Innovation in Australian agriculture is not new. Aussie farmers, supported by the research and extension system in which they operate, have been driving the creation of new technologies and farming systems since well before “agtech” was a word. Examples range from GPS-guided tractors and new varieties, to raised beds and controlled traffic.
But “agtech” is a new phenomenon, characterized by the entrance of new players (e.g., startups and venture capital investors), new business models (e.g., software-as-a-service), and new technologies (e.g., robotics and machine learning). If we can avoid the hype, agtech holds huge potential for Australian agriculture.
There are three big trends driving the growth of agtech.
First, technology has dropped in cost and increased in performance, meaning that even incredibly complex technologies are accessible to new players. You no longer need billions of dollars or many years to bring products to market, so big companies are no longer the only source of innovation.
Second, shifting consumers preferences are putting new pressures on our food and fibre system. In addition to healthy, safe, affordable food, consumers now also want convenience, premium eating experiences, and to feel confident that the products they’re buying are good for their families and the planet. These trends may still seem niche, but they are growing at an astounding pace and are already impacting the bottom lines of incumbent companies globally. The traditional big players in food and agriculture are now scrambling to partner with agtech startups to create an additional pathway to their traditional R&D activities.
And finally, agriculture is a massive and growing industry with opportunities for both impact and commercial success. In Australia, ag contributes over $40B annually to Australia’s economy and is the fastest growing industry. Investors love big markets, and entrepreneurs are drawn to the opportunity to build companies that can do good (e.g., improve environmental outcomes; bring resilience to farms in the face of climate change) and do well.
But despite all the agtech activity, and potential, the industry can be frustrating for farmers. Products often seem (or in the worst cases, are) half-baked, and as startups race to be the winner that takes all in any given area, the proliferation of similar products is confusing. This feeling of “hype” is not to be understated or ignored. Farmers are working incredibly hard, facing levels of uncertainty and constraint that most non-farmers would find overwhelming, to run businesses that benefit all of us as consumers. Adopting technologies that, however flashy, are failing to solve problems and add real value is not what agtech is about.
Agtech is about new ways of solving industry problems. Here are three examples where agtech has potential to deliver real value to agriculture.
- Rapid business model evolution. Well-trained, experienced startups follow a rigorous process designed to help them rapidly align their products with market and customer needs. Big companies struggle to rapidly meet the changing needs of their consumers, as they get stuck in existing business models and processes that are used because “we've always done it that way” not because it’s what’s best for the customer. Agtech startups are bringing solutions to market that break down existing barriers, challenge old mental models and processes, and ultimately can deliver lasting value to producers. Further, agtech startups are a new form of extension that can help commercialize world-class Australian agricultural research.
- Rejuvenated regional communities. As farming continues to use more digital technology, new skills and new jobs will be required to support farming systems and equipment. And simultaneously, new technologies can help rural and regional communities to stay connected- and fulfilled- wherever they live.
- Producers as more than agtech customers. Agtech presents new ways for producers to get involved in innovation. For example, producers can be innovators themselves, catalyzing the creation of new products that they know solve real problems. They can also be advisors and even investors, helping to shape agtech solutions and in turn sharing in the enterprise value of the startup, as well as the value of the product.
Australian agtech companies are already delivering on this potential. Examples of world class Australian agtech companies, that are creating value for producers and delivering returns to investors, include:
· Observant, a cloud-based platform for remote water management, acquired by Jain Irrigation
· AgDNA, a farm management software platform, acquired by CHNI
Last year the National Farmer’s Federation set out a goal to grow Australia’s agriculture to a $100B industry by 2030. Technology and innovation are critical to achieving this, as is attracting both local and international capital and collaborators.
In fact, embracing the agtech revolution in Australia may mean we can aim even higher than $100B. If we are able to export our knowledge, innovations, and know-how in the form of agtech solutions that avoid the hype and deliver real value, maybe we can leave $100B in the dust.
Parts of this article were originally published in The Land.