Category: Water

“The crux of the issue for water is getting the right amount of water to the right place at the right time, at a reasonable price. Ish.

So let’s say there are two sides of the water issue:

1. Ensure water supply
2. Reduce water demand

My hypothesis is that the first is more of a collaboration problem; the second is more of a technology problem.”

Last week we started a conversation on water as the ultimate unsolved problem in ag.

Today we turn to the intersection of technology & innovation and the reduction of water demand in feed, livestock, and meat/milk production.

Let’s start with the fact that WaterTech is still a relatively small category.

You hear all the time about venture-backed startups in alternative energy working to solve the problem of reduced dependence on petroleum, or reducing carbon & GHG emissions.

But rarely do you see press releases about companies raising venture capital to go solve problems related to water, even in ag.

Why is there such a gap? Is the innovation not there? Are the founders not there? Is the capital not there? Is the market too small?

Water doesn’t even have its own category in the comprehensive annual report on AgTech published by AgFunder, that’s how small the category is relative to other innovation categories within AgTech.

Let’s anchor back to the Meatingplace summary of Tyson’s water usage:

“The meat industry’s largest corn buyer, Tyson, says irrigated corn feed accounts for 91% of its supply chain water consumption, as opposed to 7% for raising animals and 2% for plant operations (31B gallons in FY 2019).”

Let’s reasonably assume these proportions are not just true of Tyson, but are representative of the entire meat value chain. Let’s break it down accordingly.

The bulk of water demand to produce meat is in growing feed.

So it makes sense that if you look within agriculture, most innovation is in irrigation technology specifically with the march towards precision irrigation via sensors to collect data and analytics to turn that data into better insights and ultimately better decisions. The same precision progression every industry is making.

Though I couldn’t find any good stats on water tech investment for ag specific solutions, consider this:

“Water experts analyze 101 funding deals (from 2009-2017) that account for over US$704 million invested by venture and private equity growth capital investors in water start-ups.”

But $704 million over a decade is laughable compared to the $5 billion that went into alternative meat startups in 2019 alone!

Technology is, of course, not the answer to everything. There are massive elements of political and societal will at play here, of bringing people and groups with divergent objectives together to accomplish shared objectives. But in an environment where people aren’t great at coming together to solve problems, more of the burden will shift to technology solutions.

And yet, here’s how Agthentic & Upstream Ag Insights authors framed the adoption challenge in their excellent report on adoption of precision irrigation technology:

“Adoption remains low because there has been too much attention given to the technology, and not enough given to the psychology of farmers. It is not the technology that needs to be better. Instead, far more attention must be given to farmer psychology, and the go-to-market strategies, business models, and water policies that can drive the change and impact we need to see.”

So you have relatively low investments in irrigation tech and relatively low adoption of that technology. The bright spot is the expectation for the precision irrigation tech market to grow at ~12% CAGR.

But the technology that directly reduces demand for water isn’t the only path to reducing water demand.

My hypothesis is that water efficiency gains in raising livestock are largely made indirectly, as a byproduct of live performance gains.

This popped up on LinkedIn recently:

And California dairies are rapidly adopting systematic & process changes to reduce their need for increasingly high-cost water:

The amount of water used to produce each gallon of California milk has decreased more than 88% over the past 50-plus years, primarily due to improved feed crop production, use of byproducts as feed, and water use efficiency.

Much of the water use efficiency bucket is in reusing water from clean water to cool & refrigerate milk, then to wash cows, then to wash barn floors, then to irrigate (with the added benefit of some 💩). This approach is also common in hog operations.

If the water efficiency equation is total pounds of output (meat or milk) divided by total water usage then we can either decrease the denominator or increase the numerator to improve water efficiency.

Let’s say that decreasing the amount of total water used is the direct route while increasing the total output is the indirect route.

My hypothesis is that much of the improvements in water efficiency have been made indirectly through general improvements in livestock performance and feed efficiency as a result of the many levers producers rely on from genetics to health & nutrition to improvements in production systems & practices that lead to increased pounds of meat and milk produced per animal or per pound of feed.

If that’s true, it raises the question, going forward will indirect gains in water efficiency be enough?

Considering the efficiency gains made in recent decades, can enough incremental juice be squeezed from future efficiency gains to make a meaningful dent in the water required to raise livestock?

(those are not rhetorical questions, I’m genuinely asking)

And then there’s processing.

This Meatingplace article is a fascinating outline of water usage in plants from live plants to the kill floor to carcass cooling and beyond. It also describes how much of the low-hanging fruit in packing plants is in improving processes within the plant, updating equipment, and training employees.

Can we boil this down to putting the right systems in place and aligning incentives for individuals within the system?

(Though I recognize that’s a vast oversimplification and managers who’ve made the hard decisions for multi-million CapEx projects to reduce water usage would be the first to say so.)

But how do you get credit for a water win, other than a random ag fact in a social media post?

The challenge with water is that it’s really hard to contextualize reduced water demand in a way that turns it into a commercial win for row crop farmers, livestock producers, or packers.

So the business impact of water-reducing initiatives & innovations has to be felt in reduced production costs.

For example, increasing soil organic matter by 1% can increase soil’s water holding capacity by 3.7%. If 58% of soil organic matter is carbon then doesn’t this sound like a multi-purpose win for carbon sequestration, water efficiency, and reduced cost to irrigate?

Saving water for saving water’s sake isn’t enough of a carrot, and no that doesn’t make anyone a boogeyman – it’s the real world.

If you want behavior change, there has to be a compelling reason for behavior change and that typically comes in the form of a carrot, a stick, or some combo.

And IMO, the most effective carrots and sticks are found in the P&L of the business.

My expectation is that agriculture will see more water innovation in the next decade, because we have to.

Shout out to those of you who recommended water resources! I’m excited to dig into some of the books you suggested.

Also 12/10 recommend listening to this Future of Agriculture podcast episode about the economics of water (straight forward overview of a complex topic), and this Future of Agriculture episode with water innovator Matthew Pryor.

I recently spent several days in Washington and when I go to the mountains, I document water like it’s my job, y’all.

I make no apologies for my water obsession though. I live in the desert so it is never lost on me how water is synonymous with life. Water represents potential and opportunity for growth and flourishing…humans, plants, animals.

We all know water is a precious resource. And we know we need reliable access to water to raise livestock and produce meat, from growing feed to watering animals to water usage in processing.

So why aren’t we urgently talking about water solutions for both the short and long term? Today we’re starting a conversation on water by framing up a few key aspects of The Water Issue.

Let caveat this entire discussion: (1) water is a wickedly complex topic, (2) the challenges are often hyper-local and vary whether you’re talking about surface water or ground water among other variables, and (3) the debates are intense.

The magnitude of The Water Issue

Meatingplace did a solid series on meat packers’ efforts to improve water efficiency, and framed the magnitude of the broader water situation this way:

“As is, the average American uses 80 to 100 gallons of water per day, in a nation using an estimated 345 billion gallons every day. That same nation is expected to be home to 200 million more people in the next 70 years, for a total population of nearly 514 million. And they’re moving more and more to the hot and dry South and West, according to new census data published in April. Those regions now account for nearly 63% of the total U.S. population, compared with just under 50% in 1970.

The country saw a nine-fold increase of total withdrawals over the first 80 years of the 20th century, thanks to supply-side adaptations like the construction of reservoirs, canals and pipelines. The rate of construction of such conveyances, however, peaked in the 60s.“

Oof.

The crux of the issue for water is getting the right amount of water to the right place at the right time, at a reasonable price.

Add an -ish to each of the parts of that equation because that’s how nature rolls.

I also like how Meatingplace framed this as a two sided problem:

“The collective conservation effort will continue on two fronts: enhancing water supply and/or reducing water demand. The former entails supply-side efforts from enlarging reservoirs, to linking supplies via new canals, to reusing regenerated wastewater, to desalinating brackish and seawater. The latter demand-side approach enlists new water-saving technologies and laws that limit withdrawals from stressed sources such as at-risk aquifers.”

So let’s say there are two sides of the water issue:

1. Ensure water supply
2. Reduce water demand

My hypothesis is that the first is more of a collaboration problem; the second is more of a technology problem.

Let’s start with definitions. What are ways to increase water supply? It’s things like…

• Building reservoirs or increasing capacity to store water
• Building canals and pumping systems to move water
• Building water districts to treat water as a utility like electricity

While on my mountain adventures I read a biography on WD Farr, Cowboy in the Boardroom. WD is best known as one of the first people to reject the dogma of his time that cattle must be finished where the feed is located by bringing the cattle to the feed. He made the bold decision to build a feedyard in eastern Colorado and bring the feed to the cattle. As interesting as his influence on the future of cattle feeding was, it was his work to establish systems of water transportation, storage, and distribution to the semi-arid region of northern Colorado that I found most fascinating.

Why? It was a function of two things:

1. His belief that northern Colorado would attract people and become a populous area in the future.

2. WD grew up in the Great Depression and more importantly, the drought that caused the Dust Bowl of the 1930’s. He knew firsthand how drought could sneak in and destroy farms, communities, even entire regions. So his goal became to secure permanent water availability for the region.

Pretty prescient, eh?

Farr’s biography details the multiple major water projects in the mid 19th century that WD helped broker among stakeholders with competing interests and visions including politicians, environmental groups, large & small municipalities, large & small farmers, and many others who struggled to see eye to eye. No they didn’t have Facebook but yes they had plenty of whacko conspiracy theorists trying to jam up projects. But they made stuff happen anyway.

Reading about the creation of those major water projects is like reading a relic of another time completely. Have any states in the western United States done major water storage/transport projects in the last 20 years? 50 years?

Could a major water project even be agreed upon, let alone permitted, in the polarization of the public square today? It’s hard to imagine, isn’t it?

And yet, with the combination of growing population (aka increased residential water demand) and severe drought in much of the west, the water issue is getting to code red levels of criticality in some geographies.

Take California where Central Valley farmers are grappling with new restrictions on groundwater usage at the same time as surface water availability is more limited than ever.

Or Arizona, now ‘celebrating’ 2+ consecutive decades in a drought, where 36% of water for both agricultural and residential use is from the Colorado River. But as the river gets lower, the largest reservoirs are now at record lows, and new restrictions on water usage are completely changing the game for irrigated acres that are reliant on surface water. (Here’s a good article.)

Even if it started raining tomorrow Noah’s ark style and the Western US were entirely out of a drought, there’s still the fact that the region is drought prone and that more people are residing in these areas than ever before, growing the annual water requirements in addition to water demand for agricultural use. So we should probably do something to prepare for the next severe drought, wouldn’t ya say?

But maybe it seems California and Arizona are two extreme examples and they aren’t representative of all regions in the US let alone the world. I’ll buy that. So let’s zoom out and consider a few broad hard-to-argue assumptions about the future, across most regions and climates:

1. Population will continue to grow creating increased need for residential water.
2. Battles between residential water use and agricultural water use will continue to be an issue.
3. Battles will continue between environmentalists and industry.
4. #1-3 will mean that water will be increasingly regulated at all levels of government.

Maybe the first innovations we need are an increase in common sense collaboration. But hope isn’t a strategy. So what’s the play here?

The limiting factors for increasing water supply aren't really problems technology can solve (yet), they are people problems…where humans need to organize around a shared vision. Which is really really really hard to do.

(Though interestingly WD did experiment with cloud seeding in the 1950’s as a potential tech solution for increasing rainfall but it was met with a lot of resistance and didn’t prove very fruitful anyway.)

One minor point – in a water constrained environment, can we assume that lawns are a luxury not a necessity? Isn’t it likely that in 50 years we look back at the quaint time when a patch of grass was default standard issue with American homes? I think so.

Back to livestock. Meatingplace referenced this summary of water usage in Tyson operations and in Tyson’s supply chain:

“The meat industry’s largest corn buyer, Tyson, says irrigated corn feed accounts for 91% of its supply chain water consumption, as opposed to 7% for raising animals and 2% for plant operations (31B gallons in FY 2019).”

Those numbers aren’t surprising, but they do tell a story. Next week we’ll dig into the implications and look at the demand side & reducing water needs across feed, livestock, and meat processing.

Technology isn't the answer to everything but in a world where it's politically difficult to solve water from the supply side, the burden gets shifted to the demand side to reduce the need for water for residential and agricultural use.

I expect we will see more water focused innovation in agriculture in the next decade because we have to.

Cathie Wood is a well known tech enthusiast and fund manager, who wrote this tweet referring to the economic problems at the moment. But I think we can put water in the bucket of super-pressing-and-urgently-critical problems. And the principle still applies: innovation solves problems.