Farming's roots go nearly as deep as human history itself, but two major agricultural cooperatives are launching a new capital fund to make sure practitioners of this ancient profession have access to the latest technological innovations.
Minnesota-based CHS Inc. announced Wednesday that it's partnering with Illinois-based Growmark to form Cooperative Ventures, a $50 million fund to support the development and distribution of new technologies in agriculture.
The partnership will focus on three principal investment areas: enhancing crop production, improving the supply chain, and promoting sustainability in farming practices.
"Maybe it's been a bit underappreciated how much innovation there is in agriculture," said David Black, the CIO and chief transformation officer at CHS. But, he said, to date much of that has been driven and funded by agribusiness giants like Monsanto or John Deere — "large companies with large R and D budgets," he said.
The goal of the new fund is "a focus on what's best for a farmer, what's best for a producer, a rancher," Black said. The fund will help accelerate the creation and expansion of fledgling technologies while giving the two cooperatives a financial stake in the technology they help develop, he said.
As one example, Black mentioned that CHS has already started to work with an innovator who's creating a sensor to measure temperature and moisture in large storage bins and shipments of grain. Such sensors are nearly impossible to recover, Black said, and it's not yet cost-effective to produce them only to be thrown away after one use.
"You work with an innovator like that, and help them scale that so it becomes cost-efficient, and those analytics will help with decisions about when and where to move grain that maximizes its health," Black said.
CHS, headquartered in Inver Grove Heights, is a Fortune 500 company that ranks first on the National Cooperative Bank's 2021 list of the 100 largest U.S. cooperatives. Growmark, based in Bloomington, Ill., is eighth on the cooperative list, and the fourth-largest in agriculture. The companies respectively tallied $28.4 billion and $7.5 billion in total revenue last year.
Black said the joint venture originated in talks between the two companies, which he called "friendly competitors," about how to more widely distribute technology that helps farmers.
"We're just continually amazed by the technology that we find our farmer-customers deploying every day," said Heather Thompson, innovation lead at Growmark. "This will be an opportunity to leverage the scale of our two groups in this landscape."
The fund will go live with the company's joint announcement this week. "We expect the phone to start ringing, and we'll take all the calls," Black said. The intent is to fund tech ventures over the next decade, and while there are no geographic requirements, Black said he sees opportunity for capital to flow into ag-based tech startups across the Upper Midwest.
"Not necessarily to take it away from the East and West coasts, where more of the traditional tech investment has occurred, but we really want to leverage these new entrepreneurs that we're seeing across the Upper Midwest," Black said.