It’s no secret that tech is the new black. Young and nimble start-ups in the technology and digital space are now a dime a dozen worldwide, not to mention the hot favourites amongst investors and governments worldwide.
Let’s face it, if you’re not developing an app or cloud solution for something or someone you’re clearly not drinking the Koolaid. And insane amounts of investment and funding continue to be pumped into the sector.
Surprisingly however, the agricultural industry, despite generating more than $6.4 trillion for the global economy (according to AgFunder), has been markedly slow off the mark to adopt technology and evolve. A crazy thought given the sheer market size and the uphill battle the industry faces in terms of growing demand for food, climate change and resource scarcity. Not to mention the East’s growing appetite for animal protein and dairy products.
But in the past few years, entrepreneurs and investors, especially those in Silicon Valley, have finally caught on and are setting their sights on AgriTech in a big way. Understandably, it’s an industry well in need of modernising and hungry for technological change and innovation.
Precision agriculture, alternative farming methods, updated supply chains, drones, big data, sustainable proteins are just a smattering of examples of technologies and innovation that will become integral to the future of farming as we scramble to solve agriculture’s imminent challenges. Particularly as the global population is tipped to increase by 70% by 2050.
License to print money?
For companies that can find, develop and market effective solutions for the sector, AgriTech will be a licence to print money. Everyone has to eat, right? New Zealand take note.
The figures speak for themselves. According to Mitchell Presser, Innovation Advisory Board Member for Global Actionable Innovation and expert in the growth of AgriTech, until recently, less than 5% of total private equity investment was channelled into the food and agribusiness channels. But the traditionally underinvested area is now breaking all records.
Halfway through 2015, AgFunder’s AgTech Funding report said investments in AgriTech related ventures reached a whooping $2.06 billion and were set to surpass $4 billion by the end of the year. Practically doubling in one year alone.
Rob Le Clerc, co-founder of AgFunder, an online investment marketplace for global ag industry, now dubs AgriTech as the ‘New Queen of Green’ as investors see the global potential of such long overdue innovation in a staid sector. Given the sheer size of the global ag market and the plethora of untapped opportunities gagging for tech entrepreneurs to solve, there’s cash to be made in the tech poor sector. For farmers, for entrepreneurs, and for investors. And lots of it. Essentially a triple clip of the ticket, across the entire agricultural value chain. The industry is booming and doesn’t look to slow down anytime soon.
Increasingly smart entrepreneurial start-ups, especially in the US, are successfully developing a raft of tech based solutions aimed to boost farm productivity and sustainability with huge long term potential.
Robots picking lettuce
Blue River, for example, a California-based start-up that is currently growing by leaps and bounds, uses hi tech robots equipped with computer vision, machine learning and cloud connectivity to weed, thin and spray vegetable fields in real time.
Compared to broad-based agriculture, Jorge Heraud, Blue River’s founder, says the technology reduces the amount of chemicals used in agriculture by 90%. The company’s unique combination of hi tech inputs is so efficient that it can process 5,000 plants a minute, without a human being in sight. Blue River is clearly onto a good thing and has already raised US$17 million in its Series B funding round. Not only that, the company is smart enough to know that capital intensive new innovations – no matter how beneficial for farmer pockets and the environment – come with barriers to entry. So instead of requiring farmers to buy its machines outright, it designed an attractive business model based around offering AgriTech as a service by providing ‘plant-byplant care’ to producers.
Move over SAAS, it’s time to think AgAAS. By keeping the technology in house while clipping the ticket and learning from its customers, the company’s current third generation machines are already 100 times faster and more accurate than its first generation. Blue River’s machines are already being used on 10% of the US lettuce market and this business model has enabled the company to rapidly speed up what would otherwise have been a slow and expensive innovation progress.
Another growing US-based AgriTech start-up that is redefining the productivity and sustainability of ag and plant-based farming by using aeroponics is Aero Farms. The indoor farming industry has been gathering momentum in recent years as consumer demand rises for locally-sourced produce with lower carbon footprint and high food safety standards. And Aero Farms is riding this wave. The company has figured out how to grow nutrient rich leafy greens indoors without soil by growing them in a mist environment using LED lights, and growth algorithms using only a
fraction of inputs.
The company claims its vertical farming facility is 75 times more productive per square foot annually than a field farm and 10 times more productive than hydroponic greenhouses. The process also requires 95% less water, 40% fewer nutrients, and zero pesticides, fungicides, insecticides, or herbicide. The company even knows which spectra of light plants do not use in order to save energy costs on lighting.
Set to become the world’s largest vertical farming business, Aero Farm recently secured US$20 million in its Series B round taking its total equity capital raising efforts to US$33 million. The company has ambitious plans to build 25 farms over the next five years and extend its presence across four continents as it sets its sights on improving the methods by which produce is grown globally.
David Rosenburg, Aero Farm’s chief executive officer and co-founder believes Aero Farm’s technology is so far superior to current competition in the market that 90% of indoor agriculture players out there will go out of business. “A lot of people have a very romanticised notion of local food production and an under-appreciation of the complexities to make it work. And there are a lot of them who are cutting corners where they shouldn’t be and that raises a real concern about food safety.”
NZ lagging in agritech?
Thankfully, Silicon Valley geniuses aren’t the only ones recognising the value and market opportunities AgriTech has to offer. Biolumic, a New Zealand startup is an example of one Kiwi company gaining a foothold in this space. It has developed a range of UV devices and environmentally friendly UV treatments that can be applied to a range of different crops to increase yields, improve quality, and improve resistance to disease. Designed to prime plants to thrive and survive, trials undertaken by Biolumic with some of NZ and Australia’s largest lettuce growers and processors have shown its technology improves yields by 26%.
Biolumic’s scientists have even discovered how to use short zaps of UV light to infuse certain flavour and colour profiles in plants just before they’re harvested. Making for tastier and better-looking (i.e. more marketable) produce. In an era where foodproducing land is becoming an increasingly rare commodity and the need to feed more mouths with less inputs, Biolumic’s innovation is undoubtedly onto a good thing both financially and food security wise.
And as with any emerging high growth, high potential industry, governments are also cottoning on to the lucrative potential of AgriTech. The UK, US and Australia are just some of those countries strategically minded enough to realise that by beefing up resources and national funding into this area they stand to become the next Silicon Valleys for AgriTech. New Zealand take note.
Australia recently launched a new innovation hub called ‘Sprout’ to back digital agriculture entrepreneurs. The country’s National Farmers Federation (NFF) says the agricultural innovation hub is part of a broad strategy to harness new technology and big data to cut the costs of production and boost output and has dedicated tens of millions of dollars ready to kick-start the first stage.
NFF chief executive Simon Talbot says it has enough capital to get the first ten projects off the ground with the first round of applications opening early this year. And after that Australia will be onto a ‘virtuous cycle’, as experts say. The hub is also looking at various models of financing, including crowd-funding, investors buying shares in an emerging incubator-tested company, or through very low-interest loans.
The UK government has also recently pumped a considerable amount of support and funding into its domestic sector with the development of the UK Strategy for Agricultural Technologies. Several initiatives include AgriMetrics, a big data centre for the sector, and the Rothamsted Centre for Research and Enterprise’s hub and innovation space for researchers, AgriTech organisations and SMEs to collaborate and work to bolster farm productivity and profitability.
Farm491, an AgriTech start-up facility attached to the Royal Agricultural University (RAU) in Gloucestershire is modelled on the Google Campus and is another win for the UK ag sector. Established to facilitate the commercialisation of ag technologies from research into viable businesses, Farm491 members will be provided with support from RAU, access to farming data, research, equipment and other resources, as well as mentoring from a network of academics, farmers, entrepreneurs and investors. The campus has already received £2.92 million in funding from the local government’s local enterprise partnership (LEP).
If that’s not all, even investment rich Silicon Valley is pumping money into the sector. In May 2015 US-based Western Growers and Silicon Valley Global Partners (SVG Partners) entered into a strategic alliance launching the Western Growers Centres for Innovation and Technology in San Jose and Salinas, California. The aim? To discover, accelerate, advance and invest in innovative solutions intended to solve critical challenges to production in agriculture through technology and to produce more with less water, labor and inputs. This info will then be fed back to fresh produce farmers across California, Arizona and Colorado.
In what looks to be a race towards the survival of the fittest, countries investing now in the AgriTech space will undoubtedly be the biggest and most profitable winners. They will also have the greatest potential to build the future Facebooks and Googles of global food production.
This begs one highly pertinent question: Where is New Zealand in this mix? Are we doing the same? And if not, why not? Especially when ag is supposed to be our prime cash cow, without which our economic livelihood would be in quite remarkably dire straits.
According to AgFunder’s mid-year 2015 AgTech Investment Report, companies located in the U.S., Israel and China continue to dominate when it comes to receiving funding and AgriTech activity.
Most noticeably absent, however, from the top ten most funded countries is New Zealand. Yes, New Zealanders are smart at being the farmers, but we also need to be smart about providing farmers globally with better technologies and tools to up their game too, particularly in an industry so ripe for innovation and change. And as a nation we would be foolish to continue to neglect this massive opportunity any longer, especially given our rich and competitive agricultural heritage. If not for for the environmental and future food security benefits, then at the very least for the financial and economic value of doing so.
But we can’t lag behind. To entrench a position of global leadership in AgriTech we need to take the bull by the horns and capitalise, support and promote investment in this space. We need to see collaboration in the industry, and for leaders to drive and fund new start-ups and hubs that support the development of what could potentially become some of the best innovations the world of agriculture will see. Not next year, not tomorrow. Now.
Not only do we already have a deep history of world leading farming knowledge and a perfectly sized test bed of entrepreneurial farmers willing to try new and improved methods of production, but we also have a growing hotbed of technological talent. A perfect combination really. And one that would be naive for us not to capitalise on. It could just be the much-awaited silver bullet New Zealand, and the rest of the world, needs. Not only to feed the future population sustainably while keeping our environmental values intact, but also to help keep our wallets bulging and our national books healthy for all generations to come.
With a PhD in disruptive sustainable innovation and technology development, and a background in marketing and account management, Dr Rosie Bosworth consults in business. Her article is reprinted from Pure Advantage.org with permission.