When policymakers talk about “green jobs,” they tend to default to examples in solar power, wind and other sources of renewable energy—or perhaps manufacturing and supply chain management. They’re less likely to talk about agriculture.
That’s a mistake. The way we eat and produce food is a significant contributor to climate change. In fact, agriculture is estimated to contribute between 13% and 24% of global greenhouse gas emissions. Any “Green New Deal” needs to not only enable innovation around sustainable agriculture, but also encourage farmers to adopt new, environmentally friendly technologies.
American agriculture is starting to enter the digital age. For years, agriculture lagged behind as one of the least-digitized of any major industryin America. That’s starting to change. More than half of farmers now use at least one “precision agriculture” tool that harnesses data to improve efficiency on the farm. Investors are starting to talk about precision agriculture as the next big thing in IoT, and the market is expected to more than double from to $7.8 billion by 2022.
I spoke with Village Capital’s Allie Burns about this potential. For example, data-driven tools can dramatically reduce the use of toxic pesticides by tracking insect populations on a farm (see DTN’s recent acquisition of Spensa Technologies), or help farmers monitor water and energy use through sensors and cloud technology (see the example of Wexus Technologies). More generally, they can help farmers grow more food with fewer resources.
This is where the Green New Deal comes in. Burns pointed me to a recent Village Capital and QBE Foundation report that discussed that although farmers have strong incentives to adopt these sustainable agricultural technologies, many cannot afford them, particularly in light of the economic downturn that farmers currently face. With net farm incomes down 50% since 2013, many farmers simply do not have the capital to invest in these cost-saving, environmentally friendly solutions.
In order to speed up the adaption of these energy saving technologies, Congress should create a fund that covers a portion of the cost. A similar program for electronic medical records incentives in the American Recovery and Reinvestment Act of 2009 (aka the stimulus) has been very successful in driving the adoption of new technologies that have broadly shared societal benefits.
This program incentivized hospitals to digitize their records with the goal of increasing healthcare efficiency and reducing costs and medical errors. Prior to Congress’s action here, most healthcare records were still recorded on paper. By 2016, 96% of hospitals had a federally certified electronic medical record system. This program had three parts. It paid a significant portion of the transition cost to first-movers. It then gradually phased out the financial incentive. Finally, it reduced Medicare reimbursement rates in 2016 for those that did not use electronic medical records. This program used the classic carrot-and-stick technique to inducing change.
It’s critical, however, that this Green New Deal program is designed in a way that ensures that its benefits are broadly shared. In order to make sure that that American taxpayers are not subsidizing offshore jobs, the program should include a requirement for products to be manufactured domestically to qualify. And to make sure that program helps entrepreneurs, Congress should set a cap on the size of a company that can receive this subsidy. Rather than providing a subsidy to John Deere, we want to grow the next generation of John Deeres. Limiting this program to American entrepreneurs fosters the innovation and competition that drives broad-based economic growth.
There’s real opportunity for the Green New Deal to push American agriculture in a more sustainable direction. As Village Capital’s Allie Burns said, “Oftentimes, ag innovation doesn’t make it into the mainstream conversation about climate change.” By creating an incentive for energy efficient agricultural technologies, we can provide an incentive for farmers to support entrepreneurs and American workers while preserving our environment.
by: Austin Frerick