Agricultural technology, agtech for short, has developed into one of the hottest global growth markets.
Without question, there is a crying need for innovation in agriculture and food systems, driven by the enormous rise in demand to feed hungry populations amidst intense competition for limited natural resources, and concerns about global warming.
Innovation is seem as a critical component to sustainable productivity growth, which will be an absolute necessity if the industry is to meet rising food demand, and to enhance a complex food chain that consists of food production, processing, distribution, consumption, and waste management – known as food systems.
In a recently published article article, Peter Wren-Hilton outlines a checklist of what makes a successful technology cluster in the the food industry. It’s based on New Zealand’s successful experience in the agtech sector.
New Zealand has long been a world leader in agricultural production – it’s the largest dairy and sheep meat exporter in the world, and a major global supplier of beef, wool, kiwifruit, apples, and seafood. A country the size of Colorado, it feeds over 40 million people, with 7,500 animal products and 3,800 dairy products going to 100 countries every month.
Farming has been the country’s economic driver for well over a century, and innovation has always been the theme, starting with the invention of the electric fence in the 1930s. Today agricultural innovation is characterized by science and technology breakthroughs that make farms more productive (agtech). Agtech innovation doesn’t occur in a vacuum – it takes a concerted effort by private and public entities alike to bring the best minds together from a variety of backgrounds so that startups can thrive.
The key factor to consider is this: if your region has an industry competitive advantage – fintech, agtech, or any other “tech,” do your startups have a clear path to connect with experts throughout the cluster? Below is a checklist of ways cluster participants can engage with the broader regional industry, and how these interactions can be facilitated, based on the experience of the New Zealand agtech sector.
- Get real-time feedback from customers. New Zealand farmers are some of the most sophisticated and demanding customers in the world, constantly looking for ways to make farming processes more efficient to overcome supply chain barriers such as proximity to the global market. Identify a customer ‘evangelist’ – someone who understands the value of technology in your industry and will give you candid feedback on needs from his or her ‘in the trenches’ perspective. Farmers like Craige McKenzie – a leading advocate for New Zealand precision farming techniques – identify problems in the fields, and turns to agtech for solutions.
- Local college courses that provide industry-specific instruction. While general computer science and engineering courses are important, do your educational institutions support the local cluster with industry-specific knowledge, insights and practical experience? Engage students early and bring the jobs to them – these educated and resourceful students will become the next generation of entrepreneurs and industry executives, and you won’t lose them to other regions that are also in desperate need of tech talent. In New Zealand, students can attain bachelor degrees, diplomas and certificates in various fields of agriculture, such as agriscience, agribusiness and farm management. Specialized agriculture institutions also offer practical farming courses. For example, Biolumic, the world’s first crop enhancement system using UV light, was developed at New Zealand’s Massey University, and increased lettuce yield by 26 percent in commercial trials in Salinas, CA.
- Match established companies with startups. Can you connect entrepreneurs with established industry players? It’s a win-win: Entrepreneurs can ‘hack’ executives’ years of experience running a business in the industry, and mature companies can reinvigorate their innovation pipeline by acquiring or investing in new technology. In New Zealand, some of the largest agricultural companies, Gallagher, Waikato Milking Systems and LIC lend their expertise to emerging “up and comers.” For example, Gallagher recently invested in an early stage startup, MyApiary, an apiary management software provider.
- Develop a pipeline of continuous innovation. Are you effectively using industry research institutions to patent and commercialize new technology? In addition to universities, research organizations have an integral role in a robust ecosystem by formalizing the ‘innovation process’ – constantly providing new solutions for old problems. For example, New Zealand’s AgResearch collaborates with farmers and companies to develop solutions that combat factors affecting production and performance on farms, such as pasture establishment, soil and water conservation and pest control. CropLogic, a crop growth forecasting company, leveraged 30 years of scientific research from NZ’s Plant & Food Research to forecast plant growth. Software company, Rezare Systems, was spun out of AgResearch and automates tasks to make farms more profitable and efficient.
- Show me the money! Accelerators that provide product and market development guidance, as well as funding opportunities should be specific to the industry cluster. For example, in New Zealand, both Sprout and Fonterra Ventures provide services specific to the agtech industry. They are supported by angel networks with an agtech focus such as Enterprise Angels and MIG Angels.
One final note – industry groups and government are essential to bringing everybody to the table and providing ongoing support for the industry cluster through programs and policies. For example, they can streamline the process for starting a business, prioritize R&D investment to improve industry profitability and productivity, and organize events that connect local stakeholders – three strategies instrumental to an industry cluster’s success. They can also act as a ‘connector’ between other successful clusters – by industry, or by region. For example, Waikato Milking Systems collaborated with the sailing industry to design a rotary milking system using America’s Cup technology; delegations of New Zealand agricultural industry players frequently tour farms around the world to better understand regional farming techniques and adapt agtech innovations accordingly.
From startups, to industry groups to government, all parties play a critical role in maintaining a strong industry cluster. As enterprise tech in a specific industry matures, it may just well be the secret weapon to remaining competitive. Giving startups a direct connection to customers, funding and mentors, will create a virtuous circle: those startups and their innovations will in turn become a resource for the next generation.
Peter Wren-Hilton is founder of Wharf42, an organization that works with New Zealand’s emerging high growth agtech companies to connect them to Silicon Valley’s innovation ecosystem.