Next wave of agri-tech start-ups going digital

Peter Griffin

Peter Griffin

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The face of the agri-tech sector is set to change with nearly half of start-ups focused on information and communication technologies as they seek to innovate in new areas.

It may be dominated by old industry stalwarts like Gallaghers, Livestock Improvement Corporation and NDA Group, but nearly half of the agri-tech sector’s emerging companies actually have an ICT focus.

That’s the finding of the Technology Investment Network’s inaugural Agri-tech Insights Report which was launched at Fieldays today and is the first in-depth snapshot at the companies working in our agri-tech industry, which employs nearly 5,000 people and generated $1.4 billion in revenue last year.

Just 20 of the top 200 tech companies in New Zealand can be considered agri-tech companies and they are dominated by high-tech manufacturing and biotech companies. Just two per cent or $26 million comes from information and communication technologies (ICT).

But TIN’s chief executive, Greg Shanahan, said that when the company looked at the 1,000 early-stage companies it surveys each year, 47 per cent are focused on ICT solutions, a real shift in focus that will change the face of the agri-tech sector moving forward.

Changing business models

Greg Shanahan, TIN

“What we’ve got is new business models that are technology-enabled, that are providing far more resilience than historical business models,” says Shanahan.

“Increasingly the modus operandi for our technology companies is getting revenue from cloud-based services and providing essential infrastructure on a business to business basis,” he added.

That was designed to give agri-tech more recurring revenues tied to services and subscriptions rather than one-off equipment purchases, which was the traditional model for most agri-tech companies. It would also give start-ups more scope to deal with market shocks such as was being experienced with Covid-19.

“They are less exposed to consumer spending, which allows them to maintain cash flows over this period.”

Shanahan sees opportunities for the agri-tech sector to learn from New Zealand businesses in the fast-growing health tech sector.

“It Is providing additional revenue streams through digitisation instead of selling widgets, it is locking in a business-as-a-service model and applying value add over that,” says Shanahan.

The agri-tech sector combines two of New Zealand’s strengths – agriculture and technology and generated $800 million in export earnings last year, with North America the biggest export market followed by Australia.

Needed: a vision and a plan

Agri-tech is a high-value industry, generating higher average sector wages ($91,020) and revenue per employee ($282,690) than New Zealand tech companies in general. 

But Shanahan said the sector needed an industry transformation plan to help progress a clear forward vision for its role in the wider economy.

That plan may start to take shape as early as next week, when the government in collaboration with players in the sector, will try to set out a strategy for agri-tech, which has been identified as a sector with great growth potential for the country.

We know that a ‘business as usual’ approach will not result in transformation,” admits David Downs, the Agritech ITP taskforce lead, who was writing in the TIN Agri-tech report.

“Reflecting this, the Government has committed $11.4m as part of Budget 2020 to implement

the action plan of this agritech ITP. This will allow us to now proceed in earnest and in partnership with industry to make this plan a reality and start progressing towards our vision for New Zealand agritech.”

That vision, says Shanahan, needs to involve New Zealand tech companies working together more effectively to go after international opportunities.  

“I don’t think New Zealanders have done collaboration well in the past, particularly because we are a small country in a small economy,” he says. 

“When we are talking about a global opportunity, it totally makes sense.”

Putting the tech in agri-tech – companies to keep an eye on

Internet of Things

RiverWatch, ModuSense, RH Innovation Limited, Harvest Electronics, (NZ) Limited, Hivemind Limited.

Robotics

Robotics Plus, Invert Robotics, Pastoral, Robotics, Greentech Robotics, Aeronavics, Rocos.

Alternative nutrients

Bluelab, AgriGanics Limited, BioSoil & Crop (part of PlusGroup)

Water use efficiency

WaterWatch, Hydroxsys, CertusBio.

The TIN Agri-tech Report 2020 is free to download here.

Peter Griffin

Peter Griffin

Peter Griffin has been a journalist for over 20 years, covering the latest trends in technology and science for leading NZ media. He has also founded Science Media Centre and established Australasia's largest science blogging platform, Sciblogs.co.nz.

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