AUS vs USA: how we stack up for agtech investment

An AgTech report, the first of its kind, was published by The University of Sydney this week and its findings show Australia falling behind the world’s best in the agtech investment game.

AgTech is the intersection of agriculture and technology. It’s the companies that sell products and/or services which contain or are enabled by technology in the agricultural value chain.

Globally, agtech investments have quintupled from US$309 million (AUD$437.8 million) in 2013 to $US$1.5 billion (AUD$2.1 billion) in 2017.

This investment has been a great boost for the Australian agtech market with total investment doubling in size from 2016 to 2017 alone.

However, the size of investment in agtech per capita in Australia is 50 times less than that of the US.

According to the report, for Australia to become a $100 billion industry by 2030, an increase in Australian agtech investment is critical.

Currently Australian agriculture is worth more than AUD$63 billion per year and food exports account for 11.6 per cent of the nation’s overall goods exports.

Why is Australia not keeping up with its global peers?

While there have been an explosion of investment activity in Australia over the last two years, the majority have been early and small investments.

In 2017, 80 per cent of all investments were less than AUD$1 million, with most being through government grants and accelerator programs.

The US are succeeding because they have higher-value and later-stage investments – the critical sorts of funding that allow companies to scale. This is what Australia is missing.

The majority of Australian investor interest was in digital agriculture segments of precision ag software, ag marketplace and sensors.

The segments with the lowest investor interest were novel crops, feed and animal genetics – noting thought that Australia commits significant public funding in these areas.

How can we improve?

Incentives for multinational agricultural corporations to establish major R&D operations in Australia are needed to create diversification of agtech segments and build commercialisation capability.

The creation of incentives for sophisticated investors from overseas to open offices in Australia, particularly venture capital firms with domain experience in agtech must be developed.

Create tight-knit, globally-connected investment communities around technology-specific expertise, allowing agtech companies in niche technology areas to access the right investors.

See the full report here.

Andrea Martinello

Andrea Martinello

Andrea is the Community & Engagement Officer at the National Farmers' Federation.

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