Graeme Philipson
September 7, 2016

AgriTech the new startup frontier

Startups

AgriTech the new startup frontier

Alex McCauley and Alex Gruszka: StartupLand arrives in regional Australia

Agricultural technology – AgriTech – has the potential to give Australia a $100 billion agricultural industry by 2030, says a new report. That’s a doubling in size in a little over ten years, in an industry that has been struggling a little in recent times.

Can AgriTech give Australia’s farmers and graziers a shot in the arm, and provide the country with a more vibrant and much larger food export industry? This new research thinks so.

Called ‘Powering Growth: Realising the potential of AgTech for Australia’, the 68 page report was produced by startup lobby group StartupAUS and consultancy KPMG. The main thesis of the document is that AgriTech is critical in building Australia’s agricultural industry.

We actually read the report, rather than just the press release.

So, what exactly is AgriTech? The report limits the term to the early stages of the agriculture value chain, which continues all the way to the consumer – ‘from paddock to plate’, as the industry jargon has it.

“The customer ultimately drives change by providing the demand for various types of food, the source of food, how food is delivered and limitation of wastage,” says the report.

“Improved connectedness across each link of this chain will enable farmers to be better able to provide a sufficient and sustainable food supply to meet customers’ needs.

“AgTech, biotech, genetech, foodtech, and food ecommerce are all important elements of the integrated value chain. AgTech specifically, though, operates almost exclusively in the initial input and production phases.”

The report defines this as the ‘pre farm gate’ stage. There is a lot of activity in improving technology and productivity later in the process, through the efforts of such organisations as Food Innovation Australia Ltd (FIAL), which is managing the new agricultural growth centre that is part of the government’s National Innovation and Science Agenda, but AgriTech is defined as being limited to the early part of the process.

The report gives a number of reasons why this early stage is important:

• It directly contributes to a more productive, sustainable and customer focused industry.
• The area is relatively immature in both development and adoption.
• There is great potential for AgriTech to be a new competitive advantage for Australia as exporters and producers.
• AgriTech contributes to more effective use of inputs on farm and reduces food wastage.
• There is a growing global investor community

This last point is perhaps the most important, certainly in terms of fostering new AgriTech startups in Australia. Global venture capital inflows into AgriTech were up threefold in 2015, and the report estimates that the global opportunity for AgriTech’s impact in the private sector could be as high as US$189 billion between 2013 and 2022.

StartupAUS CEO Alex McCauley says this is the first vertical market report that his organisation has produced.

“We are trying to identify areas where Australia can make a difference,” he told InnovationAus.com. “Many people don’t associate agriculture with technology, but it is one area where Australia potentially has a great competitive advantage.

“And agriculture is a key driver of Australian exports. Technology has always played an important role in increasing agricultural output. We have an extremely valuable opportunity here to develop technologies that make a real difference to the economy’s bottom line, while also helping rural Australia realise the economic benefits of the digital technology revolution.”

The idea that Australia can become a supplier of quality food to Asia’s emerging middle classes is taking hold in Australia’s agricultural industry, and there is an increasing discussion about how best to realise this potential.

We will need to become a leader in AgriTech, says Mr McCauley. “The research highlights the great work startups, corporates and universities are already doing to develop the AgTech sector in Australia.”

He says StarupAUS may look at other vertical market reports, telling InnovationAus.com that cyber security, transport and logistics, and building and constriction might be other candidates. “But it all depends on getting the funding to do the research.”

The report was funded ('supported' is the term used) by the Queensland Government and the Commonwealth Bank and has a foreword by former trade minister Andrew Robb AO. It draws on detailed discussions with more than 60 stakeholders, including AgriTech startups, farmers and agribusinesses, research bodies, government, and investors.

The report makes a number of recommendations, including:

• Establish an independently-administered fund designed to make AgriTech more affordable to industry.
• Develop a marketplace for AgriTech products.
• Establish a network of AgriTech hubs.
• Establish a joint R&D fund with leading global AgriTech players.
• Develop a national AgriTech strategy.
• Provide direction to university and research bodies centred on the commercialisation of technology and shorter grant periods that encourage agile testing.

More than half Australia’s food is exported. Export earnings from farm commodities will be around $43.4 billion this year, with agriculture comprising 15 per cent of all merchandise exports. But Australia’s agricultural productivity growth, once around 2.9 per cent per annually, has fallen back to 1.4 per cent in the last decade, below the global average of 1.7 per cent.

AgriTech is a way of redressing the balance. “AgriTech has the potential to be a leading source of technological manufacturing, exporting high tech products to a global agricultural market in need of innovative solutions to meet exploding demand for food,” says the report.

Download the report.

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