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Going Back to Our Roots: Can Agrotech Bring Back Growth?

By on June 23, 2016

Sowing Crops Could Reap Dollars for Puerto Rico

It wasn’t that long ago when agriculture in Puerto Rico was regarded as a backward symbol of a bygone age. But nowadays, with the island mired in an economic and fiscal crisis of unprecedented proportions, a new movement is taking shape to turn agriculture into a chief driver for economic development and job creation once again.

Several factors have contributed to this trend, including new technology and growing concerns to secure the island’s food supply and feed a growing global population. But there are also differing views on how to best carry out this agricultural transformation. While the days of the sugar plantations, which used to be Puerto Rico’s main export, are long gone, the sector has been growing slowly in recent years, and agricultural production could reach the $1 billion mark this year, thereby improving self-sufficiency in food production.

CB-Cover-Image---ROOTSWhen the economic development program dubbed Operation Bootstrap was implemented on the island in the 1950s, the plan originally called for the industrialization of the agrarian economy that was prevalent at the time.

Before long, however, the program was tweaked to bring on full-blown industrialization to the island’s economy, mainly focused on manufacturing, and dismissed agriculture altogether. In hindsight, that decision may have been a big mistake.

Today, Puerto Rico is undergoing its 10th year of economic recession and a crippling fiscal and economic crisis. Despite remaining as the island’s main economic sector, manufacturing on the island has shrunk significantly during and after the phaseout of tax incentives under Section 936, which ended in 2006.

Public officials, meanwhile, have looked desperately toward new, more diversified models with which to spur the commonwealth’s economy once again. Ongoing efforts to implement a “knowledge-based economy” and a “visitor’s economy” have yielded some results, but have not yet proven to become a cure-all for the island’s economic woes.

Meanwhile, agriculture has remained a fringe economic presence on the island, making up around 0.8% of the island’s gross domestic product (GDP), or around $829.6 million, and 1.7% of its labor force in 2014, according to the Government Development Bank. This is a far cry from little more than a century ago, when the agricultural sector comprised around 71% of GDP.

As a result, the island currently imports about 85% of the food it consumes. In 2012 alone, Puerto Rico imported an estimated $3.9 billion in food and agricultural products, according to the Planning Board.

This dynamic has prompted concerns about the island’s food security, with experts pointing out that Puerto Rico lacks a sufficient supply of locally grown food to face possible emergencies, including natural disasters such as hurricanes and droughts.

These concerns have only grown worse since the tragic sinking last October of TOTE Maritime’s El Faro cargo ship, with a crew of 33 men and women onboard, as well as 700 containers of cargo bound for Puerto Rico. TOTE is only one of three shipping providers serving the island after the departure of Horizon Lines from the local market in late 2014.

Out of the local agricultural production, which comprises only 15% of Puerto Rico’s food consumption, coffee makes up the island’s biggest crop, accounting for the most farmland—32,050 acres—on the island, according to the latest five-year census data by the U.S. Department of Agriculture, published in June 2014. Other agricultural products grown on the island include pineapples, plantains, bananas, starchy vegetables, livestock, milk and poultry.

Modest gains, at best

In recent years, the Puerto Rico government has carried out more concerted efforts to incorporate agriculture into the economy’s diversification, resulting in modest gains in the sector.
For instance, during fiscal year 2012, Puerto Rico’s agricultural income totaled $739 million. In fiscal 2014, it increased 24% to $919 million, according to data from the Agriculture Department. Moreover, Gov. Alejandro García Padilla said this figure could top $1 billion in the coming months.

The Agriculture Department also implemented a five-year Food Security Plan. The agency’s chief official, Myrna Comas, said the agency has worked hard over the past three years to boost local food production and increase marketing networks on the island, particularly with regard to the production of peppers, tomatoes, plantains and bananas.

According to government figures, about 7,000 new jobs in the agricultural sector have been created during the García Padilla administration. The Land Authority has leased about 99% of the land that it owns with agricultural and business development value to farmers, while the U.S. Department of Agriculture has been similarly proactive in providing grants for agricultural purposes.

However, there is plenty left to be done in the sector, with industry observers estimating that, in the long term, Puerto Rico can grow or raise about 90% of the food to be locally consumed, and within the next 10 years, it could produce 40% to 50% of local food consumption.

Moreover, worldwide dynamics are slated to put a significant supply-and-demand pressure on global agriculture, according to AgFunder, an online investment marketplace based in New York City. Population trends indicate that by 2050, there will be around 9 billion mouths to feed globally. At the same time, rates of yield increases for major crops have been trending negatively on a 10-year curve, according to AgFunder CEO Rob Leclerc.

Arguably, such a trend underscores the potential for Puerto Rico’s agriculture sector to become not only an important economic force, but also an essential source for improving food security, which could become ever more pressing over time.

In short, perhaps the time has come to take Puerto Rico’s economy back to its roots.

Fuits CB‘Hacking’ agriculture

In late May, a summit dubbed Agrohack was held in San Juan, and as its name implies, the event aimed to put a different, more modern spin on agriculture, focused on innovation and technology (commonly called “AgTech” in industry parlance) in an attempt to continue moving the sector forward.

Among those who attended the event were young farmers and entrepreneurs, as well as executives, suppliers, professors, technology and transportation providers, and government officials. The buzz around the venue, and the enthusiasm of speakers and attendees, were evident.

The brainchild of Carlos Cobián, a producer who has previously helmed the likes of the H3 Conference and the Animus Women’s Innovation & Summit, Agrohack was focused on “turning up the volume a bit, making some noise and getting more people interested” in modern agriculture, Cobián told Caribbean Business.

“Young people, especially millennials, are paying more attention to agriculture,” he said. “Another trend is that consumers are growing more aware of what they consume and are on the lookout for organic and locally grown products.”

Allison Kopf, founder & CEO of Agrilyst

Allison Kopf,
founder & CEO of Agrilyst

Sure enough, the concept of “family markets,” which have popped up in the plazas of 44 of the Puerto Rico’s 78 municipalities, has turned into a growing trend. A government-backed initiative, the family-markets program comprises small farmers, about 124 of them, selling their homegrown crops at different locations throughout the island.

Private-sector companies have also gotten into the act, such as Empresas Fonalledas, which owns and operates the Plaza Las Américas shopping center in San Juan, with the company opening a permanent space for a local food and agricultural market, dubbed La Placita de Plaza, some years ago.

Yet another key trend involves new technologies that are poised to transform agriculture in ways never before imagined, specifically in a burgeoning field called

Jorge Rodríguez, project manager of the Agroempresarios

Jorge Rodríguez, project manager of the Agroempresarios Program at Wal-Mart and Sam’s Club Walmart.

precision agriculture. In simple terms, precision agriculture makes heavy use of GPS, satellite navigation technology and so-called “big data” to gather information about soil and weather conditions and where to best plant particular seeds.

“A confluence of hardware and software technology advances are creating opportunities to address [the agriculture] market,” AgFunder’s Leclerc noted in a write-up for technology website TechCrunch. “Inexpensive and infinitely configurable mobile devices have liberated technology from the office desktop. At the same time, inexpensive but sophisticated hardware sensors have emerged to automate the collection of massive data sets.”

Tara Rodríguez Besosa,

Tara Rodríguez Besosa, Owner Departamendo de la Comida

“With these technology shifts, exciting technologies like drones, AI [artificial intelligence], satellite mapping, robotics and the Internet of Things, have quickly realized that the agriculture value chain provides fertile first-market opportunities for many technologies that aren’t advanced enough or haven’t yet found solutions in the consumer space,” Leclerc added.

Drones, for example, can fly around a farm, surveying the terrain and taking video and pictures for later upload to a computer. One example of a firm specializing in this technology is UAV-IQ, which is based in California and Chile, and is among the first startup firms to participate in the Parallel18 business acceleration program based in San Juan.

Also under development are state-of-the-art robots that are able to pick produce without damaging the fruit and have the ability to determine which growths are ripe for picking.

There is also technology related to the Internet of Things, for example sensors that can detect whether a tract of cropland needs water and activates the irrigation system accordingly.

Then there’s the topic of indoor farming, which of late has seen a lot of activity in the sector. One of the speakers at Agrohack was Allison Kopf, the founder & CEO of Agrilyst, a data analytics platform for indoor farms. The title of her talk, “Software is Feeding the World,” sums up the Brooklyn-based company’s approach to combine data integration farm-management software and real-time analytics to help manage indoor farms.Agriculture

The advent of cutting-edge technological tools could also help Puerto Rico circumvent one of the main perceived challenges on the island, agriculture-wise: its relatively small size. Being an island that is roughly 100 miles by 35 miles, policymakers throughout the years have dismissed the island as a potential center for agriculture by simply saying “there’s not enough land here.”

However, technology has helped increase yields of crops and advances in indoor farming have opened the door for agriculture to take place in urban centers throughout Puerto Rico, where there is currently an abundance of unoccupied buildings, many of them owned by the commonwealth government.

Differing views

However, there are questions on what is the best way to go forward in spurring Puerto Rico’s agriculture sector. On the one hand, big retail players such as Wal-Mart and restaurant chains are eager to use local farm suppliers, but this requires a combination of large volume paired with uniformity of product, something few island farmers are yet able to achieve.

Jorge Ramírez is the founder of Agronegocios, a consultancy, and a project manager of the Agroempresarios Program at Wal-Mart and Sam’s Club. In the words of Ramírez, the goal of the program is to “replace imports. In agriculture, the competition is not other local farmers, but imports.”

Ramírez began his consulting firm when he realized that local farmers and retailers were not communicating properly, and shortly after he started his company, Wal-Mart, which also operates Sam’s Club, approached him to start the program. “Three years ago, 100% of all the watermelons sold in our stores were imported,” he said. “We identified a local farmer who was willing to take on the challenge and we walked the farmer through the process, choosing the right seed to plant and the right people involved.

“During the first year, we were able to replace 25% of imported watermelons, which is a lot, considering that the demand for watermelons [at local Wal-Mart and Sam’s stores] is four million pounds in a four- to five-month period,” Ramírez noted. “It’s a product that’s better than what was imported, with a longer lifespan because it wasn’t transported over here from California.

Worldwide AgTech annual financingWe could do the same with other crops such as pineapples and papayas,” he added. “Right now, we are working with the island’s two top pineapple producers and together they are meeting 25% of local demand. “There remains 75% left to grow, and we’re not the only pineapple sellers on the island by a long shot. There’s a ton of room left for growth.”

On the other hand, other people believe the agriculture sector must not necessarily be driven by economies of scale, and that similar approaches around the world have led to disastrous consequences on the various regions’ ecologies.

For instance, many critics point to one of the cornerstones of modern farming, the industrial cultivation of livestock, as the main source of greenhouse gases worldwide by far, which in turn contributes to global warming. Then there’s the growing concern over genetically modified crops, with companies such as Monsanto becoming lightning rods for ecological activists.

Outside the San Juan venue where Agrohack was being held, a small group of farmers held a protest in the name of an agro-ecological 2015 AgTech investmentmovement that champions “food sovereignty” over food security, and criticizes the treatment of crops as an economic commodity subject to private investment. “We believe in agricultural cooperatives comprising small farms that provide food to the community,” group spokesperson Jorge Meléndez said.

Inside the venue, a voice that also clamored for an agro-ecological approach belonged to Tara Rodríguez, who owns and runs the Departamento de la Comida, a restaurant / community project that brings local, ecologically friendly products to San Juan consumers.

During her presentation, Rodríguez highlighted that out of the 7,000 plants that have been cultivated by humans over millennia, only about 30 varieties are being distributed to 95% of the population. She also noted that in Puerto Rico, only 16% of the land is protected, compared with 25% in nearby Dominican Republic.

Regarding the agro-ecological movement, she pointed out that while it is a growing movement in Puerto Rico, comprising many small farms, “the community is feeling the pressure from Big Agriculture, and there’s great concern regarding biotechnology. The lack of support from government agencies, coupled with the fact that we haven’t properly implemented a land-use plan, has further divided efforts.”

No matter which route Puerto Rico decides to take concerning the development of its agriculture, the fact that there is a conversation taking place among the various players bodes well for a sector that for decades has languished in obscurity.

“It’s all about getting together toward a common goal,” Agrohack’s Cobián said. “People here don’t collaborate because they see everyone else as a competitor. Instead, we should establish an economy that focuses on ‘coopetition,’ or collaboration among competitors.”

Javier Hiram Gómez, an agronomist and lead singer of rock group Vivanativa, perhaps put it best during the Agrohack event. “People used to think of agriculture as something lame that only old people did. That’s not the case anymore,” he said. “Young people are increasingly getting interested in it and there’s an enthusiasm I haven’t seen in maybe ever. Agriculture has turned cool again.”

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