Updated: Jun 18, 2019
By Joanna Ng & Eitan Bienstock
The need to transform the agricultural industry (Food security/shortage)
If we continue our current trajectory, global food shortage will become a reality. By 2050, global population is projected to increase by 33% to reach 9.8 billion. Already resources are becoming scarcer and famine is rife in parts of the developing world. Yet somehow we still manage to collectively waste 33%- 50% of all food produced, which adds up to a staggering $1 trillion globally every year. This form of non-sustainable farming and consumerist behaviour is damaging our soils, depleting our resources and harming the environment. Adding to this, Australian soils are some of the oldest and driest in the world, and they are becoming increasingly degraded, over-farrowed, and overgrazed. Furthermore, climate change is making conditions tougher, oscillating between flash floods and extended periods of drought. To stave off the terrifying prospect of worldwide food shortage, implementation of Agtech solutions are needed to transform primary industries.
Australian soils are some of the oldest and driest in the world, and they are becoming increasingly degraded, over-farrowed, and overgrazed
Local challenges in AgTech commercialisation (Later stage Funding)
Driven by a harsh environment, Australian Agtech is amongst the most innovative in the world. A plethora of home-grown Agtech startups currently exist to improve almost every pain point in the supply chain, thanks to government grants and accelerator programs. Reported in 2017, pre-seed and seed type investments, deals averaging $1 M, totalled 85% of all investments. But there were zero later-stage investments, typically deals greater than $10 M. The lack of late-stage VC investments is a key limiting factor to commercialisation for many of Australian startups. By comparison, in the USA, early-stage and late-stage investments contributed to 40% and 25% of investments, respectively. Australian VCs are risk averse to investing in startups till they’ve gained traction and roots, which naturally stifles optimism and the potential for Australia to become a global player in the startup space. We can look to other developed countries like the UK, USA and Israel whose corporations willingly take the risk in fostering innovation, knowing innovative technologies are key to society’s evolution to the future.
Opportunities for technology to transform the agricultural industry (IoT/Connectivity)
But where there are shortcomings and challenges, there are opportunities. If our agricultural and economic climates are shortcomings, then Agtech is our opportunity to improve farming practices, and simultaneously grow our primary industry to further the economy. One way by which home-grown Agtech is navigating the future of digital farming is through IoT connectivity. Such technology has been key to the modernisation and digitisation of farming. Connectivity enable farmers to receive useful and practical data analytics, and are thus provided with resource parameters and actionable solutions to optimise their farming practices.
Home-grown Agtech is navigating the future of digital farming through IoT connectivity
Key areas where startups are making a difference
Resource distribution and management
Startups are revolutionising how resources such as water, fertiliser, feed, land and space are used, with the goal of optimising energy input and product output. The strive for efficiency have sparked some founders to introduce aquaponic and vertical farming strategies that significantly reduce resource water usage by 95% compared to traditional cultivation. Farmwall and Vertical Farms Systems are two examples of home-grown startups in this space. The reduced carbon footprint and higher quality of yield is a win-win for environmentalists, growers and consumers, since vertical farms have the capacity to grow in cities, which are closer to the end consumer and reduces distribution costs.
Data acquisition and analytic services
Data capturing technologies and data analytic services work hand-in-hand to assist farmers in providing an automated means to measure, track, monitor and analyse their produce. In addition to gaining vertical solutions to farming practices, farmers benefit to optimise their crop or livestock by being connected to a wider pool of collated data. It is in this space where the rise of IoT, robotics, and AI has the most influence. The startup field is peppered with data-driven technologies; some of which in the Agtech sector include Wildeye, Smartpaddock, The Yield, Agerris, and Agronomeye.
Supply chain management and business security
Food wastage is one major aspect that stands to be addressed by a more transparent supply chain management. Connectivity allows the tracking of goods throughout the entire supply chain from production to its distribution to wholesalers, retailers and finally to the kitchen of consumers. Agrichain is one example of a Australian startup targeting this need. Allowing farmers to track their produce increases their control and boosts their confidence in the distribution network. The rise of cryptocurrencies, blockchain and smart contracts have enabled farmers to trade with added security and confidence. AgriDigital is a success story of a globally scaled Australian startup that has introduced agricultural bitcoin ‘agricoin’ to disrupt the way by which farmers trade their stock.
By 2030 agriculture is expected to become a $100 billion industry
Multi-disciplinary stakeholder partnerships required for lasting change
To make a real impact in the future of the agricultural industry, new channels of communication and greater horizontal transparency are needed along the supply chain. This would open up new partnerships and opportunities for all stakeholders to optimise practices in farming, distribution and consumerism. As outlined in a report released by the Australian Government on the future of agricultural innovation, key stakeholders, including government bodies, research institutions, and financial corporations need to establish cross-disciplinary partnerships in order to foster commercialisation. This not only ensures that the most original and functional startups are given the resources and proper financial support to scale up, but also promotes and rewards cross-disciplinary solutions. Given the quality of Australian produce and startups, planting global vested interests in the Australian Agtech sector would undoubtedly reciprocate the capacity of Australian startups receiving Series A funding to commercialise and scale globally.
It’s about time investors realise the key to solving Australian problems is by fostering home-grown solutions uniquely created for our agricultural climate and for our farmers
The time is now
Among all the buzz and excitement, the future is looking bright for Agtech startups in Australia. We have the talent and the technology, what we need are VCs to increase their later-stage financial contributions. By 2030 agriculture is expected to become a $100 B industry. Investors are finally catching on that there is real money to be made by investing in Agtech. Investment into Agtech in 2017 by VCs was a modest $1 B but that number is projected to rise. It’s about time investors have realised the key to solving Australian problems is by fostering home-grown solutions uniquely created for our agricultural climate and for our farmers. By giving our most transformative technologies a fighting chance, there is a real opportunity for these startups to make ripples across the world. The capacity to scale globally is aspirational for any startup, and right now, the future is ripe.
Join us at the Everything IoT AgTech Startup Forum on June 27th 5:30pm-9:00pm at the Sydney Startup Hub.
By: Joanna Ng is an avid science communicator and intern at Everything IoT.
Eitan Bienstock is an entrepreneur, an active voice in the innovation ecosystem and the founder & CEO of Everything IoT .