U.S. Agri-tech sector hopes to power through industry downturn

Scan recent headlines from the U.S. agriculture sector, and one sees an industry where technological innovation and the Next Big Thing seem low on the agenda. “Former Farming Leaders Warn US Agriculture Could Face ‘Widespread Collapse’” reads one headline from early February. The industry’s largest trade association warns “America’s farmers and ranchers are facing an economic breaking point.” Industry newsletters bemoan high input costs, low commodity prices and the impacts of President Trump’s tariffs. The cumulative effect has been rising farm bankruptcies; a rush to deliver a $12 billion one-time bailout for farmers announced by the Trump Administration in December 2025, and calls for even more government subsidies for the sector among industry participants and in Congress.

Lost in this heated debate, however, is the fact that agri-tech investments over many years, coordinated among the US government, private sector and academic institutions, have played a big role in making the US farm sector the behemoth it is today. Despite its current

challenges, the US is the world’s largest exporter of agricultural products, sending US$176 billion in goods to 189 countries across the world in 2024, 20% more than any other nation, according to the U.S. Department of Agriculture (USDA) (the European Union collectively exported more at $250 billion). US agricultural exports increased at a compound annual growth rate (CAGR) of 4.9% from 1999 to 2024, according to USDA, well above the 2.8% average growth of US GDP during that period (World Bank).

Many factors contributed to the US ag sector’s expansion in this century and the last – globalization of course among them – but agri-tech advancement has unquestionably been key. A USDA study found that US agricultural productivity tripled from 1948 to 2017 even as land and labor devoted to farming fell, driven by “innovations in animal and crop genetics, chemicals, equipment and farm organization, including “improved seed varieties, genetic enhancement in livestock, advanced machinery that comes equipped with global positioning systems, and robotics.” While America loves to celebrate the image of the entrepreneurial farmer tilling his land, government investment has been key to the industry’s transformation. By one measure – funding directed to US state universities with large agricultural research centres – the federal government’s contribution rose to 43% of the total in 2018 from 28% in 1975, during which time total funding more than doubled,

according to the Kansas City Fed. Federally sponsored research and partnerships with universities have contributed to numerous US agricultural innovations, from robotic harvesting to gene editing of crops, to regenerative farming, to precision agriculture (using technology like drones and AI to provide more detailed analysis of farmlands).

Yet as we see throughout this report, nations, like companies, cannot rest on the laurels of past innovation and hope to remain competitive in the global race. As US budget deficits have grown and some policymakers have grown more concerned about the cozy relationship between the federal government and Big Ag, the US has lost its lead in terms of public agriculture R&D spending. China nudged ahead of the US in 2013, while the margin over #3 player India has narrowed (see below). Private US agri-tech funding has also declined in recent years, surely not helped by the broader woes in the sector, but also as interest waned after hype for agri-tech drew rapid investment growth from 2012-20 that has not yet yielded commensurate returns.

With the Trump Administration continuing its attacks on many leading American universities as well as cutting funding and staffing at federal research labs, the US appears unlikely to return to the lead in public agritech spending anytime soon. Even if a Democrat wins the White House in 2028, he or she will have to confront a federal deficit that stands at more than 5% of US GDP, limiting the government’s options. Nevertheless, the innovative spirit and vast agricultural infrastructure that made the US the “breadbasket of the world” remains. Many of the same industry journals wringing hands over the industry’s current downturn contain exciting predictions about digital agriculture (using AI big-data analysis for even more nuanced crop management), smart machinery and soil management. With industry sentiment weak, the opportunity set wide and many research universities looking to private partnerships to replace their federal grants, now may be the time for opportunistic investors to consider US agri-tech and reap the benefits (pun intended) when the clouds over the US agriculture sector eventually lift.

This blog is an excerpt from Anchor Advisors' latest report with UK-based GK Strategy. Read the full report here.