The causes of the delay in starting up the Ag-tech sector in France (art. 2 of 4)

From the fork to the plate, most people oppose technology to the living when it would benefit from being at the service of agriculture for adaptation to climate change and the scarcity of production factors. In France, the lack of bridges between agriculture and high tech sector is obvious. That of Ag-tech operates apart from a globalized dynamic. French agriculture is not yet “wired” high tech on all its levels for various objective and subjective reasons.

For French growers who are at the base of agriculture, cost competitiveness is a first major obstacle to investment in innovative solutions such as high-tech equipment. The demonstrations at the start of the year remind us that exposed to specific risk factors such as climate change, operations also have little financial room for maneuver to invest in new technologies.

Facing lot of heavy regulation, the most intensive farms in high-tech equipment, such as veggy high end growers are strangled by higher cost than foreign competitors, while large-scale supermarket chains strive to confiscates their margins. Seasonally adjusted production which is grown in heated greenhouses is faced with increasingly high and uncertain energy costs (gas, which represents 1/3 of operational costs, increased from €15 to €200 per tonne two years ago) while southern countries benefit during the off-season from the heat and light delivered free of charge by the sun.

These highly specialized operations are also demanding in technical skills as well as in labor, and they face the additional difficulty of a shortage of workers aggravated by competition from nations which are advantaged by lower salary levels.

The weight of Opex and Capex is all the more difficult to cope with for these technologically demanding market gardeners as their family farm often suffers from its small size. Remember that the surface area of greenhouses in France is limited to 4.5 hectares on average for a reason that I think is - beyond the complexity of the profession - the expensive cost of fixed assets. It increases in proportion to technological intensity to the point that the value of a fully equipped and soilless heated greenhouse is around €2 million/ha. The value of the assets of this type of farm is therefore on average €9 million (before depreciation) while the sale price of a standard farm is only €200 thousand in France. Without subsidies, the profitability threshold becomes out of reach for growers who are considering investing in a high-tech greenhouse.

While they face a decrease of their cost competitiveness compounded by a limiting business size, greenhouse growers are naturally reluctant to invest in costly new technologies because they are the only ones to bear the financial risk and this without a safety net. In other field of business, its weight is generally distributed among a large group of shareholders and when this is not the case, the shareholder is seated on capital which allows him to cushion the risk of failure. From there, price sensitivity often outweighs technical interest and his explains why all high end greenhouses are on the same model in a trade where the job is highly complex? Because I don't know of any other where the shareholder who has to learn by doing plays the role at the same time of financial director, human resources director, manager and "last but not least", production manager when he must be as well a crop manager below a critical threshold which I place between 2 and 4ha.

The cost competitiveness barrier is lower in the case of field crops which are interested in the DST (Decision Support Tools) necessary for precision agriculture. It is all the less an issue since the acreage of such farms is of the same order as that of their foreign competitors and in the era of usage which is replacing ownership, the SAS (Software As a Service) substitutes an operational cost for the investment.

For another reason than farmers, their technology suppliers are also facing the problem of cost competitiveness.

Upstream in the chain, most Ag-tech players limit their target to our domestic market, which is even smaller in size as French farmers are not yet high tech minded. From there, their technology suppliers are struggling to grow up in order to be able to move from one funding round to the next in order to structure themselves aim for export and on the other hand strengthen their R&D. As they are not able to integrate the latest arising technological opportunities, the French Ag-tech sector is lagging behind while France remains at the head of European agricultural countries.

In France, a major bottleneck for all economic players in the sector remains access to capital.

In the absence of private venture capital, AG-tech startups must mainly rely on support from the state - via seed funds or the BPI (Investment Public Bank) - which usually supports the initial rounds of funding. This sprinkling sounds like demagoguery because public authorities prefer to direct their budget towards the hydrogen, quantum computer, semiconductor or health industries, among other examples. Of the 54 billion euros of the France 2030 financing plan launched in 2021, the state is only releasing “one billion euros for the revolution of life and knowledge, intended for the search for innovative solutions, agrorobotics, digital development, particularly in the service of innovation in the face of climate change (methanization, seed selection, etc.). On the other hand, “500 million will be devoted to a living entrepreneurs fund intended to help young farmers or start-ups when starting their business. That is, less than €200 million per year for the benefit of agricultural innovation, knowing that this envelope is not only intended for the high-tech sector, as specified in the list of eligible themes. Precarious by their position in our narrow domestic market, the members of the association "la Ferme Digitale" face the double penalty of lack of finance which further limits their chances of reaching the critical unicorn stage.

In a longer-established market, the growers - as their clients - are also struggling to be supported by banks and even more so by private equity. These stakeholders have a preference for other parts of the primary sector that have been industrialized for a long time - oil and other extractive industries - or for the secondary and then tertiary sectors which have been favorished successively. Chilly, they probably have difficulty accepting the low profitability of agricultural activity which goes hand in hand with a distant financial horizon and exposure to certain specific hazards such as the climate. In this context, farmers must rely on their own capital and in the absence of subsidies, it is difficult for them to modernize in the case of production requiring high-tech equipment. Technology is an orphan subject, for the benefit of the living on which both research and advice focus. Technology is an orphan subject, for the benefit of the living on which both research and advice focus.

Public research (INRAE, CIRAD) and French technical institutes (ARVALIS, CTIFL, etc.) mainly employ agronomists while researchers dedicated to technology are the exception which confirms the rule. The seldom engineers skilled in this relatively recent field of knowledge, are assigned to the management of R&D tools but it is not the subject of any research program as such. Upstream of agriculture, it is clear that life sciences remain sovereign.

Moreover, the high cost of R&D tools probably limits progress in the field of high tech, as evidenced by the outdated state of INRAE's research greenhouses. This also applies to human resources because I doubt the capacity of our EPST (Public Scientific and Technological Establishment) to align with private sector salaries to attract competent talent in technology; Especially in the field of AI, when educated profies can beefit from very high wages in wealthy industries.

We can also assume that management of skills and R&D tools is a long-term matter within our institutes while the emergence of high tech is very recent and the speed of evolution of technology goes hand in hand with accelerated obsolescence of knowledge and equipment. Beyond the limiting financial capacity of our agricultural research, the question of the flexibility of its organization and its mode of governance may arise.

The obstacles above explain the inertia of agronomic research which is struggling to extract itself from the life sciences placed at the heart of the first successfully carried out agricultural revolution (France played a leading role with champions such as Rh?ne Poulenc Agrochimie, the SCPA or Clause-Tézier) on the open field front in the last century. In the soil and outdoor, priority was given to essential biological processes such as plant nutrition and the fight against crop enemies of biotic origin, at a time when the issue of process control was minor and the technology was in its infancy. .

High tech is struggling to emerge within INRAE although it has absorbed IRSTEA (formerly the Center for the Study of Agricultural Machinery and Rural Engineering, Water and Forests). We might think that research organizations specializing in high tech - Commissariat à l'Energie Atomique or the Institut national de recherche en sciences et technologies du numérique - are in a better position to go on board of Ag-tech but for them, agriculture is for now a minor matter compared to to other more lucrative outlets.

The endemic lack of research and advice capacity in high tech - for the benefit of the living - is inherited from our education system.

As for the whole chain, agricultural education remains mainly focused on life sciences. As with researchers and agricultural advisors, there are few teachers who are competent in high-tech. Even within the most recent private establishments such as Hectar or Unilasalle, dual skills are not yet relevant and the knowledge that remains to be built, for the moment belongs to high-tech companies. A historical hiatus still separates agricultural education from that of the hard sciences which call on different thought patterns, as I point out in my previous article. This divide dates back to secondary school where those who orient themselves towards life science take other paths than those who choose hard sciences. Compared to the real economy which will inevitably bridge the gap between the living and the digital - as it is under pressure from the harsh law of the market - agricultural education is today lagging behind in the same way as research.

I would add that its poor performance in English is an aggravating factor because the high tech sector dominated by American GAFAM is globalized. Unlike other higher education sectors, French agronomy and agricultural engineering schools are slow to integrate into European exchange networks, while it is precisely abroad that technological innovation is the more dynamic. Last but not least: cultural obstacles weigh heavily on the objective determinants listed above. In France, agriculture has a unique cultural identity defined by the population's attachment to the peasantry. Perhaps this representation is inherited from our rural origins, as far as most of our ancestors still lived in the countryside in relatively recent times.

The French citizen cannot depart from a representation of natural landscapes shaped by agriculture. Compared to small countries or megacities where the shortage of land makes the population a soilless civilization, the French nation is attached to rural spaces which it has always enjoyed to the point that in its eyes, nature and agriculture are the same. From there, the use of technology on our campaigns must be neutral.

What goes for the living environment goes for food. The artisanal provenance of agricultural products is induced by the cultural dimension invested in French cuisine - as evidenced by the growing success of shows such as Top Chef. Any reference to an industrial process appears suspicious in the eyes of the consumer who expects a peasant origin, although he buys more and more processed foods and is unaware that behind appearances, open-field agriculture is far from be as natural as he imagines. For a majority of consumers, agriculture must be traditional and the concept of industry, which is based on technology, does not go well with food.

On top of these cultural obstacles to innovation, Henry Mandras superimposes other subjective obstacles in the work entitled La fin des paysans, which he published in 1992 with Actes Sud.

The next article in this series will be devoted to the consequences of France's delay in Ag-tech. Subsequently, a fourth and final article will open up original avenues to catch up.