genetic material.

    I also would like to highlight some of the successes that 
we have had along the way as we have morphed a concept into an 
agricultural biotechnology company. Our first milestone was 
licensing our pesticide-degrading technology from the 
University of Virginia. This meant that we now had value as a 
standalone company. Next, we started pitching investors and 
after a few months closed our seed round of financing. Then we 
used our newly acquired funds to purchase equipment and outfit 
our new lab in our home in Charlottesville. Lastly, we signed 
our first corporate research contract where a company is 
funding us to encapsulate one of their synthetic biocontrol 
chemicals. Our next steps are continuing to produce data 
validating our technology, find a partner in biocontrols for 
Agriculture, and hopefully, receive some SBIR funding!

    We have many factors that have contributed to our success 
but would like to highlight a few:

           Creating a team of young motivated 
        entrepreneurs with diverse backgrounds allows us to 
        attack problems from many different angles. We have 
        various science backgrounds, business backgrounds, and 
        a faculty entrepreneur. Our young entrepreneurs changed 
        career paths from going to medical or graduate school 
        to pursue AgroSpheres.

           Engaging farmers and crop protection 
        companies early to define and modify the product and 
        initial company vision based on market need. Potential 
        customers were much more generous with their time, 
        information and resources than we initially thought. 
        Without this initial generosity, we would not have been 
        able to confirm our platform's versatility.

           Entrepreneurial competitions provided us the 
        much-needed gap financing between technological 
        development and equity funding. This non-dilutive 
        funding gave us the ability to pay expenses and explore 
        the technology and different end markets before 
        approaching investors with inadequate information. When 
        we needed money for an experiment, to pay a lawyer, or 
        to run a field trial, we would look for a competition 
        that we thought that we could enter and win.

    In closing, I want to leave the committee with a couple of 
final thoughts that could help early-stage AgTech companies 
going forward.

           Public funding for company incubators or 
        accelerators. At the University of Virginia, we have an 
        iLab incubator that is funded by the University of 
        Virginia and its donors. This program was immensely 
        helpful to our development, providing office space, 
        entrepreneurial mentorship, and contacts.

           Strengthening Federal, State and most 
        importantly local grant opportunities for commercial ag 
        research and development. If we had the ability to 
        receive short-term funding to bridge the gap between 
        technology conception and equity funding, we would have 
        devoted more time to the rapid development of the 
        technology and less time to the competitions that were 
        a necessity for survival.

           We have applied for a couple of SBIR grants 
        regarding different commercialization opportunities, 
        but as startups move quickly and adapt to real time 
        market feedback, it would be helpful if the evaluation 
        timeline was expedited and shortened. This would allow 
        us to incorporate this funding into our future 
        planning.

    In closing, I would like to thank you again for inviting 
AgroSpheres here today to share our experiences. I look forward 
to answering any questions you might have.
    High Tech Agriculture: Small Firms on the Frontier of 
Agribusiness

    Testimony presented to the House Committee on Small 
Business, Subcommittee on Agriculture, Energy, and Trade

    Presented by Joseph W. Guthrie, Senior Instructor, 
Agricultural Technology Program, Virginia Tech, Blacksburg, 
Virginia

    Ladies and gentlemen of the committee, I am honored and 
delighted to speak with you today about agriculture and how the 
many small business owners who comprise most of our nation's 
agricultural production are finding challenges and 
opportunities in the adoption of ever-advancing technology. I 
will also present information to you about how those of us who 
are teaching agriculture in higher education are preparing the 
next generation of agricultural producers to successfully 
incorporate new technology into their farm businesses.

    Agriculture has been at the center of my life's work since 
I was a boy growing up on a beef cattle and dairy farm in the 
New River Valley of Southwestern Virginia. It is a farm that my 
family has owned for six generations since 1795, and one that I 
will pass along to my children to continue a legacy of a small 
family business that is helping to feed a hungry world. And 
that task will become increasingly important and challenging as 
the world's farmers will need to feed over 9 billion people by 
the year 2050.

    For the past eleven years, I have also taught courses in 
agricultural business management in the Agricultural Technology 
Program in the College of Agriculture and Life Sciences at 
Virginia Tech, which is Virginia's Land Grant University. So I 
can speak to you today both as a small business owner of a farm 
and as someone who is helping to train tomorrow's farmers, 
agricultural supply business managers, farm equipment dealers, 
and others who will keep America at the forefront of 
agricultural production.

    It is no exaggeration to say that technology in agriculture 
has changed more in the past 100 years than it had in any 100 
years prior, and perhaps more than in all of human history 
combined. As an example of that, when my father, who was born 
in 1925, was growing up on our family farm, he walked behind a 
horse that was pulling a plow, just as every generation before 
him had done. A quarter century later, he was driving a tractor 
with more power than 100 of those horses. By the time he handed 
the farm off to me, we had stopped plowing altogether because 
we had begun using zero tillage planting as a soil conservation 
practice.

    So, what it happening now and what will continue in the 
future with advancements in agricultural technology? Just as it 
was impossible for people in the early 20th Century to foresee 
the advancements that awaited them, so it is difficult for us 
to say what advances in agriculture might be in the next 25, 
50, or 100 years. But what we can see is what some recent 
advancements have been and where the industry appears to be 
headed with them.

    There is no question that precision agriculture is an all-
important driving force in crop production now and appears that 
it will be even more important in the future as it is more 
widely adopted, as the technology will likely become more 
affordable, and as it continues to improve over time. Precision 
agriculture is a term used to describe several related 
technologies that are often used together to decrease input 
costs and increase yields. ?Those technologies include soil and 
yield mapping to great precision using GPS, tractor guidance 
systems that allows for automated tractor operation in fields, 
and variable rate application of fertilizer, chemicals, and 
seeks. Unmanned aircraft, or drones, are also often 
incorporated into precision agriculture to provide imaging of 
fields that enhance decision-making on irrigation and 
application of chemicals and fertilizers.

    A USDA study (USDA ERS Report Number 217) released October 
2016 found that precision agriculture was used on 30-50% of US 
corn and soybean acres in 2010-2012. There is no doubt that the 
percentage has risen significantly since then.

    Let me give an example of the use of precision agriculture 
and how it is transforming how we farm. I visited a dairy farm 
in central Virginia a year ago where one of my students was 
working as an intern during the summer. The farm owner said, 
``Joe, come back in two years and I won't be sitting on a 
tractor planting corn. I'll be sitting at a desk watching a 
monitor of 5 un-manned tractors in 5 fields pulling 5 corn 
planters.'' Each of those planters are able to change the rate 
an the variety of corn seed to match the precise conditions of 
the soil the planter is driving over.

    The implications of this technology to enhance production 
is, as you can tell, staggering. So are the changes it might 
have on the agricultural industry. First, the technology, while 
designed to improve profits by providing savings in input costs 
and increases in yields, is very expensive. The USDA study 
found only a small increase in farm profitability among farms 
that had adopted precision agriculture during the time of the 
study. Hopefully, profitability will increase as the technology 
becomes more affordable over time.

    Another consideration is that precision agriculture and 
other technological advancements make more sense on larger 
farms where their fixed costs can be spread out over more 
acreage. That would indicate that we might expect larger farms 
to adopt the technology first and that we might see a trend of 
fewer but larger farms. And, indeed we are seeing those trends. 
It is important to keep in mind, however, that even large farms 
in the US are still considered small firms. Most, in fact 
nearly all, are family owned.

    Another implication of precision agriculture and other 
technologies in agriculture is a reduction in the number of 
people needed to farm labor. As you can imagine from the 
example of the dairy farmer, he won't be hiring anyone to drive 
those 5 tractors. The reduction in the need for farm labor and 
labor costs is one of the benefits of the technology, but it 
has serious implications for rural communities.

    Another example of a labor-saving technology that is 
becoming increasingly popular in agriculture is the so-called 
robotic dairy. Using this technology, no one at one of these 
dairy farms actually milks the cows any more. Instead, the cow 
is trained to walk into a stall whenever she wants to be 
milked, and she is fed some grain from an automated feeder 
while a computerized robotic milking machine attaches to her 
and milks her. It's truly amazing to see in practice. It costs 
about a half million dollars.

    That leads me to another example of the staggering changes 
we are seeing in agriculture, specifically in the dairy 
industry. A colleague of mine from Virginia Tech took her Dairy 
Management class to visit 4 Virginia dairy farms that milked a 
total of 5,000 cows. A generation ago, given the size of the 
typical Virginia dairy herd, she would have needed to have 
visited 50 dairy farms to see that number of cows, and even 
more to see the equivalent amount of milk produced, since the 
average cow produces much more milk now than a cow of 20 or 30 
years ago. Again, the use of technology favors larger farms 
that spread out fixed costs, so we are seeing fewer and larger 
dairy farms with increased production per cow.

    These changes associated with technology and increased 
economies of scale increase production, which makes 
agricultural products more plentiful and less expensive. 
Therefore, they ultimately benefit consumers, perhaps more than 
they actually benefit the farmers who use them.

    Given time limitations, I have discussed only a little bit 
about only a few of the changes in technology we are seeing in 
agriculture. Others would include the use of genetically 
modified crops such as Round-Up Ready corn, new technology in 
chemicals and particularly in herbicides, and the increasing 
use of drones for a number of applications.

    We on the faculty of the Agricultural Technology Program at 
Virginia Tech, like faculties of colleges of agriculture around 
the nation, are endeavoring to keep up in teaching courses that 
incorporate new technology as we train the next generation of 
agricultural producers and suppliers, most of whom will own, 
manage, or work for small businesses. An example is a new 
course that we added to our curriculum three years ago specific 
to teaching precision agriculture. We were able to do this with 
a grant of the precision agriculture equipment from a 
manufacturer. So, the students are learning on the equipment 
that the may use some day or may already have at their home 
farm. Public/private partnerships such as this one can be 
greatly beneficial to both the students and to the technology 
manufacturer, and I would encourage your states' Land-Grant 
universities to pursue a similar partnership if they have not 
done so already.

    Given the brief time I have been asked to speak, I will 
stop there in what is a very large and broad topic, but one I 
am glad your committee has seen fit to put onto its agenda to 
learn more about. To the extent I am able, I will now try to 
answer any questions you may have or top provide your answers 
later if I need to do more research before I can answer 
accurately.

    Thank you.
                    Questions for the Record

                  Committee on Small Business

         Subcommittee on Agriculture, Energy, and Trade

    ``High-Tech Agriculture: Small Firms on the Frontier of 
                         Agribusiness''

                          Lisa Benson

    Rep. Al Lawson

    Question 1:

    Can you please explain the important role of 1890 
institutions in helping to expand agri-tech and how these 
universities can assist in the development of this industry?

    The field of agricultural technology is critical to helping 
U.S. farmers and ranchers produce enough food to feed a growing 
global population. Land grant institutions provide key training 
to the next generation of entrepreneurs who will create 
agricultural technology innovations to help us produce healthy, 
safe food using less land, water and inputs. The role of 1890 
land grant institutions will become even more important as the 
U.S. population shifts from a majority of non-Hispanic whites 
to a more diverse population with a minority-majority.\1\ The 
1890 institutions serve an important role equipping diverse 
students to enter into the field of agricultural technology. 
The 1890 institutions and other HBCUs (Historically Black 
Colleges and Universities) provide much needed career 
exploration and STEAM training (science, technology, 
engineering, agriculture and mathematics) to ensure our country 
has a robust, skilled and diverse workforce to address the 
mounting challenges facing agriculture. Career exploration 
programs include Tuskegee University's AgriTREK Summer 
Institute and AgDiscovery Summer Program \2\ that introduces 
high school students to potential career tracks through a two-
week residential program. Florida A&M offers AgTech Century 21 
\3\, a summer enrichment program to help middle and high school 
students learn more about careers in agricultural science. Some 
initiatives focus on entrepreneurship and the commercialization 
of agricultural inventions. The HBCU Innovation and 
Entrepreneurship Collaborative \4\ fosters innovation, 
commercialization and entrepreneurship at college campuses 
across various disciplines including agriculture, science, 
engineering and technology.
---------------------------------------------------------------------------
    \1\ U.S. Census Bureau (2015). Projections of the Size and 
Composition of the U.S. Population: 2014 to 2060. https://
www.census.gov/content/dam/Census/library/publications/2015/demo/p25-
1143.pdf

    \2\ Tuskegee University (2017). AgriTREK/SciTREK and AgDiscovery 
Summer Programs for High School Students. https://www.tuskegee.edu/
programs-courses/colleges-schools/caens/conferences-workshops/
agritrekscitrek

    \3\ Florida A&M (2017). AgTech Century 21 Summer Enrichment 
Program. http://www.famu.edu/cesta/main/index.cfm/cooperative-
extension-program/agriculture/herd-health/agtech-century-21-summer-
enrichment-program/

    \4\ Association of Public & Land-Grant Universities (na). HBCU 
Innovation and Entrepreneurship Collaborative. http://www.aplu.org/
projects-and-initiatives/access-and-diversity/hbcu-innovation-
commercialization-and-entrepreneurship/index.html

---------------------------------------------------------------------------
    Question 2:

    Can you discuss what improvements can be made to improve 
the agri-tech industry, particularly as it relates to 
protecting the environment and food production?

    We are facing the challenge of producing food for a growing 
global population with an ever dwindling supply of farmland and 
water. Ag technologies are being developed to produce food more 
intensively, using less water, farmland and inputs. Through the 
Farm Bureau Rural Entrepreneurship Challenge \5\ we have 
identified and promoted a number of technologies developed by 
rural entrepreneurs that help produce food with less farmland, 
water and inputs. Albert Wilde from Croydon, Utah, developed an 
all-natural plant food from sheep wool that reduces the need 
for watering by 25%. Albert's business is Wild Valley Farms 
\6\. Alex Adams, an entrepreneur from Knoxville, Tennessee, 
developed a technology called GeoAir \7\ that uses drones to 
detect mold in corn so farmers can conduct targeted spraying 
and reduce overall crop protection chemical applications. To 
learn more about agricultural technology businesses across the 
country, visit our Entrepreneur Showcase available here: 
https://app.reviewr.com/s1/showcase//RUral2018
---------------------------------------------------------------------------
    \5\ Farm Bureau Rural Entrepreneurship Initiative (2017). Rural 
Entrepreneurship Challenge. http://www.strongruralamerica.com/
challenge/

    \6\ 2018 Farm Bureau Rural Entrepreneurship Challenge (2017). Wild 
Valley Farms. https://app.reviewr.com/s1/
pitch?subid=2618319&evtid=2499238

    \7\ 2018 Farm Bureau Rural Entrepreneurship Challenge (2017). 
GeoAir. https://app.reviewr.com/s1/pitch?subid=2815350&evtid=2499238

---------------------------------------------------------------------------
    Question 3:

    I just launched a hunger initiative calle4d the ``Let's 
Feed America'' initiative where I am advocating for various 
hunger initiatives to eradicate food desserts in my district 
and to provide food aid to low and moderate income residents 
along with senior citizens and the disabled populations. How 
can agri-tech be used to help eradicate hunger in food 
desserts?

    Food deserts are crated when residents living in a 
designated area have limited access to healthy, reasonably-
priced food. Agricultural technologies, innovations and systems 
can be used to address food deserts by 1) increasing the 
availability of healthy foods for residents living in remote or 
low income areas, and 2) providing foods at a price point that 
is affordable for low and moderate income residents. Through 
the Farm Bureau Rural Entrepreneurship Challenge we have 
identified a number of agricultural technology businesses that 
address the challenges of food deserts. Linda Janes and Dan 
Perpich of Anchorage, Alaska, created Vertical Harvest 
Hydroponics \8\, a hydroponics farm built in a shipping 
container that can withstand artic conditions. The containers 
are shipped throughout Alaska to provide fresh vegetables to 
communities living in remote rural villages and towns. Local 
residents learn how to farm using the containers, In South 
Carolina, Lindsey Barrow Jr. created the Lowcountry Street 
Grocery \9\. The Lowcountry Street Grocery is a community-
supported mobile farmers' market that delivers local, farm-
fresh food and nutrition education to communities surrounding 
Charleston. Lindsey takes a portion of the revenue from the 
stops the mobile market makes to pay for additional visits to 
low-income/low-access communities to ensure that residents in 
these areas receive access to healthy food. Visit our 
Entrepreneur Showcase to see more ag technology businesses that 
are helping increase access to healthy, affordable food: 
https://app.reviewr.com/s1/showcase//Rural2018
---------------------------------------------------------------------------
    \8\ Vertical Harvest Hydroponics (2017). What We Do. http://
verticalharvesthydroponics.com/about/

    \9\ Lowcountry Street Grocery (2017). About: An Innovative and 
Unique Approach to Doing Good Business. http://
www.lowcountrystreetgrocery.com/about-us/
                    Questions for the Record

                  Committee on Small Business

         Subcommittee on Agriculture, Energy, and Trade

    ``High-Tech Agriculture: Small Firms on the Frontier of 
                         Agribusiness''

    Thank you again for the opportunity to be in DC for this 
experience. Here are our responses to the questions provided:
    Question 1: Can you please explain the important role of 
1890 institutions in helping to expand Agri-tech and how these 
universities can assist in the development of this industry?

    One way to increase AgTech adoption is continued hands-on 
experiences through the land-grant system. For example, 
Internships provide opportunities for young people to 
experiment and pursue careers in agriculture while helping 
agribusinesses.

    With the AgTech industry change happening at such a rapid 
pace, we need more partnerships between education and the 
private sector. There are many benefits to completing an 
internship for the student, the business, and the university.

    Question 2: Can you discuss what improvements can be made 
to improve the Agri-tech industry, particularly as it relates 
to protecting the environment and food production?

    IN10T believes in the importance of continued access to 
environmental data. In addition to access, continuing to 
increase the quality of environmental data is essential. An 
example environmental data set is the SSURGO database which 
contains information about soil at collected by the National 
Cooperative Soil Survey. Other examples are the satellite 
imagery and radar information that is published daily.

    Secondly, IN10T believes we need more testing and 
validation of products and practices at the farm level. New 
technologies need to be evaluated on real farms to understand 
value and utility. FarmerTrials is a place in which objective 
data and farmer feedback regarding new technologies can be 
generated to drive better innovation. A neutral platform 
displaying research and innovation projects is a needed tool 
for tomorrows farmer.

    Question 3: I just launched a hunger initiative called the 
``Let's Feed America'' initiative where I am advocating for 
various hunger initiatives to eradicate food deserts in my 
district and to provide food aid to low and moderate income 
residents along with senior citizens and the disabled 
population. How can agri-tech be used to help eradicate hunger 
in food deserts?

    Data is already helping us measure and improve many 
elements of today's agriculture. In the proposed initiative, 
there appears an opportunity to apply data science to the 
currently available data. This analysis could evolve to a model 
with predictive/potential opportunities thus supporting the 
future eradication of hunger.

    Thank you,

    Kevin Heikes/IN10T
    w: 913.283.4270
    c: 913.220.4375
    Questions for the Record
    Committee on Small Business
    Subcommittee on Agriculture, Energy, and Trade
    ``High-Tech Agriculture: Small Firms on the Frontier of 
Agribusiness''

    Rep. Al Lawson

    Question 1:

    Can you please explain the important role of 1890 
institutions in helping to expand Agri-tech and how these 
universities can assist in the development of this industry?

    My University, the University of Virginia works closely 
with 1890 Land Grant Institutions including Virginia State and 
North Carolina A&T. In particular, the nanoSTAR Institute at 
University of Virginia, which I direct, works closely with the 
North Carolina/Virginia Minority Alliance to place 
undergraduate students from these schools into our Summer 
Undergraduate Research Program. As discussed in my testimony, 
all schools of higher education should be committed to a 
culture of entrepreneurialism for their undergraduates. These 
students should be encouraged to participate in team-projects 
that prepare them for the new opportunities offered by the 
scientific ``revolution'' in synthetic biology and agricultural 
technology.

    Question 2:

    Can you discuss what improvements can be made to improve 
the Agri-tech industry, particularly as it relates to 
protecting the environment and food production?

    As discussed in my testimony, one of the companies I have 
founded, Agrospheres, is using the science of synthetic biology 
to engineer non-GMO delivery platforms to degrade pesticides 
directly on plant surfaces. Agrospheres, developed as a student 
entrepreneurial project, is now a University ``spin-out: 
company that has won several prestigious National competitions 
including the United States Patent and Trademark Office 
Collegiate Inventors Competition. To successfully compete and 
grow as a company, Agrospheres has taken advantage of incubator 
facilities in the Charlottesville area as well as grant funding 
from local, State and National Sources. Further support for 
these resources, particularly enhanced SBIR grant funding in 
the Ag space, from NSF, USDA, DOE and DOD, are essential to the 
development of these new companies that will change the world.

    Question 3:

    I just launched a hunger initiative called the ``Let's Feed 
America'' initiative where I am advocating for various hunger 
initiatives to eradicate food desserts in my district and to 
provide food aid to low and moderate income residents along 
with senior citizens and the disabled population. Howe can 
agri-tech be used to help eradicate hunger in food desserts?

    There are now numerous examples of companies developed 
through Academic/Industrial partnerships that are making 
agricultural products safer and more cost-effective. This 
directly transfers to a healthier economy for farmers but also 
to fresher and more plentiful products in urban settings. Ag-
tech provides the ``solutions'' to feed urban food deserts and 
quite possibly the world.

    Respectfully,

    Mark Kester

    Director, nanoSTAR Institute, University of Virginia
                    Questions for the Record

                  Committee on Small Business

         Subcommittee on Agriculture, Energy, and Trade

    ``High-Tech Agriculture: Small Firms on the Frontier of 
                         Agribusiness''

                          Joe Guthrie

    Question 1:

    Can you please explain the important role of 1890 
institutions in helping to expand Agri-tech and how these 
universities can assist in the development of this industry?

    The 19 colleges and universities that comprise the Council 
of 1890s Institutions are integral and vital components of the 
land-grant missions that provide invaluable new knowledge of 
agriculture to the people in their states and to the nation. 
These historically black colleges and universities--such as 
Florida A&M in Rep. Lawson's state and Virginia State 
University in my home state--have the same 3-part mission of 
all land-grant universities: education, research, and 
extension. In each of the states with one of the 1890 
Institution, that institution partners with another 
university--such as the University of Florida or Virginia 
Tech--to fulfill the land-grant mission. Agriculture has been a 
central focus of the land-grant mission since the passage of 
the Morrill Land-Grant Act and the establishment of 
universities around the nation that it provided for.

    Today, the land-grants are continuing to provide leadership 
in the burgeoning new agricultural technologies. Importantly, 
the land-grants are fulfilling that leadership role in all 3 
aspects of their mission. They are educating students, such as 
through the new course in Precision Agriculture in the 
Agricultural Technology Program at Virginia Tech that I 
discussed in my testimony. They are providing research in many 
aspects of agriculture, both on-campus and at agricultural 
research and experimentation centers. And they are extending 
that knowledge to farmers through the Cooperative Extension 
Service.

    There has never been a time in which it was more important 
to get new information quickly to agricultural producers and 
suppliers than it is right now. The states with 1890 
Institutions are fortunate to have two sets of campuses, 
faculties, and students with a combined extension component to 
fulfill that need. As an example, in Virginia, the work in 
agricultural research and extension is divided up with Virginia 
Tech and Virginia State University partnering in some sectors, 
and each taking areas of specialization in other sectors. In 
Virginia, we are particularly fortunate to have these two 
institutions in two geographically distinct parts of the state. 
Virginia Tech's campus is in the ride and valley region of the 
Southwestern part of the state, which is primarily a forage and 
livestock producing area and lends itself well to research in 
those sectors. Virginia State University is located in 
Petersburg, in Virginia's coastal plain region, where row crop 
farming predominates. The two institutions partner in having 
about a dozen other research stations around the state. 
Virginia State has also taken the lead in several initiatives 
that work well in its area such as aquaculture. To the extent 
that other states with 1890 Institutions can find similar ways 
of having their land-grants partnering with specializations, we 
have found in Virginia that it can certainly create synergies 
and efficiencies and be beneficial to stakeholders.

    I am a person with a love of history and the story it tells 
us of who we are today, so I'd just like to add a note about 
the history of the Morrill Land-Grant Act and two other great 
acts of Congress and the Lincoln Administration that have 
proved to be of incalculable value to the nation and have made 
American agriculture the most productive and efficient in the 
world.

    First, the Morrill Land-Grant Act provided for a grant of 
land in each state from the federal government to provide 
either the site or the funding for a public institution of 
higher education with areas of focus on agriculture, mechanics 
(what we now call engineering), and military science. It was 
originally passed during the Lincoln administration in 1862 and 
was expanded to include colleges for African-Americans in 1890.

    Another of those great pieces of legislation was the one 
which created the United States Department of Agriculture in 
1862. Lincoln called it ``the people's department.'' From its 
humble beginnings where its most prominent mission was to 
distribute seeds to farmers, it now works to ``assure food 
safety, protect natural resources, foster rural communities, 
and end hunger in the United States and internationally'' 
according to its website.

    The third great work of Congress and the Lincoln 
Administration of 1862 was the Homestead Act. It provided for 
settlement on the vast and rich farmlands west of the 
Mississippi. Settlers were given title to land for free if they 
settled on it and farmed it. The act was expanded in 1866 to 
include African-Americans. More than 1,600,000 homesteaders 
settled on over 270 million acres, which is about 10% of the 
total area of the United States. As a result, today's American 
agriculture is largely comprised of family farms where 
ownership is passed down through generations of landowners who 
tend the land as their own and protect it for their heirs. No 
other system provides as well for productivity or 
sustainability.

    I cite these great acts of Congress from 1862 to give 
examples of how legislation can provide great benefits to the 
nation with the hope that this Congress will be as inspired and 
as gratefully remembered for the works it passes.

    Question 2:

    Can you discuss what improvements can be made to improve 
the Agri-tech industry, particularly as it relates to 
protecting the environment and food production?

    Among the advantages of many of the new innovations in 
technology in agriculture is that they can have positive 
effects on environmental sustainability. For example, 
enhancements in seeds and chemicals have led to reduced soil 
erosion by reducing or eliminating tillage. Precision 
agriculture more accurately and efficiently applies fertilizers 
which helps reduce run-off. Precision ag can also reduce the 
number of trips over the field that a farmer would need to make 
during the growing season, and that saves diesel fuel and other 
input costs. So, while these technologies are designed to 
reduce input costs, they have an indirect benefit of 
environmental stewardship in doing so. We can only presume that 
further improvements in precision ag and other new technologies 
in agriculture in the future would tend to have the same 
effects.

    In addition to reducing inputs, precision ag and other new 
technologies are designed to improve yields. For example, 
modern corn planters can select from a number of varieties of 
seeds as the planter covers a field and select, to a high 
degree of accuracy, a particular seed that will maximize 
production in a specific part of the field. That selection is 
based upon precise satellite mapping and records of previous 
yields that measure the field down to the square meter. As 
yields per acre improve we can produce more food to feed more 
people on the same acreage.

    Ultimately, sustainability in American agriculture is 
linked to profitability of millions of small farms, mostly 
family farms, across the nation. Our farmers can only stay on 
the land and make it productive while providing for long-term 
environmental stewardship if the farm business is profitable 
enough to allow for investments to go back into the farm. New 
technologies should improve profitability by reducing input 
costs and increasing yields, and they generally do. However, 
the technology must increase profits enough to pay for itself. 
So far for precision agriculture, that profit has only been 
nominal because of the cost of the technology, as I pointed out 
in my testimony. The hope is that the cost of the precision ag 
technology will go down over time, as the cost of technology 
generally tends to do.

    Question 3:

    I just launched a hunger initiative called the ``Let's Feed 
America'' initiative where I am advocating for various hunger 
initiatives to eradicate food deserts in my district and to 
provide food aid to low and moderate income residents along 
with senior citizens and the disabled population. How can agri-
tech be used to help eradicate hunger in food deserts?

    I applaud the Congressman's efforts in these initiatives to 
enhance nutrition for all Americans in general and for the more 
economically disadvantaged people in his district in Florida in 
particular. I hope it helps to raise our consciousness of the 
issues associated with the lack of adequate nutrition faced by 
many Americans. Food deserts are a problem in many places 
across the United States, but in our urban centers in 
particular. I share the Congressman's hope that we will find 
applications for new agricultural technologies in providing for 
food production in areas that are currently food deserts.

    One challenge that we will face in achieving the use of 
enhanced agricultural technologies in eliminating food deserts 
is the scalability of the technology. As I pointed out in my 
testimony, precision agriculture technology tends to be used on 
large farms because only the larger farms are able to afford 
the technology since they can spread the cost outlay for the 
technology out over enough acres to make it worthwhile. The 
hope is that the technology will become less expensive over 
time, as most technologies tend to become, and then they will 
be used more generally in medium sized and small farms. That's 
important because most of the efforts in eliminating food 
deserts focus on smaller scale operations and start-ups with 
limited acreage. That could help us to raise more food, not 
necessarily in the urban centers, but perhaps close enough in 
outlying areas to make small farms there viable, productive, 
and profitable enough to specialize in marketing to consumers 
in the urban centers with fresh produce through outlets such as 
farmer's markets and produce stands.

    Because of the limited acreage available in urban areas, we 
would also tend to look to intensive, high value returns from 
acreage in the urban centers themselves. Greenhouses are one 
way to capture that high value per acre. I'll point out an 
example of such an intensive operation that has been successful 
as an agricultural producer, a youth training center, and a 
community outreach program. It is a hydroponics operation 
called Pulaski Grow in my home county, Pulaski County, 
Virginia. Their website is www.pulaskigrow.org. Pulaski Grow 
uses greenhouses to grow both plants and fish in a symbiotic 
relationship called hydroponics. Hydroponics allows for the 
production of both plants and fish on a large enough scale to 
be economically viable in only a very small area. A similar 
project could be done on a couple of vacant lots or perhaps, on 
a smaller scale, even on a roof top. While such an operation 
could be viable as a for-profit venture for an entrepreneur, 
Pulaski Grow has chosen to be a philanthropic non-profit and 
focus on using the operation as a youth training center which 
employs disadvantaged youth in the area to help them acquire 
hands-on skills and important life lessons in working at a 
business. Such an operation could be replicated almost anywhere 
because of the use of greenhouses. Outputs can include both 
farm-raised fish, which can be a very affordable protein source 
for a local urban population, and organically-grown herbs. 
Pulaski Grow receives a modest annual grant from Pulaski 
County's Board of Supervisors, of which I am a member. The 
grant is specifically used to help enhance the youth training 
aspect of the venture. I want the Congressman and all the other 
members of the committee to consider themselves to have an open 
invitation to visit and tour the facility. Their staff can 
contact me to make the arrangements.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

               Our Experience With Rural Entrepreneurship


    I am glad your paths crossed with Dr. Lisa Benson from the 
American Farm Bureau Federation. She is very dedicated to rural 
business development, is genuine, and tack sharp.

    My name is Martin Bremmer and I am the president of 
Windcall Manufacturing, Inc. in rural Venango, Nebraska (the 
southwest corner where Nebraska, Kansas, and Colorado meet). 
Our company manufactures a small handheld grain combine. Its 
purpose is to allow grain growers to harvest a small amount of 
grain to test the sample for water content. The percentage of 
water is how farmers determine if a field or crop is ready to 
harvest. If the grain is too wet the farmer is charged a 
``drying'' fee and if the grain is too dry the farmer will lose 
money from ``shrinkage'' when the grain is sold. The GrainGoat, 
a patented machine, is the only one of its kind in the world 
due to the complex nature of threshing grain in such a tiny 
machine. You can learn more at www.graingoat.com.

    Dr. Benson asked me, and several other who participated in 
the Farm Bureau Rural Entrepreneurship Challenge last year 
(2016), to describe the ``challenges and opportunities'' facing 
rural entrepreneurs.

    Despite being 100 miles from the nearest town with a Home 
Depot or a good sushi restaurant, we are, for the most part, 
satisfied with shipping access to plastics and metal 
fabricators. We are accessible to all freight companies, FedEx, 
and UPS. So acquiring our raw components and drop shipping our 
finished product is relatively uneventful.

    We are challenged with the distance to our plastics and 
metal fabricators during product development, however, simply 
because they are four to six hours away by interstate. Face-to-
face meetings are usually necessary when new CAD drawings are 
being discussed and implemented into ``one-up'' prototype parts 
prior to larger purchase orders. This step is critical in 
discovering errors in manufactured parts before large orders 
are requested.

    This hurdle could be eliminated with reliable high speed 
internet access is rural parts of the U.S. While most cities 
enjoy internet speeds of 20 to 100 mbps of speed, here in rural 
Nebraska, Kansas, and Colorado we either have dial up speed or 
we must pay $60-$100 per month for 3-8 mbps. This means we 
cannot hold reliable video conferences and a simple webinar 
usually cuts in and out. Cell phone companies do not equip 
their cell towers with high speed equipment due to the low 
population in rural areas. This past summer our only internet 
provider is this area announced they were closing, which would 
have left us without internet completely until an ISP from 200 
miles away purchased the business and has continued to offer 
our area with basic internet access. This is our greatest 
challenge, currently as a rural entrepreneur.

    I echo the four points brought up by Dr. Hofecker (Demeter, 
Inc.) in his email on this subject (Access to tech, 
entrepreneurial training, peer communities, and access to 
capital). Most rural entrepreneurs do not intentionally set 
their trajectory to become an entrepreneur, rather, they take 
skills from their careers and start a second career developing 
their own businesses. They are very often lacking in the 
training necessary to understand the process to grow a start-up 
to a successful level.

    If I could add anything to these points it would be 
emphasizing access to capital through all stages of a start-up. 
Seed money for prototyping, funds for product development, and 
finally commercialization all require varying amounts of money 
at very specific milestones. If the business owner cannot 
accurately plot this timeline and secure the funding before it 
is needed the business will fail. Training in this matter is 
equal in importance to oxygen!

    I feel so blessed that here in Nebraska we have been 
supported by an enthusiastic network of Angel Investors, and a 
Dept. of Economic Development who value rural business growth. 
Outside of Nebraska, our hard work has caught the eye of USDA 
and their Small Business Innovative Research program (SBIR). We 
thank them for awarding us both a Phase I & Phase II grant 
allowing us to reach the threshold of commercialization. With 
that assistance we will market our product not only to farmers 
and custom harvesters but also to seed breeders such as Bayer 
and ADM, university researchers, and in the next few years to 
overseas markets. If any of these groups or agencies had not 
assisted our business, our goals could not be attained.

    If you have additional questions or would like further 
details of our experience with starting a manufacturing 
business in rural Nebraska, please let me know.

    Thank you for being interested in this very important 
element of the U.S. agricultural economy. Ripples from the ag 
economy travel to every corner of the country.

    Have a great fall,

    Martin Bremmer

    303-243-1553
    GrainGoat.com

    Windcall Mfg. Inc
    75345 Road 317
    Venango, NE 69168