By 2050, nearly 10 billion people will walk the Earth. To satisfy their daily need for two trillion calories, the global agriculture industry has to increase food production by 70 per cent, according to the the UN Food and Agriculture Organisation.
As that demand surges, digital technology is beginning to disrupt what McKinsey & Company describes as the world’s oldest and least digitally mature industry: agriculture. The burgeoning global agriculture technology (AgTech) industry is expected to play a vital role in meeting the growing food demand and, according to experts and industry stakeholders, Australia has a real opportunity to lead the AgTech sector.
AgTech incorporates a broad range of solutions that includes everything from robots and drones, driverless vehicles, ground-based sensors, and aerial imaging through to the analytics and artificial intelligence platforms needed to understand all the new data streams being created.
Internationally it is attracting a growing pool of venture investors, as well as driving increasing M&A activity by industry giants such as Monsanto, Syngenta, John Deere and DuPont, according to a whitepaper by research outfit CB Insights.
Australia is already regarded as a global AgTech leader in research and innovation. But as with so many industries before it, the sector will struggle to commercialise its intellectual property (IP) if it falls prey to the same traps that held back the local manufacturing, IT and biotechology businesses over the last 30 years.
Here we go again
For students of Australia’s R&D commercialisation track record, the problems facing AgTech are depressingly familiar: researchers who are more concerned with publishing papers than solving problems; government programs that lack a commercialisation focus; and technology providers trying to shove square pegs into round holes to make a quick sale.
Once again the country’s innovation Achilles heel is on display.
“It’s easy to innovate and come up with a proof of concept. It’s a completely different thing to take it to market and to make it a commercial success,” says Ros Harvey, founder and Managing Director of The Yield, a world-beating Australian AgTech company.
“To come up with cool technology is probably $1 out of $100 that you have to spend to really take something commercially to market.”
This challenge persists, slowing progress, despite Australia enjoying all the elements conducive to a thriving ecosystem:
- AgTech research is well funded and world renowned;
- Australian farmers are some of the most innovative and receptive to new technology;
- the vast, varying and arid climate provides an ideal testing ground to develop solutions that can then be exported around the world;
- and investment in the local industry is growing, albeit from a low level.
“What we’re sitting on is all the right ingredients for Australia to ultimately become a leader in what we refer to as Agri 4.0 — Industry 4.0 application to agriculture — where we’re digitising the way we produce food and the supply chain,” said Ben van Delden, KPMG head of markets and AgTech sector leader.
However, according to van Delden and other experts Which-50 spoke with, if Australia can’t solve the commercialisation problem it is unlikely to capitalise on its ideal Agtech environment.
And the country’s track record, in everything from biotechnology to manufacturing, does not exactly provide confidence.
Climate for growth
The varying, but consistently challenging, farmland of Australia is worked by arguably the most innovative farmers in the world. A reputation hard-earned and well-deserved, according to The Yield’s Ros Harvey.
“To be a grower in Australia, honestly, you have to be really productive. And we are, we’re innovative,” she told Which-50.
“We’ve got the highest labour costs in the world, we’ve got the driest continent, we’ve got massive climate change which is really affecting production and to top it all off we have to ship everything offshore to get it to market. Added to that we cover every single crop that’s grown on the planet because of our climatic diversity.”
Australian farmers also don’t get a lot of help from the government compared to global counterparts — at least not through direct subsidies, according to Andrew Bate, Managing Director and CEO of Swarm Farm, an AgTech company developing autonomous farming machinery in Queensland.
“No Australian farmer is subsidised. Farmers in the US, UK and many other countries have farm subsidy bills. They get paid to farm whether they’re profitable or not.”
“I think Australian farmers are, by and large, proud of the fact we stand on our own feet. We run efficient strong businesses and we have to innovate to survive and be profitable. I think that really drives a culture of innovation and early adoption in Australia,” Bate said.
In March, The National Farmers Federation (NFF) presented its vision for 2030 — growing Australian agriculture into a $100 billion industry. To deliver that outcome, agriculture will need to grow by almost 70 per cent in the next 12 years, and the NFF believes AgTech will play a significant role.
That is why the industry body identified technology and innovation as a key driver in the 2030 vision.
“Food and agribusiness form a $5 trillion global industry and is the world’s largest employer,” said Andrew Lai, Accelerator Director at SproutX, an AgTech accelerator and coworking space based in Melbourne.
“From an Australian perspective, in 2017 the industry was Australia’s fastest growing sector last year with 23 per cent growth and is set to be the next $100 billion industry,” Lai told Which-50.
“It is a big global opportunity and is fueling Australian economic growth.”
With world-leading research, an ideal climate that provides global export scale, growing investment and farmers eager to test AgTech, the question is raised: what’s holding back AgTech in Australia? Australia, while well-regarded by the global industry, is not yet a major exporter of AgTech, struggling to convert research into enterprise-level AgTech solutions.
A full yield
Too often the solutions farmers and growers are offered from researchers are not fit for purpose or the use case too narrow, according to Dr Mike Briers AO, founding CEO of the Food Agility Cooperative Research Centre. He told Which-50 much of Australia’s AgTech research occurs in controlled conditions without the necessary input of final users.
“Farmers have been sold down the road by a lot of technology companies, thinking that they had a product that would fit to their environment,” Briers said.
“It’s not a factory. It’s not under control. You’ve got climate change, you’ve got disease, you’ve got pests. You’ve got different soil types, you’ve got different plant species that grow in different conditions at different times. You have an amazing amount of complexity, effectively, in terms of predicting yield, when to harvest or when to plant.”
“Every [agriculture area] has its own issues from a technology perspective. So a blanket approach to technology doesn’t work. So there’s a bit of a skeptical view in the agricultural community about the technologists that are trying to sell them solutions that don’t fit their needs.”
Australian AgTech The Yield beat out several global competitors to become one of the first three startups to receive funding from AgFunder earlier this year. Founder Ros Harvey says the key to the company’s AgTech success is considering final use cases.
“You have to understand the market. The most important thing is that the business problem has to come first,” Harvey told Which-50.
“[Farmers will] use great technology, but it’s got to be great technology. I think what often fails is not that growers don’t like technology, it’s that the technology industry hasn’t delivered reliable, robust, business-centric solutions that are easy to use.”
KPMG’s van Delden agrees — much of the technology that eventually ends up in the hands of Australian farmers is overwhelmingly complex and lacks interoperability.
“If they’ve got three core problems that they’re trying to solve, often the solutions are bringing ten value propositions to them and they’re overwhelmed by what’s in the package. They don’t need all ten attributes — there might only be two or three that are really relevant to the farmer,” van Delden said.
The KPMG AgTech leader argues the solution is to include more input from end users and take a codesign, agile approach to AgTech. Swarm Farms’ Andrew Bate, a farmer of nearly two decades, calls it a “mud on your boots” approach.
“We have a critical problem in Australia where we keep funding research,” Bate said. “Research is the discovery of new ideas and that’s great. It gets papers written and the papers stack up in our universities and don’t end up out in the field helping farmers.”
“Everyone forgets about the D word: development. Technology has to be developed to a useful product before it can be commercialised. I think that’s the really strong area that Australia can [lead in]. I think that’s the missing thing, not only in Australia but worldwide.”
“If Australia wants to be this hotpot of AgTech for the world to follow I think we need to think more and more about how we support more development in our country … Development doesn’t happen at universities. It happens with early stage technology companies, startups, innovators and early adopters out in the field.”
Emma Weston, CEO and cofounder of Agridigital, acknowledges the industry’s struggle with development and commercialisation. But she argues things are changing for the better.
“We have done spectacularly well on a global stage in terms of R&D, we just don’t seem to have made that transition in terms of seeing that turn into unicorns or whatever the commercialisation success marker is in Australia. There’s some notable exceptions obviously.”
Weston says some of the changes have already begun, including important policy shifts from governments, but there will likely be a lag before the full effect is seen.
Closing the AgTech commercialisation Gap
Several of the experts Which-50 spoke with said there needs to be a culture change around AgTech research and its application if Australia is to become a global leader.
According to van Delden, a more holistic strategy is needed. “We’ve got 40-odd universities, we’ve got 15 Rural Development Corporations, we’ve got state departments that are focusing on research and agriculture. Actually it’s a really busy space and the way our funding mechanism is established, we are basically promoting innovation through the RDC structure back into traditional sectors.”
Van Delden’s point about rethinking Rural Development Corporations is a common gripe from AgTech companies. Currently RDCs are the key way government and industry invest in research and development through a levy on various agriculture commodities then matched by the Australian government — a partnership “that has been operating successfully for over 25 years,” according to the government’s RDC web site.
Overall, nearly half a billion dollars is spent on research and development in the agriculture industry. But how it is being spent needs to be addressed, according to Michael Dean, co-founder and CIO of AgFunder.
“I’d love to see the Rural Development Corporations take a more commercial approach to their activities, with a percentage of their funding directed to early stage venture type investing,” Dean told Which-50.
“Venture is risky and of course there will be failures. But in my view, given the low rate of commercialisation success we have seen to date, it is worth looking at. The invigoration it would bring to early stage innovation funding would be well worth it.”
According to Briers, the changes are beginning to happen and understanding is improving. But the current funding mechanism could be improved through research application incentives.
“[There is a] growing awareness in this community about ‘we’ve got to do things differently’ — we can’t fund a project and ask the researcher to come back with a research paper in six months or a year’s time. We now have to say what are the milestones, how can we practically implement those findings, how can we validate those findings with the industry.”
Publishing versus Problem Solving
That change will take time, according to Briers. “It will take a while because there’s a lot of researchers out there that still have the old mindset — they’re really after a research grant, that’s my KPI and I want to get my publication and that’s all I care about.”
Briers’ organisation, Food Agility, is in charge of dispensing some of that research funding and he has a simple message for those seeking it: “Don’t come to me if you want funding. Come to me if you really care about something. If you care about solving the problem then funding will come. It’s that change in mindset.”
While an important lever, adjusting the funding mechanism is only part of the solution. There are still considerable challenges around digital infrastructure and awareness, for example.
KPMG’s van Delden is calling for a government-led national initiative on AgTech.
“The biggest challenge in the way is collaborating across our states and multiple parties involved. We need to take a much more strategic and aligned view to how we support the development of an export industry around technology and agriculture.
“Right now we’ve got nearly a dozen accelerators, we’ve got every state government department in ag interested in it, and all the RDCs are interested and most of the universities. But what we don’t have is a national strategy aligned to enabling a vibrant AgTech ecosystem. We’re doing what we’ve done in agriculture and competing locally before we’ve got any energy left to compete globally.”
“We are renowned for our leadership in innovation and research. We’re also renowned for how jolly hard it is to get access to that. If we can solve that latter component we will certainly be able to make the most of the global market opportunity that AgTech presents. Because the [global level of] investment going into this is only going to increase.”
With the components of a thriving AgTech ecosystem already in place, what remains is for industry and government to unify them.
Joel Fitzgibbon, Shadow Minister for Agriculture, Fisheries, Forestry and Rural and Regional Australia, told Which-50 a Labor government would be a strong advocate of the AgTech industry, including reviewing the “structure, operations and performance” of the 15 RDCs.
“But that alone will not be enough if we are to lift technology up-take to the levels needed to improve productivity and international competitiveness. Success will only come with a whole of government approach,” Fitzgibbon said in a statement to Which-50.
The Minister for Agriculture and Water Resources, David Littleproud, did not respond to Which-50’s repeated requests for comment.
Update: Since publishing, Minister Littleproud has provided a response to Which-50, saying the government invests more than $600 million every year in agriculture research and development, including AgTech, and supports the NFF initiative to grow Australian agriculture to $100 billion by 2030.
“We are also investing $180.5 million in the Rural R&D for Profit program to get new innovations on farm, faster and improve farmgate profits,” Littleproud said in a statement to Which-50.