[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]









  RESTORING RURAL AMERICA: HOW AGRITECH IS REVITALIZING THE HEARTLAND

=======================================================================

                                HEARING

                               before the

             SUBCOMMITTEE ON AGRICULTURE, ENERGY, AND TRADE

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                           FEBRUARY 15, 2018

                               __________



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




                               

            Small Business Committee Document Number 115-055
              Available via the GPO Website: www.fdsys.gov
              
                                   ______

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                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        TRENT KELLY, Mississippi
                             ROD BLUM, Iowa
                         JAMES COMER, Kentucky
                 JENNIFFER GONZALEZ-COLON, Puerto Rico
                    BRIAN FITZPATRICK, Pennsylvania
                         ROGER MARSHALL, Kansas
                      RALPH NORMAN, South Carolina
                           JOHN CURTIS, Utah
               NYDIA VELAZQUEZ, New York, Ranking Member
                       DWIGHT EVANS, Pennsylvania
                       STEPHANIE MURPHY, Florida
                        AL LAWSON, JR., Florida
                         YVETTE CLARK, New York
                          JUDY CHU, California
                       ALMA ADAMS, North Carolina
                      ADRIANO ESPAILLAT, New York
                        BRAD SCHNEIDER, Illinois
                                 VACANT

               Kevin Fitzpatrick, Majority Staff Director
      Jan Oliver, Majority Deputy Staff Director and Chief Counsel
                     Adam Minehardt, Staff Director
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Rod Blum....................................................     1
Hon. Brad Schneider..............................................     2

                               WITNESSES

Mr. Kevin Kimle, Director, Agricultural Entrepreneurship 
  Initiative, Iowa State University, Ames, IA....................     4
Mr. Sam J. Fiorello, Chief Operating Officer, Donald Danforth 
  Plant Science Center, St. Louis, MO............................     5
Mr. Pete Nelson, President, AgLaunch, Vice President, Ag 
  Innovation, Memphis Bioworks Foundation, Memphis, TN...........     7
Michael Fernandez, Ph.D., Senior Fellow, Food Institute, George 
  Washington University, Washington, DC..........................     9

                                APPENDIX

Prepared Statements:
    Mr. Kevin Kimle, Director, Agricultural Entrepreneurship 
      Initiative, Iowa State University, Ames, IA................    29
    Mr. Sam J. Fiorello, Chief Operating Officer, Donald Danforth 
      Plant Science Center, St. Louis, MO........................    41
    Mr. Pete Nelson, President, AgLaunch, Vice President, Ag 
      Innovation, Memphis Bioworks Foundation, Memphis, TN.......    45
    Michael Fernandez, Ph.D., Senior Fellow, Food Institute, 
      George Washington University, Washington, DC...............    50
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    None.

 
  RESTORING RURAL AMERICA: HOW AGRITECH IS REVITALIZING THE HEARTLAND

                              ----------                              


                      THURSDAY, FEBRUARY 15, 2018

                  House of Representatives,
               Committee on Small Business,
     Subcommittee on Agriculture, Energy, and Trade
                                                    Washington, DC.
    The Committee met, pursuant to call, at 9:30 a.m., in Room 
2360, Rayburn House Office Building. Hon. Rod Blum [chairman of 
the Subcommittee] presiding.
    Present: Representatives Blum, King, Radewagen, Comer, 
Curtis, and Schneider.
    Chairman BLUM. Good morning. I call this hearing to order.
    Thank you to the panelists for being here this morning. We 
already had our mini hearing in front of this hearing. This is 
going to be a great hearing.
    I consistently hear from family farmers back in Iowa about 
the many challenges America's small farmers are facing, 
including burdensome and confusing regulations and excessive 
taxation. Agricultural innovations and technologies have the 
ability to increase farm productivity, reduce resource use, 
which is a good thing. We have runoff issues I know in Iowa 
that are of concern. And boost profits, which are also a good 
thing.
    At last October's Subcommittee hearing, witnesses 
emphasized the importance of agritech entrepreneurs and farmers 
working together so that small businesses and small family 
farms will benefit from the emerging technology and 
innovations. Agritech entrepreneurship activity is also 
spurring rural revitalization with agritech initiatives in 
America's Heartland and other regions, attracting talent, 
dollars, and jobs to those communities.
    Corporate and angel investors, trade associations, land 
grant universities, and state and local governments are 
partnering not only to connect entrepreneurs and innovators 
with startup capital which is so important, but also to mentor 
those entrepreneurs and set them up for success in the 
marketplace.
    These organizations can also facilitate relationships 
between entrepreneurs and farmers so that the risk of farmers 
trialing new innovation is minimized or even monetized, best 
case scenario.
    Our witnesses today will discuss how these diverse 
stakeholders are working together to attract startup activity 
to the Heartland and how creating a strong, local support 
system providing talent, infrastructure, and capital is vital. 
They will also discuss their efforts, including training 
workers for skilled tech jobs, to keep the startups local so 
that we may bring additional jobs and investment to their local 
communities.
    I want to thank all of you again for being here today, and 
we really look forward to this hearing today and to your 
testimony.
    I now yield to the Ranking Member, Mr. Schneider, for his 
opening statement.
    Mr. SCHNEIDER. Thank you, Mr. Chairman. And thank you for 
holding the hearing today.
    The agriculture industry plays a critical role in our 
personal lives and the United States economy. Unfortunately, we 
do not spend enough time thinking about the current state of 
affairs of the industry and how it can, and should, and must, 
move forward. It is, therefore, noteworthy that this is the 
second hearing of this Congress discussing something as 
important as agricultural technology, also known as agritech. 
This sector offers an opportunity to combine the newest 
technology and ideas with agriculture in a way that has the 
potential to revitalize our economy and our future.
    Most importantly, this hearing focuses on rural America, 
and I am lucky to have constituents who are working hard to 
sustain our food supply. Our rural economy has shown an ability 
to adapt and change with the development of new technologies. 
It has created opportunities by adding different uses for their 
products, from investing in renewable energy, to identifying 
foreign markets for their products, farmers have been 
resilient, and our local economies and the country have 
benefitted from it.
    Farmers have been investing more in technology to disrupt 
the industry, reverse stagnating prices from oversupply, and 
combat extreme and unpredictable weather patterns. In fact, we 
saw a jump in agritech startups in 2017 as more than $700 
million was invested compared to just $332 million in 2016.
    As we have seen in the past year, there is no denying that 
our planet is experiencing more frequent and more damaging, 
natural disasters. We saw it with Hurricanes Harvey, Irma, 
Maria, and Jose, just to name a few. We also saw how wildfires 
and California's 5-year long drought have devastated farms, 
ranches, and forests.
    Extreme weather continues to impact our country. These 
often result in scarce supplies, decreasing nutrient levels, 
and other factors that threaten the continuing success of the 
agriculture industry. As the planet warms, weeds, pests, and 
fungi that thrive in warmer temperatures are expected to force 
farmers to spend more than $11 billion to combat them.
    Meanwhile, there is a real epidemic among our Nation's most 
important commodity, farmers. In recent years, it has been 
concluded that the suicide rate for farmers is among the 
highest of any profession. Much of their distress comes from 
lagging prices from oversupply and low prices. This is where 
agritech can truly make a difference by streamlining operations 
and protecting farmers and ranchers from low commodity pricing.
    American has always been a country of innovation, 
creativity, and invention. We must harness these skills today 
and find the balance between government oversight and 
technological advancements without hindering business 
opportunity. The promise of agritech can change lives and 
positively disrupt an entire industry, which is why I am 
hopeful we can find a way to grow investment in this area.
    I am thankful to all the witnesses for being here today and 
look forward to your insights on the industry and how 
technology is really a valuable investment for the Ag industry.
    Thank you, and I yield back.
    Chairman BLUM. Thank you for those comments, Brad.
    If Committee members have an opening statement prepared, I 
ask that it be submitted for the record.
    I would also like to take a moment now to explain the 
timing lights that are somewhere there in front of you. You 
will have 5 minutes to deliver your opening testimony. The 
light will start out as green. When you have 1 minute 
remaining, the light will turn yellow. And finally, at the end 
of your 5 minutes it will turn red. And we would like to have 
you try to adhere to that time limit.
    I would now like to introduce our witnesses. Our first 
witness is Mr. Kevin Kimle--I think I pronounced that right--
the Director of Agricultural Entrepreneurship Initiative at 
Iowa State University in Ames, Iowa. Mr. Kimle is also a 
cofounder of the Ag Startup Engine, a program to fund and to 
help agtech entrepreneurs and to increase startup creation at 
Iowa State. I have heard a lot of good things about that 
program. Thank you for being with us today.
    Our next witness is Mr. Sam Fiorello. And I did a double 
take. I went to Loras College, a small school in Iowa back in 
the 1970s, and we had a young man from the Southside of Chicago 
that ended up being the National Wrestling Champion Division 
III, and his name was Sam Fiorello. So I was wondering if that 
was----
    Mr. FIORELLO. It was not me.
    Chairman BLUM. It was not you. Okay. All right.
    The Chief Operating Officer of the Donald Danforth Plant 
Science Center in St. Louis, Missouri. He is also a cofounder 
of the Ag Innovation Showcase, a gathering for the agricultural 
innovation community. Welcome, and we appreciate your testimony 
today.
    Our next witness is Mr. Pete Nelson. Welcome. Vice 
President of Agricultural Innovation at the Memphis Bioworks 
Foundation in Memphis, Tennessee. Mr. Nelson is also the 
President of AgLaunch, a joint initiative with the Tennessee 
Department of Agriculture to create agricultural innovation 
opportunities in the Midsouth. Welcome. We appreciate your 
testimony.
    And I now yield to our Ranking Member, Mr. Schneider, for 
the introduction of our final witness.
    Mr. SCHNEIDER. It is my pleasure to introduce Dr. Michael 
Fernandez, a Senior Fellow at the George Washington 
University's Food Institute and Sustainability Collaborative. 
Prior to GW, he was the senior director of Global Public Policy 
for Mars, Inc., and served as executive director of the Pugh 
Initiative on Food and Biotechnology. He has also held 
leadership roles as USDA, EPA, and on the Senate Committee on 
Agriculture, Nutrition, and Forestry. Dr. Fernandez holds a 
degree from Princeton University, and Ph.D. in Biochemistry and 
Molecular Biology from the University of Chicago. Welcome, Dr. 
Fernandez, and thank you for testifying today.
    Chairman BLUM. And I would now like to recognize our first 
witness, Mr. Kimle, for 5 minutes.

       STATEMENTS OF KEVIN KIMLE, DIRECTOR, AGRICULTURAL 
  ENTREPRENEURSHIP INITIATIVE, IOWA STATE UNIVERSITY; SAM J. 
   FIORELLO, CHIEF OPERATING OFFICER, DONALD DANFORTH PLANT 
    SCIENCE CENTER; PETE NELSON, PRESIDENT, AGLAUNCH, VICE 
PRESIDENT, AG INNOVATION, MEMPHIS BIOWORKS FOUNDATION; MICHAEL 
  FERNANDEZ, SENIOR FELLOW, FOOD INSTITUTE, GEORGE WASHINGTON 
                           UNIVERSITY

                    STATEMENT OF KEVIN KIMLE

    Mr. KIMLE. Thank you, Congressman. Good to be with you this 
morning.
    I serve as director of a program, as the congressman 
mentioned, called the Agricultural Entrepreneurship Initiative 
at Iowa State University. The program was founded in 2005 to be 
one of the foremost programs for training and developing 
agricultural entrepreneurs inspirationally in the world. Our 
activities really have their foundation in the land grant 
university mission of teaching, of research, and of outreach. 
So from a classroom perspective, as an example, a class that I 
teach, Entrepreneurship and Agriculture, this semester has 108 
students. Starting next week, they will begin the process of 
developing three concepts for new businesses, and in May, 
instead of a final exam, their final will be to present their 
favorite of those three business concepts to panels of bankers, 
investors, entrepreneurs, and so on. And that class has become 
a primary feeder for agtech business development activities.
    We do a lot of things out of the classroom, experiential 
learning activities, business plan competitions, and so forth. 
We place students as interns with startup companies, many of 
which now are founded by former students who had their own 
startup companies in the agtech arena.
    As the congressman mentioned, one of our initiatives is 
called the Ag Startup Engine. It is an investment platform in 
the Iowa State University Research Park intended to provide 
early stage funding and mentoring for agtech entrepreneurs. We 
currently have five companies that are part of our portfolio. 
Just as one brief example, there is a company called Smart Ag. 
They have a software platform for self-driving tractors. Their 
first program is for a self-driving tractor that pulls a grain 
cart. So there were two farmers in Iowa last fall who had 
tractors that were driving themselves, pulling a grain cart 
between the combine and the truck harvester.
    Just a brief question. Can Iowa, can the Midwest be a hub 
for agricultural entrepreneurship? Well, a lot of the activity 
that we have seen and what we do is really based on animal 
protein supply chains. And so the technology that we have 
developed to create more sustainable, more productive 
agriculture is really what it is about. And so we have a lot of 
new and exciting things that are happening, a lot of new 
initiatives, certainly not just in Iowa but across the Midwest, 
but we still have a lot of work to do. Most certainly, the 
environment today is a lot better than it was when I founded my 
first agtech company back in 1996. So many more sources of 
funding, support, and mentoring than there were, but we still 
lag. The Midwest, at least in the way that I count the Midwest, 
last year got about 4.7 percent of venture capital dollars in 
the United States while we have about 20 percent of the U.S. 
population, so we are not kind of punching up to our weight in 
terms of gathering venture capital funding.
    In terms of ecosystems for agricultural entrepreneurs, some 
of our challenges, you know, funding always is a challenge, but 
again, the sort of shark tankification of our culture created a 
lot of new contests, kind of a new language for startups for 
competitions and so on.
    Mentoring is a really big deal. As a former founder of an 
agtech business when I was younger myself, finding somebody 
else who has done that before is a really key part of it. So 
finding the right mentor at the right time is a key part of the 
challenges that we try to address.
    Creating what I would call a change-making culture is a big 
part of it as well. The Iowa nice culture that we have I think 
is certainly a good thing but there are some parts of that that 
may not work when it comes to celebrating entrepreneurship. 
There is an old saying in the Midwest, you know, nothing is 
punished in small towns like success. And that may not work so 
well when it comes to entrepreneurship.
    Finally, economists talk about a concept of agglomeration; 
right? When a lot of people come together in one place who do 
the same thing, and some of the benefits for talent, for money, 
for expertise. The congressman was talking about that in Utah 
when we were visiting out front before. Agriculture by its 
nature is spread out in a lot of different places, and so 
finding ways to get together to exchange information is a big 
deal.
    So for agtech ecosystems in the Midwest to become more 
vibrant I think three things are critical to conclude. I think 
exposing more young people to the concept of entrepreneurship 
and that being an option as part of their career is a big deal. 
So certainly, university programs like we run at Iowa State 
University I think are big, but even high school programs. 
Fewer young people today grow up on farms and small businesses, 
in entrepreneurial families, and so exposing them to that, I 
think, is a big deal. We need to continue to develop more parts 
of early stage funding. Those things are so key to getting 
things off the ground. And then finally, from an agtech 
perspective, you know, I think we need more venture funds in 
the Midwest. We have some new ones that have been formed but I 
think having home-based funding will be a big part of 
continuing to develop the agtech ecosystem in the Midwest. 
Thank you.
    Chairman BLUM. Thank you, Mr. Kimle.
    Mr. Fiorello, you are now recognized for 5 minutes.

                  STATEMENT OF SAM J. FIORELLO

    Mr. FIORELLO. Thank you very much.
    Good morning, Chairman Blum, Ranking Member Schneider, and 
also good morning to you, Congressman Comer and Congressman 
Curtis.
    My name is Sam Fiorello, and I am the COO of the not-for-
profit Donald Danforth Plant Science Center in St. Louis, 
Missouri. It is the center's largest institute of its kind with 
over 240 scientists and staff working to improve the human 
condition and strengthen the economy of the region. I am also 
president of the Bioresearch and Development Growth Park, BRDG 
Park for short. It is a research park on our campus.
    Fifteen years ago, a farmer would tell me with great pride 
that he could fix anything on his farm with baling wire and a 
blow torch. Today, the nearly million dollar tractor he drives 
has more computing power than the Apollo 11 spacecraft that 
went to the moon and back. That is progress, but that progress 
comes with challenges. Today, the average farmer in the U.S. is 
over 58 years old. Tech savvy young people are leaving rural 
communities for urban centers where 21st century jobs are more 
readily available.
    We believe that Ag innovation is a crucial component to 
help reverse this trend and is one of the few undertakings that 
can help bridge our Nation's urban versus rural divide. Our 
discoveries are the basis for creating products and services 
that meet critical needs of farmers and ranchers, food 
processors and manufacturers, distributors and grocers. Because 
of the growth of ag-focused innovation, young people now have 
an outlet to put that interest and technology to use in their 
local communities. Imagine if you will a kind of a Geek Squad 
in rural America that would go across and be deployed to help 
get a tech-heavy piece of equipment up and running in hours 
versus days.
    Conducting best in class research is not the only way the 
center contributes to the creation of the region's agtech 
innovation system. We also provide open access to our core 
facilities, facilities like greenhouses and growth rooms and 
chambers and Biocomputing. These are valuable pieces of 
infrastructure for small companies. They could not simply 
advance their businesses or build something like this on their 
own, so access to ours makes it a critical way to advance 
businesses.
    As I mentioned in my opening, in addition to our research 
center, the Danforth campus is also home to the BRDG Park, an 
agtech-focused research park. BRDG Park is home to 14 companies 
that employ nearly 300 people. Of these companies, six are from 
our region and eight moved to St. Louis from Germany, Israel, 
India, and across the U.S. BRDG Park companies and the Danforth 
Center spinoffs account for close to $200 million of invested 
capital in our region.
    In 2009, BRDG Park partnered with the St. Louis Community 
College to create a workforce training program. This 2-year 
training program boasted a 95 percent placement rate with 
graduates hired to work at companies throughout our region at 
salaries upwards of $45,000 a year. Program trainees are young 
people who come from disadvantaged neighborhoods or older 
workers who have retooled to start completely new careers. One 
example of such a trainee is a gentleman named Dave Busby. Dave 
worked for more than 15 years making truck seats at a Chrysler 
plant in St. Louis. When the plant closed, Dave, who was in his 
mid-30s, needed to start a new chapter in his working life. In 
2011, Dave enrolled in the community college's Plant and Life 
Science technician training program, and upon graduation was 
hired by the Danforth Center. Today, Dave is the assistant 
director of the center's tissue transformation facility.
    In part because of our success, this innovative training 
model is being deployed at community colleges throughout the 
state. One example includes the precision Ag and robotics 
training programs at Three Rivers Community College in Saxton, 
Missouri. For the last 10 years, our center has held an agtech-
focused investor conference, the Ag Innovation Showcase. This 
event brings the agtech community from more than 25 countries 
together to advance the industry. Central to the event is a 
segment called ``Voice of the Farmer,'' which features farmers 
from across the U.S. sharing their challenges with innovators 
and investors to help ensure a direct path to useful solutions. 
Since inception, companies involved in our agtech business plan 
competition have raised more than half a billion dollars in 
investment capital to grow their businesses.
    The Ag Showcase is not alone in the rise of popularity and 
agtech entrepreneurship and investing. According to the 
publication Ag Funder, venture capitalists invested over $6.9 
billion in 2015 in a rage of agricultural-related innovations. 
Last year, invested capital approached $9 billion. To give you 
context, when I started the Ag Showcase in 2009, that figure 
was less than half a billion dollars.
    We hope to build on our early success. In 2016, with the 
help of a EDA planning grant, the center and its partners 
launched a 600-acre innovation district called the 39 North 
District. The district is designed to attract talent, ideas, 
and capital to our region.
    We are building on our regional strengths. Today, St. Louis 
is already home to nearly 1,000 plant Ph.D.s and hundreds of 
companies employ close to 100,000 people and contributing over 
$4.6 billion to our regional economy.
    If I can leave you with three things that I think are vital 
to help keep this going, one is rural broadband. We need to 
have access. We cannot use these technologies if farmers do not 
have broadband. Two is an educated and trained workforce. And 
three, we need to continue to fund ag research, basic Ag 
research, because it is the beginning of the virtuous cycle. 
Thank you very much.
    Chairman BLUM. Thank you, Mr. Fiorello, for your testimony.
    I would like to recognize the Chairman of the Full Small 
Business Committee that just walked in, Chairman Chabot. Thanks 
for being with us today, Chairman.
    Mr. Nelson, you are now recognized for 5 minutes.

                    STATEMENT OF PETE NELSON

    Mr. NELSON. Good morning. And thank you, Chairman, and 
Ranking Member Schneider, and members of the Subcommittee for 
the opportunity to share with you some thoughts regarding this 
important topic.
    My name is Pete Nelson. I am the vice president of Ag 
Innovation, Memphis Bioworks Foundation, which is an economic 
development nonprofit focused on life sciences, including 
agriculture. In this role, I get to serve in a unique public-
private partnership as the president of AgLaunch, which is a 
joint initiative between Bioworks and the Tennessee Department 
of Agriculture.
    AgLaunch envisions a transformed regional agriculture and 
food economy centered around farmers, innovation, and equity. 
It was conceived as part of the Tennessee Governor Bill 
Haslam's Rural Challenge in 2012, and specifically named in 
2016's Governor's Rural Taskforce. The initiative is supported 
by a broad and diverse group of partners, including Farm 
Bureau, USDA, Launch Tennessee, and our agriculture 
universities. Although our work is anchored in Tennessee, our 
agricultural leadership supports the regional collaborations we 
are developing. This includes a particular focus on Memphis and 
the Mid-South Delta Region, a five-state area that includes 
Arkansas, Kentucky, Mississippi, Missouri, and Tennessee, as 
well as other regions that have distressed counties or food 
access areas, such as the Appalachian Region.
    The Delta Region is characterized by its highly-productive 
agricultural systems, first-class logistics capabilities, and a 
large number of food and agricultural companies. This region is 
also home to chronic poverty, population decline, health 
disparities, and limited opportunity.
    The agtech revolution is offering the ability to rethink 
how Tennessee and the surrounding region can become a leading 
innovation hub for food and agriculture. This means jobs, new 
business opportunities, improved food access, and new 
opportunities for our farmers.
    Farmers have traditionally been at the forefront of 
developing and implementing new innovations and technologies. 
Over time, the role of the farmer in adopting new technologies, 
and this is key, has become one of ``customer'' rather than one 
as ``partner''. Currently, there is a large amount of new 
technology that gets presented to the farmer, but the value is 
not always clear. There is also an increasing disconnect 
between those creating new innovations and the farming 
community. This fact was outlined in the memo presented here 
last year on the topic and in the hearing itself.
    To address this disconnect, AgLaunch has initiated a three 
phase startup program called AgLaunch 365, which provides 
participating startups with direct access to AgLaunch's network 
of innovative farmers to actually ground-truth these products 
or services. The program allows the startup founders to acquire 
unbiased feedback and incorporate these observations into the 
development of their product. Participating farmers get access 
to new technology and the opportunity to participate in the 
upside of the business.
    Since the creation of the program, dozens of companies have 
received support. A good example of the power of this farmer 
network is a startup company called Ag Voice, which has a voice 
recognition technology for agriculture that simplifies crop 
scouting and other recordkeeping efforts and was validated 
through the network. The validation process included answering 
simple questions like ``Will the technology work in the cab of 
the tractor or combine when it gets noisy? Will the ear piece 
stay on your ear when you are in the middle of scouting a hot 
soybean field? And will the lexicon be robust enough to record 
all the farm practices necessary, and will the records be 
accurate?''
    The results of this real-world field trial generated data 
and farmer testimonials used to raise further investment and 
attract additional customers. The participating farmers were 
rewarded with opportunities for equity and ability to get 
favorable terms for accessing the technology.
    AgLaunch has worked to assemble several tools that can be 
leveraged and replicated specifically in the agtech opportunity 
to provide early-stage capital to companies in the program. 
These are included in our written testimony. One that I would 
like to highlight is our work with the Tennessee Department of 
Agriculture to pilot a cost-share program for farmers to 
incentivize participation in trials of pre-commercial startups.
    AgLaunch and its partners are positioning Tennessee and the 
surrounding region to be a leading innovation hub while also 
sharing key learnings to other states and regions. We believe 
in the role of the farmer as a partner in innovation and that 
our approach will change the current agricultural investment 
thesis. This will create more successful startups and bring 
forth solutions that more efficiently address real-world 
agricultural problems. Ultimately, and this is important to us, 
this will mean job creation, increased food access, and new 
opportunities in rural areas and urban areas.
    Mr. Chairman, I would like to thank you again for inviting 
Memphis Bioworks Foundation to share with you the AgLaunch 
story and look forward to any questions.
    Chairman BLUM. Thank you for your testimony, Mr. Nelson.
    Dr. Fernandez, you are recognized for 5 minutes.

                 STATEMENT OF MICHAEL FERNANDEZ

    Mr. FERNANDEZ. First of all, thank you, Mr. Chairman, and 
Ranking Member Schneider, and all the members of the 
Subcommittee for giving me the opportunity to be here today.
    I am Michael Fernandez. I am a senior fellow with the Food 
Institute at George Washington University.
    This morning I would like to briefly offer three general 
observations and three points to consider as you are thinking 
about the role of technology in rural development.
    So the first observation is that agritechnology is critical 
to sustaining vibrant rural communities. Food and agriculture 
is the bedrock of most rural economies and the entire food 
sector is really already being transformed by new technology. 
How we grow our food, how we manage complex supply chains, how 
we buy food, how it gets to our homes all are being transformed 
by new technology. And these changes present exciting new 
opportunities for capturing added value in rural communities 
both on and off the farm, but we need to be thinking about the 
infrastructure, education, and the training necessary to take 
advantage of them. If we want vital rural communities, we 
cannot let this technological revolution pass us by.
    So my second observation is that we need to think about Ag 
science and technology as a critical part of the public 
infrastructure supporting rural America. Public funding for 
food and Ag R&D is really what supports the basic science 
underpinning this technological innovation and revolution that 
we are seeing, and it is critical to sustaining the science 
talent pipeline necessary for long-term success. I know that 
infrastructure is an important topic right now and it is great 
to see rural infrastructure being part of that conversation. I 
just hope that we do not lose sight of this important component 
of rural infrastructure.
    My third observation is we are on the cusp, actually, of 
what I think is a new agritech revolution, which is gene 
editing of plants and animals. Now, what makes this new form of 
genetic engineering potentially so transformative is that it 
gives scientists the ability to go in, find specific DNA 
sequences within a plant or animal genome, and make targeted 
changes. So you can kind of think of it as a search-and-replace 
function in a word processor. You go in and can find the one 
word in the whole document you are looking for and change just 
a few letters. It is fundamentally different from the first 
generation of genetic engineering techniques, and it 
potentially opens up a whole new range of applications.
    And in addition to being more precise, gene editing 
technology also promises to be relatively easier and cheaper, 
making it more accessible. So that means there is a real 
possibility that a whole ecosystem of scientists and small 
businesses will spring up in rural communities around this 
technology, and you have already heard from the witnesses this 
morning about how that is happening. It also means that there 
may be more incentive for developers to work on kinds of crops 
and trades that would not be economically viable otherwise, and 
therefore bring benefit to a wider array of farmers.
    So as you are looking at how new agritechnologies, 
including gene editing, could help revitalize rural America, I 
would like to offer three points. First, we want to make sure 
that these new technologies actually benefit farmers of all 
kinds. So we have heard we have an aging farm population. We 
have a new generation of farmers that will be taking over and 
it is going to change the rural landscape. These younger 
farmers will be more tech savvy than their predecessors, and 
they are probably also likely to be working more on smaller 
operations and be more dependent on a mix of farm and off-farm 
income. So we need to make sure that new technology meets the 
needs of these new farmers and the rural economies around them.
    Second is that new agrifood technologies must be acceptable 
to consumers. The first generation of genetically engineered 
products was geared more toward farmers than to end-consumers. 
American consumers are ever more focused on food, what is in 
it, where it comes from, how it is produced, and that trend is 
not going away. So the best way to build acceptance is to offer 
products that provide tangible benefits that consumers can 
embrace and to be transparent about it to build consumer trust.
    Which really leads me to my last point which is that 
consumers will not have trust if they do not have confidence in 
the underlying regulatory system. The products of gene editing 
will be different from earlier GMOs, and we are going to need 
to tailor our regulatory approach accordingly. But a robust, 
scientifically justifiable, and transparent system is 
absolutely critical to ensuring success at home and to 
accessing markets abroad. New product developers are already 
starting to knock on regulators' doors and there really is not 
a clear system in place.
    So I know that talking about the benefits of regulation is 
counter to the current trend, but the window to craft a clear, 
credible pathway to market that gives developers some certainty 
on the one hand and consumers confidence on the other is 
narrowing rapidly. We cannot let this opportunity go to waste 
and risk killing this technology before it even starts to 
deliver on its real promises.
    So with that, thank you again, Mr. Chairman, and I am happy 
to answer any questions.
    Chairman BLUM. Thank you, Dr. Fernandez.
    I will now recognize myself for 5 minutes of questioning.
    I think almost everyone today mentioned funding, so I would 
just like to chat a little bit about funding. Someone, maybe 
Mr. Kimle, mentioned a 4 percent number, retracting just 4 
percent of I think the venture capital in the country, and I 
would just like to have your thoughts on why is it only 4 
percent? Why are venture capitalists not viewing the 
agricultural marketplace as someplace they want to put their 
investors' money? I know a few years ago when farm prices 
skyrocketed, Warren Buffet and lots of capitalists, investors 
were talking about investing in venture capital in the Ag 
sector. Now, I do not know if since the downturn in farmland 
prices has coincided with may be the 4 percent number. So if 
you could address that.
    And then also, it is kind of an interesting industry 
because we have these startups but they, unlike other types of 
businesses, they need to get farmers to try a lot of these 
things. And so what incentives are you seeing for farmers? Do 
they want to be paid to try or is it enough to say, well, the 
promise is you are probably going to get better yields out of 
this acre of land? If you could discuss that as well. So 
funding I am sure is an issue.
    Mr. KIMLE. Well, I will give it a start. Yeah, funding is a 
big deal. Why? Kind of disproportionate performance in the 
Midwest. Probably a combination of things. You know, funding is 
kind of a chicken and egg sort of a thing to use an agriculture 
metaphor. You know, you need deals to invest in and then you 
need money to invest in it. So both need to rise at the same 
point. And at some point it all improves and it definitely is, 
so I think programs that produce more quality new businesses is 
part of it, and we definitely see that going on. And then at 
the same time, more localized money for that to happen. So just 
have not had a tradition of venture capital funding. You know, 
we have built things in Iowa, at least, like the ethanol 
industry with a lot of investment and money but the models for 
that are a little bit different from venture funding, I guess. 
So it is probably a matter of some of our capital in places 
like Iowa learning kind of how they might want to participate, 
if at all, in venture capital, as well as bringing some new 
talent. And we see some of that.
    Chairman BLUM. How important is projected rate of return? 
If you are an investor out in Silicon Valley and you say, I can 
invest in this Ag startup, but the Ag income is not that great 
and that can negatively impact the marketplace for product A, 
or I can invest in the next Amazon, perhaps. Okay, I can see 
that. Is that part of the issue? Part of the problem is farm 
income?
    Mr. KIMLE. It can be. Certainly. Yeah.
    Chairman BLUM. The ability of farmers to afford maybe this 
new technology?
    Mr. KIMLE. Certainly for solutions for the crop industry, 
which has been under economic stress. You know, I think that 
can be part of it. And part of it, too, is probably just having 
some deals that succeed that are more localized in the Midwest. 
You know, so we have had deals in agtech that have certainly, 
from an entrepreneur and investor perspective, been successful. 
Climate Corp. being purchased by Monsanto, Granular being 
purchased by DuPont Pioneer in 2017. Those are sort of big 
deals. We have not had anything like that yet out of our 
program. That sort of things happen and other people see 
investors and entrepreneurs having success and I think it sets 
a precedent that is important. But certainly, underlying 
economics in the industry affect it too, to your point.
    Chairman BLUM. Anyone else want to have a thought on the 
funding in general?
    Mr. FIORELLO. A couple points. I totally agree with Mr. 
Kimle. I would also add that investors tend to invest near 
where they live, and so you have this concentration of 
investors in Silicon Valley and in Boston, so we need to get 
them into the Heartland. So things like our investor 
conferences that we hold in St. Louis, part of our goal is just 
to get them here and to say this 12:38:58xxx and see how this 
works. Two, investors look for big exits, big sales. We have 
had a few of those but not many, and investors look for a path, 
a many-pronged path to an exit. And early on, a lot of these 
deals happened to be in the seed space, for example, and there 
were just a handful of paths. There were four, five, six 
companies that could acquire business. I think as you have seen 
this stretch out into more technology across the spectrum, you 
are going to see more exits because there are more paths for 
this technology to go. So I am quite optimistic the trend is 
going to change.
    Chairman BLUM. Good to hear.
    Mr. NELSON. Just a couple comments. One, agriculture is 
fundamentally different. The investors have not understood the 
industry, so the timing, how we think about interfacing with 
the customer, the farmer, has been different. And so, we have 
spent a lot of time thinking about how we align the capital 
sources, both regionally, but also tactically with what we are 
doing. So, for example, our cost-share program allows the 
farmer to be a first customer, have skin in the game, but also 
not bear full risk to get started, which allows you to prove 
and validate to get to the next step. We are also working with 
farm organizations, Iowa Corn Growers would be an example. 
There are actually farmers that have investment funds that 
understand the space, and so that knowledge is building. But 
that is sort of a big key part of that.
    I would love at some point to also address the farmer 
issue. I am not sure if we are out of time.
    Chairman BLUM. I will come back in a second round.
    Mr. NELSON. Okay.
    Chairman BLUM. Dr. Fernandez, you are anxious to jump in.
    Mr. FERNANDEZ. Yeah, I am not sure that I have a whole lot 
more to add other than to say that I think it is interesting we 
are seeing a lot of what have been the traditional tech 
investors in Silicon Valley starting to be more interested in 
food and Ag, and I think that is a great thing to provide 
additional money. But as we just heard, they do not understand 
food so well, so I think there is going to be a learning 
process. And the time-lines in terms of the rate of return I 
think may be a challenge for some of those investors. But 
having the investment funds based in the Midwest and by people 
who really understand how food and Ag work I think is where we 
are going to really see the most success.
    Chairman BLUM. Thank you.
    And I will recognize Mr. Schneider, the Ranking Member, for 
5 minutes.
    Mr. SCHNEIDER. Thank you. I have a lot of questions. But I 
am going to start with a quick story that kind of links to what 
you are talking about.
    Ag is different. Maybe not so much. I want to go back, Mr. 
Fiorello, you said 15 years. I am going to take us back 32 
years. A personal story.
    I was working and developing oil and gas software. This 
links our Committee, Energy and Trade. And we finished. It was 
accounting software that ran on the old Compaq computers. We 
finished in 1985, which was the peak of a boom and became a 
bust, so we had to find new markets. And in the Spring of 1986, 
our new market we found, I was in Irrigon, Oregon, installing 
our accounting system onto a farm--and this fits to 
everything--a former consultant had moved out to Oregon. He 
wanted to be a farmer and he was at the cutting edge of 
technology. And I just remember being in his office with a lot 
of green CRTs. But he was there. And at that time it was a 286 
chip, less technology than was on the moon. We now have more 
technology in our pockets on our phone, so we have come a long 
way. But it is important I think how far we have come really 
matters.
    And maybe this is a segue to my question for Dr. Fernandez, 
because in your testimony you said the United States is falling 
behind. What is the implications of the United States falling 
behind in technology long-term?
    And I will ask a second question. What recommendations to 
us as policymakers do you have that we can get back to where we 
should be leading?
    And then I will come back and talk about the Heartland in a 
second.
    Mr. FERNANDEZ. Thank you very much. Yes, this was in the 
staff memo. This is not new to you all that in terms of basic 
R&D investment, the United States public funding has dropped 
something like 20 percent in real-term dollars in roughly the 
last 10 years. So we have gone from being the world's leader to 
where now China is spending almost twice as much in terms of 
public investment in R&D. We have seen a huge increase in 
private investment in R&D, which is great, but I think that the 
overall levels are still below where we have been.
    I think the challenge here is that support for underlying 
basic science is the engine for the technological innovation 
that is coming next. What is the next big thing? What is the 
next new technology? And we need to really be supporting that. 
And thinking about that as part of, as I said, part of the 
public infrastructure that will support rural America. And the 
danger is that we fall behind clearly, you know, in the long 
term.
    Mr. SCHNEIDER. I will take it a step further in the broader 
economy. We are a fraction of the global population. We are 
still the breadbasket for the world in many cases, but other 
countries are getting to self-sustaining agriculture. But they 
are only going to sustain that with technology. If we can be at 
the cutting edge of technology, we can export that to the 
world. Again, it is jobs here in the United States and 
hopefully jobs in the Heartland.
    Mr. Kimle, if I can ask you, you are at Iowa State in Ames. 
You have got these startups. Have you faced the issue of, as 
they start to get funding, your startups move either from Ames 
to the big city or out of the Midwest and to the Coast? How 
many companies have done that?
    Mr. KIMLE. No, we have not as yet. We have had some success 
at attracting companies to come to Ames, fortunately, but we 
have not lost any.
    Mr. SCHNEIDER. Fantastic.
    Mr. KIMLE. And that is part of the thing that is different 
from when I started my first company in 1996. So I have my own 
history as well. We had a company doing electronic commerce on 
the Internet starting in 1997. It was new then. Hard to believe 
now. And we had revenue to begin with but we thought, well, we 
will go out and look for some money. Anyway, to make a long 
story short, we went out looking for a million and a half 
dollars but people in Iowa, some of the prospective investors 
were like, well, the Internet, I do not know if it is really 
going to be that big. And you guys have DuPont as a customer 
and Dow, but gosh, I do not know if you have really proven, you 
know, that you can get customers. And so, anyway, we had money 
from Silicon Valley, New York, and Atlanta that came in. Money 
that said if you are happy being in Ames where we were 
headquartered, that is fine, but you really should consider 
moving to Silicon Valley. We made the choice not to do that. I 
am happy to say that in 2018, sometimes the money is not 
developed but the issue of moving to be someplace else, 
especially for things that face the industry that we are 
surrounded by in the Midwest has not been that big of a 
challenge.
    Mr. SCHNEIDER. I think one of the issues, you want to be 
close to your customer. I mean, this is my segue to you, Mr. 
Nelson, because I think you said it very well. The industry has 
treated farmers as customers only, not as partners. And if you 
would elaborate on what does it mean to treat the farmers as 
partners in the development of ag-tech?
    Mr. NELSON. There is a perception in agriculture that the 
farmer is kind of, you think about the overalls and the 
pitchfork, and we do not have that perception. My entire career 
has been partnering with farmers to innovate technologies 
earlier. That was, for us, the first call we ever would make 
when we would try a new idea. So, what we are doing is 
institutionalizing that idea and also supporting other groups 
that are doing that. So, the way we do that is we work with 
farmers to screen technology. Without that part in place you 
would have basically farmers getting hit with, you know, if you 
get the reputation as a first mover farmer you are going to get 
hit with hundreds of things every year to try, so we work 
through screening that process, working with the growers, 
bringing technology, and making sure that the farmer has a 
combination of things that give them an advantage besides the 
rights to, oh, great, if this works you get to buy it later. So 
that is participation in the deal flow, equity, potential to 
invest at a favorable valuation rate, distribution rights, and 
a portfolio of options that are organized between the company 
and the farmer to make sure that they have got a favorable 
advantage for their time. And that is all tied back to their 
time and energy. And we are now replicating that in other 
places. We have started that with row crops but have found 
dairy and beef and other sectors also want that service and to 
pull that piece together. There are great models out there 
right now if you are already further along in the pipeline to 
pay cash for those kinds of services. What was missing was the 
ability to do that early with the really early-stage 
technologies like Dr. Kimle and others are working with and to 
match that with the farmer. So, we are doing that.
    And I love your farm shop analogy. What we believe, where 
the deals get done, and I am in this every day, is on a farm 
shop in Ripley, Tennessee, or in Savannah, Tennessee. 
Typically, a lot of technology and computers that you 
referenced earlier, but also some muddy boots and the ability 
to get in and out on the field, and it is that combination of 
what really anchors these technologies in the rural areas, you 
know, the theme of today.
    Mr. SCHNEIDER. I am way over my time. I will close with 
this. Mr. Fiorello, you raised the issue of broadband, rural 
broadband. And we are talking infrastructure, and others have 
talked about it. We did have a hearing on this Committee on 
rural broadband. We understand the impotence. If we are going 
to connect our communities in the Heartland to markets, to 
opportunities across the globe, that rural infrastructure, that 
rural broadband has to be a piece of it.
    So with that I yield back, and thank you for the extra 
time.
    Chairman BLUM. Thank you, Mr. Schneider.
    Now the gentleman from Kentucky, Mr. Comer, is recognized 
for 5 minutes.
    Mr. COMER. Thank you, Mr. Chairman. My questions are going 
to all go to Mr. Nelson. I appreciate the long-working 
relationship you have with my flagship agricultural university 
in my district, Murray State University.
    So my first question, can you elaborate on how Memphis 
Bioworks has used the agritech industry to stimulate regional 
revitalization?
    Mr. NELSON. Yeah. We realized early that even for 
Bioworks's original vision of stimulating life sciences in 
Memphis without reaching out and building a collaboration, and 
so we have now morphed that into the AgLaunch vision, which 
again starts with that five-state vision.
    We have to mention our mutual friend, Tony Brannon, who 
helped bring that together and had the vision. It is not easy 
to collaborate across state lines or to think regionally, but 
we think it is important both for the food access area--that is 
where we grow the crops--the commonality, and then also the 
ability, when we think about how we are positioning our region, 
we are going to Tel Aviv, London, all over the world and saying 
``Here is a place to implement your technology with real 
farmers, and that we can do rice in Arkansas. We can do tobacco 
and corn and soy in the Purchase area of Kentucky.'' So that is 
part of it.
    We also, back to your district, thinking about places like 
Hopkinsville that are already models of value-added agriculture 
with the ethanol facility and the flour mill there, how do we 
implement tech into that? And so, we see tech as a way of 
bringing the farmer along in the process and then being able to 
build more businesses like you guys are already creating in 
your area. And the collaboration really is centered. Bioworks 
gets small, and Arkansas State University and Mississippi State 
University, Murray State, our university partners, and then our 
development districts and Farm Bureau get large in this 
partnership as we sort of really continue to mobilize on the 
rural side.
    Mr. COMER. What is the biggest challenge facing agritech 
entrepreneurs in your region?
    Mr. NELSON. Well, this would be broader than the region. In 
fact, you will see this common theme with the Farmer Network. 
When we talk to venture capitalists in agriculture, and these 
are knowledgeable Ag venture capitalists, they say that there 
is a 90 percent failure rate for deals that have all the right 
elements. The intellectual property is good, the market is 
huge, and the people who run the company have already had exits 
in other industries, a 90 percent failure from this lack of 
connecting with the grower. As you know from your background, 
the grower on the other end of that typically gets hit with a 
bunch of sort of crazy ideas without a way to incentivize them 
and build them in. So, we really, the lynchpin of all this is 
how we connect those two pieces together. So, and for us in 
Tennessee, building out this cost-share program and then 
building out an actual organized Farmer Network, as you know, 
we have done that with alternative crops before. We are now 
expanding that work into the agtech work. For you all, that is 
probably interaction with KAIDF and some of the other sources 
to help farmers get in and work early. We should also comment, 
we have got some great stories like Ag Connections and others 
that are already great leaders there in the purchase area.
    Mr. COMER. We hear not just in agriculture but every 
industry, especially small business, about the shortage of 
skilled workers. What is Memphis Bioworks doing to address the 
problem so that companies can find the workers they need and 
that they can keep those jobs in the community?
    Mr. NELSON. I am going to address Memphis Bioworks, and if 
you do not mind, I may pass this to Sam as well because they 
are leading some programs. So, we run DOL programs targeting 
specific industry sectors, including agriculture, and have had 
over 1,000 people come through those programs that are getting 
training, certificate training or entry level into 2- or 4-year 
colleges. We are expanding that into this agtech arena pretty 
dramatically, and the number we like to hold up--there is a big 
dispute whether it is 20,000 to 60,000, but we have a gap in 
the ag industry of anybody that is opposed to an associate 
degree and try to sort of address that logically with getting 
feedback. And I love Sam's comments on Geek Squad and others.
    Is that okay to pass and let them also comment on that?
    Mr. COMER. Absolutely. Absolutely.
    Mr. FIORELLO. Yeah, I think there is a tremendous amount we 
have to do. We have to, if I start backwards, like I said, we 
partner with community colleges in areas to try to get them to 
customize programs that will help, gift certificates and 
training programs that will directly impact precision ag and 
the modern farm. But we have to move backward a step and make 
sure that in high school and elementary school these kids have 
some exposure to computing and computers and what data means 
and robust mathematics. Also, I am lucky to live in a suburb 
near a university, and so my daughter is exposed to things like 
classes on innovation and entrepreneurship not when she gets to 
Iowa State level but in fifth grade they have business plan 
competitions.
    And we were talking before the meeting, there was a 
terrific program that Warren Buffett's son, Howard, launched a 
couple years ago, a national Ag entrepreneur contest. We saw 
high schoolers from across the state get involved and great 
excitement. Unfortunately, that plan fell off but those kinds 
of things to, first of all, give these kids a view, a path 
towards what it can be, and then give them the tools to get 
there I think are critical.
    Mr. COMER. Thank you, Mr. Chairman.
    Chairman BLUM. Thank you, Mr. Comer. Good questions.
    The gentleman from Utah, Mr. Curtis, is now recognized for 
5 minutes.
    Mr. CURTIS. Thank you very much.
    I would like to express my appreciation to the witnesses 
for coming today. I found this conversation very interesting 
and stimulating. I would like to return to the rural broadband 
issue.
    Much of my rural area is owned by the federal government. 
Some of my companies have as much as 90 percent of the property 
is owned by the federal government. And we are struggling with 
permitting across those federal lands. I have joined with 
Senator Hatch to introduce a bill called the Rural Broadband 
Permitting Efficiency Act of 2018, to hopefully break that log 
jam.
    Mr. Fiorello, you brought it up, and any of you are welcome 
to jump in on this. Can you comment? Do you have any experience 
with federal lands? And is this bill helpful and the type of 
thing that we need?
    Mr. FIORELLO. Congressman Curtis, I do not have specific 
experience with federal lands, but I do know that there are 
enormous swaths of rural America where intensive farming 
happens where it is just dark. There is no Internet connection 
at all. We are creating all this innovation. We are creating 
this high end Ferrari and putting it on a gravel road. We 
cannot utilize the fruits of these innovations without 
broadband. I think it is a critical issue and until we fix that 
underpinning, that access to the broadband technology, we are 
really going to hold back rural America.
    Mr. CURTIS. I had a unique opportunity to bring Google 
Fiber to my city in Provo, Utah, and learned that density is 
critical. How do we deal with that? The infrastructure, the 
cost of bringing broadband to these rural communities? Do you 
have some thoughts on that, on how we get past that?
    Mr. FIORELLO. I know that folks talk about the cost. As 
technology advances, the cost is coming down. The problem is we 
cannot afford to wait because it is not just the deployment of 
technology; it is the kids in the classroom that do not have 
access to the tools. And you cannot be a fourth and fifth 
grader again; right? You could lose an entire generation. So I 
think we are going to have to really move in any sort of 
infrastructure funding that comes from the federal government, 
this has got to be moved to high up on the list because I think 
it is a critical shortcoming and we are just going to have to 
invest in it.
    Mr. CURTIS. So you bring up a good point. I have watched 
President Trump's plan for infrastructure and an emphasis on 
rural, and I would like to use this bully pulpit for a minute 
to say rural structure is not just roads. Or infrastructure is 
not just roads. And this clearly has to be a topic.
    I do not know if any of the others want to jump in on the 
importance of this and how we get past this problem of just the 
cost. The number of users per mile makes this very difficult.
    Mr. Kimle, you look like you are ready to give me the 
answer.
    Mr. KIMLE. Not an answer but just to reinforce the 
importance. You know, the startup that I mentioned earlier, 
Smart Ag with the self-driving tractor relies on wireless to 
get that done and they have had to have some workarounds to get 
that done. And so they can be creative in getting it done, but 
clearly, a solution, whether it is a self-driving tractor or 
just information passing from one node to the next is an 
important part. And almost any part of rural America that you 
go to you are going to find challenges.
    Mr. CURTIS. So you are telling me the hot spot on their 
phone may not drive that tractor?
    Mr. KIMLE. Not quite enough.
    Mr. CURTIS. I am also curious about the culture. I am 
listening to you thinking on the one hand our farmers really 
are the first entrepreneurs in our country; right? The risk 
takers. They fit all the characteristics. But in many ways they 
are not your stereotypical entrepreneur. And do you have some 
suggestions on how we bridge the cultural gap between our 
traditional entrepreneurs and our farmers and get them thinking 
along an entrepreneurial line? And then the second part of that 
question is are we in danger of leaving people behind? As 
technology becomes successful, how do we deal with those who do 
not adapt to technology and love the baling wire and torches?
    I will throw that open to whoever feels best qualified to 
answer that.
    Mr. NELSON. The interaction with the farmers, I would argue 
that generally the ones that are in business and are growing 
viable farm operations are fully entrepreneurs. They have the 
culture you described, Creating ways, Sam is doing it with his 
event that they do in September. We are doing it by actually 
getting investors and other kinds of techno entrepreneurs on 
the farm and actually going out and seeing. This phenomenon is 
just amazing. Like I said, in a farm shop is where this work 
actually gets done, and it is now a highly technical place with 
a lot of interesting innovation. So, making, creating those 
matchmaking environments is really, really important. There is 
also, and this touches I think a little bit on what Dr. 
Fernandez was getting to on technology, there also are a lot of 
new farmers that are coming in that are tech savvy in other 
things beyond technology and agriculture. So typically, they 
are small farmers that are interested in only organic or 
certain types of production, and so helping them get connected 
in with the larger farmers and overall community to understand 
some of the really interesting ramifications with gene editing, 
CRISPR, and some of these other technologies. So, there is the 
problem of the outside people connecting in, and then within 
agriculture, really building a common vision on how we feed the 
world and create these new types of innovations and 
entrepreneurship.
    I also want to comment that typically, the industry has 
not--a lot of folks say ``Are you trying to build the next 
Silicon Valley?'' And we say, ``No, we are trying to build an 
innovation hub but also that has women and minority 
participants in a meaningful way.'' And that is another part of 
this culture. It really is a new culture that has to be created 
around the best of the innovators, the tech people, folks from 
the West Coast, with the growers and then with new entrants 
into the space.
    Mr. CURTIS. Thank you. I am out of time, Mr. Chairman.
    Chairman BLUM. Thank you, Mr. Curtis.
    In Iowa, we do not call it Silicon Valley. We call it 
Silicorn Valley.
    It is my pleasure now to recognize the lady with the 
beautiful flowers in her hair from American Samoa, Ms. 
Radewagen, for 5 minutes.
    Ms. RADEWAGEN. Talofa. Good morning.
    I want to thank the Chairman and Ranking Member for holding 
this hearing today, and I want to thank all of you for 
testifying.
    My first set of questions is for all of you. You are aware 
of the Rural Prosperity Taskforce led by Agriculture Secretary 
Purdue. Can you respond, each of you? Yes?
    Mr. KIMLE. Yes.
    Mr. FIORELLO. Yes.
    Mr. NELSON. Yes.
    Mr. FERNANDEZ. Yes.
    Ms. RADEWAGEN. Okay. Well, so as a follow up, if Secretary 
Purdue reached out to you for advice, what would be your number 
one recommendation? Mr. Kimle?
    Mr. KIMLE. Good question. What would be my number one 
advice? You know, I have always had this notion that prosperity 
is--and I am economist, right, but it is more than just 
economics. So a notion of really flourishing. And so certainly, 
as we have done outreach work with rural communities around 
startups and that sort of thing, is tried to bring that idea of 
real flourishing, of engaging people in creative and impactful 
work, and hopefully, you know, higher incomes, improve training 
as part of it. But what we are trying to do as part of our 
programs at the Agricultural Entrepreneurship Initiative is to 
train people to have careers of impact. And that means 
something different for everybody but it is kind of this idea 
of flourishing. And we can see it in the Midwest as we go from 
one community to the next. Some that seem to have all the 
pieces in place--the leadership, the people for flourishing, 
and others that clearly have work to do to get that done.
    Ms. RADEWAGEN. Next?
    Mr. FIORELLO. I think, Madam Congressman, if you asked me 
to pick one, I, again, access to rural broadband would be there 
because it addresses a number of important needs. One, of 
course, access to technology, but also ability to deliver 
mentoring and education remotely. I mean, some of these kids, a 
lot of these kids have never really seen a successful 
entrepreneur. If you had the ability to do a live broadcast and 
connect an entrepreneur and have him or her tell their story of 
how they got to where they are. And again, I am talking about 
fifth and sixth graders, not college kids. So if you asked me 
to pick one, my pick would be, again, the critical need for 
access to real broadband for all.
    Mr. NELSON. Mine is a two-parter. Expand the existing 
programs that affect farmers' ability to innovate or get 
involved in value-adds. That would be value-added producer 
grants with USDA, innovation grants within NRCS, and other 
programs that directly stimulate the farmer getting involved in 
new innovation. And then the second part of that would be 
adding programs that allow farmers to be incentivized to 
connect in with some of these early-stage entrepreneurs, 
building the networks and other things that we described about 
in the hearing. And make sure that that is front and center. 
Again, repositioning the farmer as sort of the middle man. But 
this is what we did to stimulate the ethanol industry when 
farmers said we do not want to deal with the bases. We do not 
want to haul our grain. We want to make products here. Doing 
that in this tech sector is well where the farmers have an 
advantage to participating. And when we say farmers, a lot of 
times you get the view of a large, huge soybean, corn, or 
cotton farm. When we think farmer, we mean everything from the 
urban small farmer to the one doing a specialty vegetable crop 
to the large farmer. We view that there are programs that can 
cross all those but stimulate the technology early adoption and 
testing.
    Mr. FERNANDEZ. Thank you for the question. I think what I 
would say is that we really need to make sure we are supporting 
a diversity of farms and a diversity of types of kinds of farms 
and the coexistence of all these farming operations.
    I am a biologist originally, and we all know that diverse 
biosystems are the strongest and have the most resilience and 
are the longest lasting. And so I think about it in that way, 
making sure that we can support all of the farmers in whatever 
their endeavors.
    Ms. RADEWAGEN. So my second question is especially 
important to the people of American Samoa as our 
telecommunications are severely lacking and it is of vital 
importance that it is developed, especially after Hurricane 
Gita devastated American Samoa last weekend. This Committee and 
the Rural Prosperity Taskforce have advocated for a Federal 
Government regulatory regime that supports and fosters growth 
in the telecommunications industry. How will greater access 
stimulate rural economic growth? All of you?
    Mr. NELSON. Let me make sure I understand your question. 
You are saying stimulating more rural telecom access, how will 
that stimulate rural growth?
    Ms. RADEWAGEN. So for a lot of the reasons we talked about 
here all the way down to something as simple as a small farmer 
in your district that is trying to figure out a market price. 
If they cannot communicate the use of cell phones across the 
world, especially in smaller farms have allowed them to 
actually look at markets and understand their markets better. 
So even things that would seem simple like that.
    I also should have said I am sorry for what happened over 
the last couple of days and for the loss there.
    But so the simplicity of those kinds of things, as well as 
some of the larger scale innovations that we have talked about 
that just require connectivity in order to do business. There 
are also a lot of innovations in our pipeline. I know Sam is a 
little bit well with some of the different specialty crops, but 
things, cold storage, the way solar interacts. So you have got 
off-grid power and other things that are in this pipeline. So 
again, we end up talking a lot about corn and soybeans and big 
crops, but a lot of the innovation efforts we are involved in 
go across that for, again, different scales and different 
circumstances.
    Ms. RADEWAGEN. Anybody else?
    If not, thank you, Mr. Chairman. I yield back the balance 
of my time.
    Chairman BLUM. Thank you, Ms. Radewagen.
    I would like to recognize the gentleman from Iowa, a fellow 
colleague of mine, Mr. King, for 5 minutes.
    Mr. KING. Thank you, Mr. Chairman. I appreciate you holding 
this hearing. I hope you accept my apologies for showing up. We 
have other duties around this Hill, too, so I am glad I got 
here in time. And I reviewed some of this testimony.
    My background is in the construction business, and I have 
always been fascinated by where technology takes the next 
generation of humanity. And I regret that none of us are going 
to live long enough to see where its destination is, but we are 
watching it accelerate at a really fast rate.
    One of the things that I have been impressed by with 
agritechnology, let's see, if I just look back about 3 years 
ago I finally got over the shock of watching a planter go 
through the field with the markers folded up and now I am 
wondering why the markers are on some of them. They are not on 
all of them anymore. A lot of them took them off. That says a 
lot.
    And I received a briefing I recall at the Farm Progress 
Show a few years ago from Monsanto and they said at that time 
that they were going to team up with a Google operation out of 
San Francisco to be able to tie together their weather 
surveillance technology with the technology developed by 
Monsanto. And so when I began to put that all together and 
watch it take place and they have since made that merger, it is 
pretty fascinating to see that I have neighbors that are 
monitoring their fields every 2-1/2 acres I think it is in a 
grid pattern, and they get a little text on their phone that 
says you had better side dress 20 pounds in because you are 
going to get about an inch of rain soon. You will not be able 
to get back in the field and the corn needs it. And here is 
your green days and your temperatures and it is such a 
fascinating thing, so much different. And also, I think I go 
down into my man cave most every day I am at home. There are 
millions of them in America for domestic reasons I will not 
enter into right now, but I have got two ears of corn down 
there. And those ears, one of them is from an 1848 open 
pollinated variety that is preserved by Iowa State University, 
and that ear yielded between 15 and 25 bushel to the acre. And 
then the next ear, the ear next to it is an ear from a triple 
stack hybrid that is a 2015 crop that went across the scales 
not at 15 to 25 bushel but at 232 bushel. And so that shows me 
what technology has done for our Ag production.
    And I wonder if I could ask Mr. Kimle, what is your view on 
the GPS components of this and what it is doing for efficiency 
and where yields are going to go? What am I not observing that 
is on the horizon?
    Mr. KIMLE. Good to see you, Congressman King.
    I think you are seeing a lot. And the story of corn, I 
think, is emblematic of a lot of agriculture. It has been the 
process of developing plants that can survive at higher 
populations, but the management requirements to do that 
effectively are what ag technology will ultimately help with. 
When you think about the career of a crop farmer, at least in a 
temperate climate, you know you get about 40 shots at figuring 
out how to do what you do. And you build on probably what your 
dad knew and maybe your grandfather knew, what you learned from 
other people, what you pick up through agronomists, anyway, and 
that sort of thing. But what technology will allow to 
accelerate, is that learning? When I look at machine learning 
and artificial intelligence, and when we think of those 
technologies, I think we think of things oftentimes outside of 
agriculture, but it is going to be a really big deal because it 
will allow us to compress kind of our learning and to getting 
more out of each season and figuring out is it nitrogen or is 
it phosphorous or is it some other micronutrient, or is it 
bacteria in the soil? And so I think absolutely, you know, the 
trend from the 25 bushel corn to the 225 is there, but what I 
see and what I think you will see is 300 to 400 bushel being 
much more common, at least during decent years. And that is 
exciting, although certainly challenging with what are we going 
to do with all those bushels?
    Mr. KING. I have a picture in my iPhone from an individual 
that I broke some bread with last Saturday night and the 
picture is the license plate on his brand new Corvette. It was 
new in 2008, and the license plate is $8CORN. Now, they said 
what paid for that Corvette completely is $8 corn, but now it 
is $3.40 cent corn or less.
    So I would say, Mr. Fiorello, do you have any comments you 
would make on that question?
    Mr. FIORELLO. Yeah, I think, Congressman, the paradox is if 
you overlay the increase in farm productivity, the bushel, 
let's look at corn as an example, 1975 to today, you have at 
the same time a declining rural America. There are less jobs, 
less people, less young people. So the challenge before us is 
not how to keep producing more because I know we will get 
there, but how to push some of those benefits of that 
technology to rural American so that young men and women can 
see a path to staying in their communities. We talk a lot about 
urban food deserts. There are plenty of rural food deserts. 
They are in plenty of communities. We have to get in the car 
and drive 30 miles to Walmart to get your fresh fruits and 
vegetables. So I know we will get to 300 bushel corn. The 
question is how can we recreate the urban landscape so that 
there is economic opportunity and jobs for all so those men and 
women can stay there and stay in their communities. That is a 
tougher one.
    Mr. KING. If the chairman would indulge me in a final 
question. I thank him for his own entrepreneurship, too, by the 
way. This brings to mind when you address that, I sat in on a 
little private briefing with a young man who has a project of 
vertical hydroponics growth of multiple vegetables. And I have 
seen the pictures of his prototype operation that he set up. He 
can grow about anything in vertical hydroponics and it is only 
with the water and the nutrients put in the water that they 
pump up and it trickles down, and so all of it is used and 
reused until it is consumed and it is all in there with lights. 
It only projects the frequency, the spectrum of lights that 
stimulate photosynthesis. He says that he can raise in one acre 
inside a building the equivalent of 150 acres of crops that 
would be raised in the outdoors. Are you seeing anything like 
that coming along?
    Mr. FIORELLO. Sure. We are seeing great trends like that. I 
think Dr. Fernandez made a great point earlier about we need to 
have more diversity of farming. We need the entrepreneurs who 
can think of aquaculture, aquaponics, indoor farming as well as 
the farmer aspiring to 300 acre corn. But again, we will not 
get there until we start to address how to inspire young kids 
in a school and how to give them a path to say I can start my 
own company. I go to these rural communities. You will not see 
one kid who will say I have met an entrepreneur and I have 
gotten to know them. In our worlds, those are folks we meet 
with every day. So how do we start to change the culture and 
exposure, and even something as simple as celebrating farmers 
who have been successful entrepreneurs in our community? So it 
is culture. It is mindset. It is infrastructure. It is a lot of 
things.
    Mr. KING. I would suggest as I conclude here that we look 
at some of the models of the successful entrepreneurs, such as 
the Chairman of this Subcommittee, and ask him to continue to 
illuminate his life story. And I would yield back to the 
Chairman. Thank you.
    Chairman BLUM. Thank you, Mr. King.
    We have about 10 minutes remaining so I am going to be a 
little less formal. If you want to stay, Mr. King, we are just 
going to do like a lightning round. I am going to fire a 
question and then Ranking Member Schneider will. And if 
Congressman King wants to. So maybe try to keep your answers 
short and concise because we have about 10 minutes left.
    My question is, I am back to the funding again and paying 
to try the technology with the farmers. What comes to my mind 
is co-ops. Co-ops in my district are huge companies owned by 
the farmers. A kind of interesting relationship there. Are any 
of you in the startup business? Are they looking to partner 
with co-ops? Because there is money there. The funding of co-
ops, which in essence is funding from farmers out of profits. 
Anybody have experience with working with the co-ops, and are 
they involved in the startup entrepreneurship?
    Mr. FIORELLO. Yes, one quick one. The company that won last 
year's business plan competition, our event, is a company 
called NanoGuard. They have a technology to help clean grain. 
And so the rice millers are partnering with them now, investing 
early on and letting them set up beta test sites and 
prototypes. So it is the partnership that Mr. Nelson talked 
about before that is vital and win-win.
    Chairman BLUM. So they are getting involved?
    Mr. NELSON. Yes. The co-ops are, and the check off 
organizations, and the farm organizations, like Farm Bureau, 
which in essence make, when Dr. Kimle was talking about the 
cluster and how hard that is, they become sort of the cluster 
because they have these relationships, as well as capital that 
you mentioned. So, yeah, and we are fully endorsing any of 
those kinds of ways.
    Chairman BLUM. Good to hear. Good to hear.
    Mr. Schneider?
    Mr. SCHNEIDER. Thank you. I want to go back to the idea of 
how do we create the ecosystem within these rural communities, 
because as you create tech companies, it raises productivity as 
you touched on. But that raising productivity as farms get 
larger, technology replaces it, driverless truck, driverless 
tractors, it lowers the employment opportunities on the farms. 
If we keep these tech companies within these communities, that 
creates some jobs but tech companies can grow to scale without 
a whole lot of jobs. So we need other ancillary jobs around 
that. How do we create broader ecosystems with the community?
    And on another topic, Mr. Kimle, you talked about the fact, 
and I will use the example of back to 1985, that farmer that I 
was working with probably was making less than his job in San 
Francisco financially but there was a whole psychic income of 
working on the land and waking up and seeing the sun rise and 
all the things that go with being in agriculture that go with 
that. But how do we create these ecosystems in these 
communities that inspire young people to come home, stay home, 
and create the opportunities for them to succeed?
    Mr. KIMLE. I think a lot of the models that were used in 
larger communities can work in the rural communities as well. 
Just as one simple example, our program, we have started a 
larger program. The Ag Startup Engine at Iowa State University 
is called the Startup Factory. So kind of a training mentoring 
program, 6 to 12 months and beyond. They started this year a 
pilot program to work with smaller communities in essentially 
kind of a train the trainer sort of a thing to take that model, 
work closely with people in that community, pull in a cohort of 
startups and work. And so the clear idea is to plant a seed 
there so that they have kind of the startup support and 
mentoring that happens there just as it happens. So Spencer is 
one of those communities and Ossam, Minnesota is the other one 
that is participating in that. So I think sort of a matter of 
identifying those communities that have at least a core of kind 
of leadership and the want-to to get it done and then 
transferring some of those models and just experimenting and 
trying things.
    Mr. FERNANDEZ. You know, you talked about young people 
coming back, and I think an interesting observation is that we 
are seeing a lot of young people who have never been on the 
farm before; people who actually want to go into farming. And 
so I think part of what we need to be thinking about is how do 
we create that ecosystem with those people who did not come 
from the farm but have that interest, and how do we provide 
them with the training and the education necessary so they can 
enjoy the benefits of that lifestyle?
    Mr. SCHNEIDER. And that is something--and I will yield back 
with this comment--veterans coming home are a great opportunity 
do that.
    Mr. KIMLE. And I might, if I can just take one moment, you 
know, what is different between 1986 and now or when I got my 
bachelor's degree in 1988 and now, and corn prices may not be 
good, but it is so different now. You know, moms and dads in 
the 1980s, telling their sons and daughters, whatever you do, 
do not come back to the farm. Whatever you do, do not work in 
agriculture. And we have people coming to Iowa State University 
from the Coast, from around the world, because they want 
careers in agriculture. Two, 3 years ago there was one of our 
ag business students on the cover or the second page of the 
Wall Street Journal, and the headline--I am going to forget 
exactly what it was, was about agriculture careers being sexy. 
I never thought I would see that, but that is a good thing for 
us.
    Mr. NELSON. Can I make one more comment on your question? 
What Dr. Fernandez talked about with gene editing, if you think 
about what drove Silicon Valley, it was that Moore's law line 
that gave investors, you got the dream, but because of the line 
you knew this is worth keeping on investing and it would 
weather it. With the cost of genomic sequencing falling faster 
than the line of Moore's law, what Dr. Fernandez was describing 
is we can tap in not just corn or soybeans but a huge subset of 
the other 56,000 identified nutritional plants and start to 
commercialize those. So, when I started my career, you could 
not work with a new trait or a new type of breeding unless it 
had 5, 6 million acres. Now we can do that with this whole 
realm of new crops. So that is what is going to drive the whole 
rural change. As you look at these communities, they are going 
to have all kinds of value-add opportunities, a lot of 
different kinds of crops, and unlike other industries, the 
automation, so agriculture at its most efficient--you talked 
about the corn plan earlier--it is 20 percent efficient 
compared to a 95 percent efficient indoor factor. So, any 
automation of everything we do only brings efficiencies to get 
us up to par with other industries and actually will stimulate 
in ways that automation robotics do not do. So, the vision is 
really this compelling rebuild of agriculture to take advantage 
of these tools that Dr. Fernandez talked about and it will 
stimulate a whole host of new innovations. I just wanted to add 
that.
    Mr. SCHNEIDER. And then just to link it all together, 
projected global population of 9 billion or more in 2050, the 
rest of the world ahead of us right now, we need to invest in 
the R&D to make sure we are there because this is a growth 
market that could really lead to growth in our communities.
    Chairman BLUM. Mr. King?
    Mr. KING. Thank you, Mr. Chairman.
    Mr. Kimle, you kind of lit of a memory for me when you 
talked about what it was like in the 1980s. And, of course, we 
struggled through that entire decade. And what you said is 
something I do not remember anybody saying before, at least in 
a hearing here, is that our children in rural--I will call it 
Corn Belt, but Ag--our children were raised throughout the 
1980s to leave home, go get an education, take your degree, do 
not look back. And now my neighborhood is full of grandparents 
that buy plane tickets to fly to the Coast to see their 
grandchildren. And I always wanted to see that changed. I have 
a little vignette in my memory though of being at the Tulip 
Festival in Orange City, Iowa, back in the 1980s, and there 
were the queen and her court, and there was a corded 
microphone, which is hard to imagine today, and they passed 
that around and they said, what are you going to do when you 
graduate from high school? I am going to go to Northwestern 
College. That is in Orange City, Iowa. And four of them said 
Orange City. And the fifth one said, I am going up to Bethel 
and then I am coming home. Those kids in that county at the 
same time were raised to have a future there, and they had 
competition in education. They have entrepreneurs, they have 
Trans Ova, the very first cloned bovine, anywhere successfully 
in the world. Now you have got about eight or more spinoff 
companies off of that. I see what is happening with the 
technology, the genetic technology that you addressed, Mr. 
Nelson, and I think also in that same community, about 15 years 
later, around the year 2000, 2001, I met a family on the street 
that had 1,300 acres of crop, all corn, except for one acre. 
And that corn grossed only at $300 an acre that year, I recall, 
but they took $28,000 off of that single acre, which was a 
glorified garden. And they had irrigated. They did a great job 
of marketing, and they probably had $50,000 worth of child 
labor invested in that one acre. But I bring this up because 
when you draw the distinction between $300 an acre corn here 
and $28,000 specialty crops out of the same soil, and then you 
add to that the technology that you addressed especially, Mr. 
Nelson, it tells me that 7 billion people, 9 billion people, 
they can be well fed, and we should never worry about being 
able to feed the planet if we employ the technology we have. We 
have got the skillsets. We have got the technology. It is a 
matter now of implementing it.
    Does anybody want to comment on those comments?
    Mr. NELSON. I will comment first. And you mentioned this a 
minute ago with the business model of seed company, then 
traits, and then now selling data. And so, the first comment I 
will just say is this information in this technology 
revolution, you are right, but it has to be laid out with the 
right partners. So, farmers now do not probably want to be you 
just give me the prescription and just tell me what to do. They 
want to think, and they want to analyze data. And so, as we 
think about how we bring these other technologies in, we just 
need to be thoughtful in how to build the right partnerships. 
Part of the theme of this one was having the right public and 
private partners at the table and how we stimulate it. But 
there is no question that the technology, plus implementation 
in the field, plus good soil management practices, can lead to 
solving some of these global problems.
    Mr. KING. Anyone else?
    Mr. KIMLE. I think your comments about Orange City in Sioux 
County, just the stuff going on there, I mean it is just a very 
interesting case study. I absolutely agree that more of that 
spread around other rural communities is a big deal. When I 
first came back to Iowa State, I had my own businesses, 
colleagues did a survey of Iowa State alumni who graduated with 
our bachelor's degrees between the years 1982 and 2006. For the 
entire sample, 15.1 percent had started at least one for-profit 
business. And when you got back to the 1980s graduates, the old 
people like me, it was upwards of 30 percent. So a really good 
record of entrepreneurship. The jobs that their businesses had 
created was like 225,000 that did $64 billion in revenue. 84 
percent of the jobs created, however, were outside of the state 
of Iowa. You know, so you take a student body that is 70 
percent Iowa and they created jobs someplace else. Now, that is 
okay, but we have not, in Iowa, at least done a good enough job 
trading our young people who go someplace else and importing 
somebody else. But what I see that is fundamentally different 
today is that we are bringing people in to agriculture no 
matter where it is at. And if we do our jobs as a community, as 
policy leaders, and so forth, we are going to keep people there 
and have, you know, and just engage imagination to create a 
better tomorrow than what we have ever had and how we did 
things in the past.
    Mr. KING. I would like to conclude with a point here that I 
think came out of the data you quoted, and that is, this is a 
reference to a theory I cannot find anymore, but it is 
Coltieve's theory. But what it is, it calculates that the 
economy goes into a cycle, and when everything is down at the 
bottom, where we were in the 1980s, flat at bottom, that is 
when you have your innovation and your entrepreneurs because 
you do not have anything else going. You do not have capital. 
You do not have cash flow, so you sit around the kitchen table 
and say what are we going to do? Are we going to move or are we 
going to come up with a better idea? And that is where the 
innovation is rooted. And then you start plugging those ideas 
together and you look for capital, you look for technology, 
match that together, work your way up. That happened in the 
1980s in Iowa and across the Ag community in the country. And 
as we came out of the 1980s, I saw that capital start to get 
formed and pulled together and that capital became productivity 
and efficiency and competition. So that is a cycle I wanted to 
reference that I think showed up in the data that you quoted, 
Mr. Kimle.
    And I appreciate all your testimony.
    I yield back, Mr. Chairman.
    Chairman BLUM. Thank you, Mr. King.
    As Mr. King said when he sat down, we have other 
responsibilities. So unfortunately, I want to draw this hearing 
to a conclusion. I would like to thank all of our witnesses for 
their excellent testimony. This was a great hearing I thought.
    As we heard today from our excellent panel, agritech 
investment is driving rural revitalization with various 
initiatives using agritech entrepreneurship to bring jobs and 
dollars into our local rural communities. Today's witnesses 
represent a diverse group of stakeholders who are partnering to 
attract startup activity to the Heartland and other regions. 
They are also creating ecosystems that set up these small 
businesses to thrive and compete in the marketplace. We are 
also reminded importantly that all stakeholders must work 
together to make sure that the most important stakeholder, 
small family farms, can benefit from the many exciting 
technologies and innovations America's brightest entrepreneurs 
are developing. This will ensure that family farms, a vital 
part of Iowa and America's economy and food supply, continue to 
succeed.
    I ask unanimous consent that members have 5 legislative 
days to submit statements and supporting materials for the 
record.
    Without objection, so ordered.
    We are adjourned. Thank you, gentlemen.
    [Whereupon, at 10:52 a.m., the Subcommittee was adjourned.]
    
    
    
    
    
    
    
    
    
    
    
    
    
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    House Committee on Small Business Committee, Subcommittee 
Agriculture, Energy and Trade
    Remarks by San Fiorello, Chief Operating Officer, Donald 
Danforth Plant Science Center and President, BRDG Park

    February 15, 2018

    Good morning Chairman Blum, Ranking Member Schneider, and 
members of the subcommittee. My name is Sam Fiorello and I am 
the Chief Operating Officer of the not-for-profit Donald 
Danforth Plant Science Center in St. Louis, Missouri. Since I 
began working with Dr. Danforth to establish the Center 20 
years ago, we have grown to the world's largest institute of 
its kind with over 240 scientists and staff working to improve 
the human condition. I am also President of the BioResearch and 
Development Growth Park a research park on our campus that is 
home to 14 for profit enterprises and a bioscience workforce 
training program. Thank you for the invitation to discuss the 
importance of agricultural research and innovation, a key 
driver in strengthening family farms and growing the small 
business sector of our economy.

    Fifteen years ago, a farmer would proudly tell me that he 
could fix anything with a handful of baling wire and a 
blowtorch. Today, the three quarter of a million-dollar tractor 
he drives has more computing power than the Apollo 11 that went 
to the moon and back. That's progress. But that progress has 
also come with challenges. The average farmer is 58 years old. 
Tech savvy young people are leaving rural communities for urban 
centers where 21st century jobs are more readily available.

    Our economy has changed. Big business, manufacturing and 
the like are not the economic engines they once were. According 
to the Kauffman Foundation in Kansas City, MO, ``Without 
startups there would be no net job growth in the U.S. 
economy.'' Entrepreneurs who are now household names like Steve 
Jobs, Bill Gates and Jeff Bezos, developed ideas and produced 
new products and services that improved the quality of life for 
people around the world. In the process, they improved our 
position in the global economy by creating employment 
opportunities for communities and served as engines of wealth 
creation. Newly created wealth, in turn, is re-invested in new 
economic enterprises that further enrich our communities.

    Why is someone who helped establish a plant science 
research institute, research park and an ag investor conference 
here to talk to the small business committee you might ask? I 
am here because plant science and ag innovation are impacting 
both of the trends I just described.

    According to the Report to the President of the United 
States from the Task Force on Agriculture and Rural Prosperity, 
prospects for innovation in agricultural and food industries 
are evidenced by their attractiveness to private-sector venture 
capital. Recent years have seen a sharp increase in venture 
capital directed at these sectors, especially for information 
technology and biotechnology innovations. According to 
AgFunder, during 2014-15, venture capital funds invested at 
least $6.9 billion in a range of agriculture-related 
innovations, including precision agriculture and e-commerce 
food marketing. Most of these venture capital investments have 
been directed at U.S. firms, but some have involved major 
investments with firms located in Europe, Israel, China, and 
elsewhere. Last year that figure approached $9 Billion. To give 
you context, when I started the Ag Innovation Showcase in 2009, 
that figure was less than half a billion dollars.

    Federal and state research institutes use a variety of 
means to collaborate with the private sector as does the 
Danforth Plant Science Center. Some of the venture capital 
startups are spinoffs from innovations developed in these 
laboratories or through joint research efforts with private 
firms. Other major contributors are the more than 100 
federally-funded U.S. Land Grant Colleges and Universities, 
which are key providers of STEM training as well as innovators 
across many sectors, and have contributed to U.S. world 
leadership in many high-technology fields. Innovations 
emanating from these institutions find their way into 
industries through scientific publications, patents, direct 
university-industry partnerships, and STEM-trained graduates. 
Furthermore, these institutions help create internationally-
competitive firms and industries.

    Now I would like to tell you more about how the Danforth 
Center has contributed to the creation of a vibrant innovation 
ecosystem which is anchored by some of the best and brightest 
scientists in the field, world class facilities; greenhouses, 
growth rooms, tissue transformation, computational genomics and 
more. In the last 20 years, we have established networks of 
individuals and organizations that help strengthen the 
ecosystem; inventors, investors, business development experts, 
key industry players who become acquirers of technologies and/
or companies, thought leaders, and more.

    A sub point of our mission statement is to, strengthen the 
economy of the St. Louis region. This seems a noble goal, but 
again, why should we, a research institute, care so much about 
building an ecosystem that supports innovation and 
entrepreneurship?

    In addition to addressing the need to feed and fuel 10 
Billion people by 2050 without choking our planet, what is 
really special about the agtech and food tech innovation is 
that it is one of the few undertakings today that help bridge 
our nation's urban vs rural divide. Our discoveries are the 
basis for creating products and services that meet critical 
needs of farmers and ranchers, food processors, food 
manufactures, distributors and grocers. Young people who are 
tech savvy now have an outlet to put that love and 
understanding of technology to use in their communities. 
Imagine a kind of ``Geek Squad'' in rural communities across 
America that can be deployed to help get a tech heavy piece of 
equipment up and running again in minutes or hours rather than 
days.

    Let me share briefly some of the measurable outcomes that 
we have achieved. In 2008 the Danforth Center partnered with a 
leading real estate developer to build the first leg of our 
research park; The BioResearch & Development Growth Park, BRDG 
Park for short. Although still in its early phase of 
development, we can point to some tangible results. Today the 
BRDG Park is home to 14 companies that employ nearly three 
hundred people. Of these 14 companies, six are from our region 
and eight are transplants from; Germany, Israel, India, and 
across the U.S. Furthermore, BRDG Park companies and Danforth 
Center spinoffs account for close to $200 million dollars of 
investment capital drawn to our region. Since 2013 two of our 
BRDG Park companies have been sold, offering financial rewards 
to their investors.

    When we built BRDG park we partnered with the Saint Louis 
Community College to create a workforce training program to 
provide skilled hands at the bench, a key element of any 
bioscience talent pool. This two year post high school training 
program boasts a 95 percent placement rate and graduates have 
been hired to work in institutions like the Danforth Center, 
Monsanto, Washington University and companies throughout our 
region at salaries upwards of $45,000 per year. The majority of 
trainees are young people who come from disadvantaged 
neighborhoods or are older workers who have retooled to start 
completely new careers. One example of such a trainee is a 
gentleman named Dave Busby. Dave worked for more than 15 years 
making truck seats for the Chrysler plant in St. Louis. When 
the plant closed Dave, who was in his mid-thirties, needed to 
start a new chapter in his working life. He typed the words 
auto plant technician into a job search program on his computer 
and stumbled upon the community college's ``Plant and Life 
Science Technician Training Program.'' He had not taken a math 
or biology class since his sophomore year in high school and 
wondered if this training program was really for him. But he 
took a chance and enrolled, graduated in two years and was 
hired by Danforth Center. Dave has been with the Center for 
over five years and today he is the assistant director of our 
tissue transformation core facility.

    For the last ten years the Danforth Center has partnered 
with the Larta Institute to host an annual investor conference, 
the Ag Innovation Showcase. This event brings the agtech 
community from more than 25 countries together to create 
synergy between the multitude of products and projects that are 
contributing to the explosive growth of the industry. Central 
to the event is the ``Voice of the Farmer'' featuring farmers 
from across the U.S. who share their challenges with innovators 
who can address them in cost effective, environmentally 
sustainable ways. Since inception, these entrepreneurs have 
raised more than half a billion dollars in investment capital. 
Several of the companies have chosen to locate in our region.

    In 2016, with the help of an EDA planning grant, we 
launched a 600-acre innovation district called 39 North, home 
to the Danforth Center, BRDG Park, Helix Center Incubator, 
Yield Lab accelerator and Monsanto Company. The district is 
designed to attract talent, ideas and capital. Today St. Louis 
is home to nearly 1000 plant science Ph.D.s, and nearly 45 
companies have formed as startups or migrated from other 
regions because the ecosystem enables the path from discovery 
to commercial product with remarkable speed. Current operations 
of the Danforth Center, BRDG Park and Helix Center are 
estimated to generate a total annual output impact of more than 
$250 million on the St. Louis regional economy.

    That's Agtech, and that's real progress.

    Thank you for inviting these comments, I am happy to answer 
any questions.



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    Good morning and thank you Chairman Blum, Ranking Member 
Schneider, and members of the Subcommittee for the opportunity 
to share with you some thoughts regarding this important topic. 
My name is Peter Nelson, and I am the Vice President of 
Agricultural Innovation at Memphis Bioworks Foundation, a 
nonprofit organization focused on assisting early-stage life 
science companies grow their businesses by supporting and 
funding entrepreneurs and building critical components missing 
in a region's entrepreneurial ecosystem. This work as included 
incubating and supporting agricultural ventures for over a 
decade and providing thought leadership in the sector. My 
entire career has been focused on creating new ways for farmers 
to connect with technology and value-added opportunities and 
this is my passion. In my role at Memphis Bioworks, I am 
fortunate to have the opportunity to serve as President of 
AgLaunch, a joint initiative with Tennessee Department of 
Agriculture.

    By creating the AgLaunch partnership, we have matched a 
regional player in life science technology commercialization 
with an extensive food and agriculture network, ensuring 
AgLaunch's work is substantiated by farmers and provides 
benefit to both the urban and rural communities.

    AgLaunch envisions a transformed regional agriculture and 
food economy centered around farmers, innovation, and equity. 
It was conceived as part of Tennessee Governor Bill Haslam's 
Rural Challenge in 2012 and specifically named in the 2016 
Governor's Rural Task Force recommendations focused on economic 
development. Supported by a diverse group of partners including 
Tennessee Farm Bureau and land grant universities, AgLaunch's 
mission is to attract, create, and grow agtech startups, 
facilitate the development of new agriculture and food value-
chains, and build collaborative farmer networks, with a 
commitment to intentional inclusion.

    While AgLaunch is anchored in western Tennessee, the 
agricultural leadership in the state understand that the 
problems and opportunities in this area are simply too 
important to not consider the regional impact of AgLaunch's 
work. This includes a particular focus on Memphis and the Mid-
South Mississippi River Delta region, a five-state area that 
includes counties in Arkansas, Kentucky, Mississippi, Missouri, 
and Tennessee.

    The Memphis and Mid-South Mississippi River Delta region is 
characterized by its highly productive agricultural system, 
first-class logistics capabilities, and a large number of food 
and agricultural companies. This region is also a home to 
chronic poverty, population decline, health disparities, and 
limited opportunity. The global agricultural innovation 
revolution is offering the ability to rethink how Tennessee and 
its surrounding region organizes assets to create a leading 
innovation ecosystem for food and agriculture.

    As this Subcommittee addressed in its last hearing on this 
topic in October 2017, there is increasing interest and 
investment in the development of new agricultural technologies 
and the creation of new startup companies to bring innovations 
to market. This interest is driven by the need to feed a 
growing population, changing food consumption patterns, 
increased pressure on natural resources, and the dramatic 
reduction of the cost of enabling technologies such as genomic 
sequencing and big data.

    Farmers have traditionally been at the forefront of 
developing & implementing new innovations and technologies. 
These early innovations addressed direct needs on the farm and 
created solutions that could worked economically and 
efficiently. Over time, the role of the farmer in adopting new 
technologies for their farms has been one of ``customer'' 
rather than ``partner.'' Currently, there is a large amount of 
new technology, much of it unproven, that gets presented to the 
farmer, and an increasing disconnect between those creating new 
innovations and the farming community. As was stated in the 
October 2, 2017 Memorandum to the Members of this Committee, 
``The most important player in the agtech industry is the most 
likely to be ignored as new technologies are developed, which 
has led to extraordinarily low rates of technology adoption by 
farmers.''

    It is this disconnect between those who are creating new 
innovations and farmers that is dramatically lowering the 
probability of success for new agricultural ventures, which is 
in turn giving investors pause and slowing down the rate of 
adoption of these new innovations on the farm. The ``Farm 
Centric Innovation Model'' championed by AgLaunch is changing 
the agricultural investment thesis into new ventures and 
ensuring that farmers are part of the development process much 
earlier.

    AgLaunch has initiated a 3-phase startup program called 
AgLaunch365, which leverages the farm-centric philosophy 
developed to propel agtech firms. Phase I concentrates upon 
developing the company's business model and initiates the 
customer discovery process. Phase II allows teams to complete 
their minimal viable product and prepare for spring field trial 
plans with designated farmer partners through the AgLaunch 
Farmer Network. Phase III provides the participating startups 
with direct access to AgLaunch's network of innovative farmers 
to actually ``ground-truth'' those products or services.

    The value proposition for the startup to participate in 
AgLaunch programming is access to technology-embracing and 
curious farmers through the AgLaunch Farmer Network, which 
allows the startup founders to acquire direct, unbiased 
feedback and incorporate those observations, ideas, or 
modifications into the development of their product. 
Participating farmers get access to new technology and an 
opportunity to participate in way in the growth of the new 
innovation. The AgLaunch approach provides better alignment 
between those innovative firms and their potential to become a 
commercial success.

    Since the creation of the program, dozens of companies have 
received support some of which are featured on our website at: 
http://aglaunch.com/aglaunch-portfolio. All of the AgLaunch 
startups have received valuable insights and feedback from 
members of the Farmer Network and many are pursuing active 
partnerships with those producers.

    A good example of the power of the AgLaunch Farmer Network 
is a startup company called AgVoice, which has a voice 
recognition technology for agriculture that simplifies crop 
scouting and other recordkeeping efforts and was validated 
through the AgLaunch Farmer Network. The validation process 
included answering simple questions like: ``Will the technology 
work in the cab of a tractor or combine when it gets noisy?'', 
``Will the ear piece stay on your ear when you're in the middle 
of scouting a hot cotton field?'', and ``Will the lexicon be 
robust enough to record all the farm practices necessary and 
will the records be accurate?'' The results of this real-world 
field trial generated data and farmer testimonials used to 
raise further investment and attract additional customers. The 
participating farmers were rewarded with opportunities for 
equity and distribution rights in the company, furthering 
engaging the farmer in the success of the startup.

    The AgLaunch Farm Centric Innovation model and Farmer 
Network does not work without early stage capital sources that 
are aligned with AgLaunch's approach. AgLaunch has worked to 
assemble several tools that can be leveraged and replicated in 
order to provide early-stage capital to agtech companies in the 
program. These include:

          1. Working with Tennessee Department of Agriculture, 
        AgLaunch is piloting a cost share program for farmers 
        to get reimbursed for hard costs associated with on-
        farm trials of pre-commercial technology vetted and 
        assisted through the AgLaunch program.

          2. Supporting Memphis Bioworks' venture capital firm, 
        Innova Memphis with an AgTech fund specifically focused 
        on early stage investments in rural-based innovative 
        agricultural startups.

          3. Encouraging the efforts in Tennessee of Launch 
        Tennessee, a statewide entrepreneurial organization, 
        and Life Science Tennessee to create an SBIR/STTR cost 
        share program, as well as support applicants in the 
        surrounding states that have similar programs.

          4. Creating a network of other agricultural venture 
        investors that have an interest in agricultural 
        innovation and connecting them directly with farmers 
        and the field trial network to better understand the 
        AgLaunch pipeline.

    AgLaunch programs are scalable to other regions, and key 
learnings are distributed through various initiatives to ensure 
that the Farm Centric Innovation Model has maximum impact.

    The October 2, 2017 memorandum states that ``agricultural 
regions are competing to be the next great innovation hub, 
which has spurred rural revitalization.'' In many cases, agtech 
startups directly benefit from being located in regions closer 
to their customer base: the farmer. In so doing, they are 
building small businesses in rural areas and delivering 
innovation and technology solutions to a sector that needs it 
to remain competitive in a global marketplace. AgLaunch is 
positioning Tennessee and the surrounding region to be a 
leading innovation hub, while also sharing key learnings to 
other states and regions through various initiatives to ensure 
that the Farm Centric Innovation Model has maximum impact 
towards changing the investment thesis for agtech and 
accelerated adoption rates of technology.

    We believe in the role of a farmer as a partner in 
innovation, not just a first customer and this philosophy will 
change the current agricultural investment thesis. This will 
create more successful startups and bring forward solutions 
that more efficiently address real-world agricultural problems. 
Mr. Chairman, I would like to thank you again for inviting 
Memphis Bioworks Foundation to share with you the AgLaunch 
story and the work we have undertaken and look forward to 
addressing any questions that the committee members may have.


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