New Zealand’s agritech sector will grow at least fivefold by 2030 and more NZ agritech firms will list on ASX to raise capital and target global markets.
That is the view of Brendan O’Connell, CEO of AgriTech New Zealand, the country’s peak body for the agritech sector.
“NZ agritech has exceptional long-term prospects,” says O’Connell. “The world will need higher agricultural productivity amid population growth, whilst enabling climate action at the same time. Agritech innovations are a critical part of the solution to feed more people.”
Nobody doubts agritech’s potential to improve the efficiency and output of agricultural processes – and collaborate with other sectors, such as biotech and renewables, as happens in NZ. But like other nascent tech sectors, the NZ agritech ecosystem has hurdles in capital availability, skills, and investor awareness.
“Access to capital for NZ agritech, although improving, remains an obstacle,” says O’Connell. “Arguably, there’s sufficient seed and angel capital available for promising NZ agritechs and more venture-capital and private-equity firms in this space. But it gets harder when agritechs need to raise larger amounts to expand globally, particularly in capital-intensive parts of the sector, such as plant and equipment manufacture.”
Brendan O'Connell, CEO of Agritech New Zealand
O’Connell says exchange listings can fill a gap in the NZ agritech ecosystem. “I expect more NZ agritech firms to list on ASX or dual list on ASX and NZX this decade. A listing allows them to raise larger amounts of capital, focus on their business and pursue their global ambitions. Capital raising for private agritechs can be very time-consuming.”
O’Connell expects collaborations between NZ and Australian agritechs to feature. AgriTech NZ has a good working relationship with the Australian Agritech Association (AusAgritech), and a memorandum of understanding to work together on various initiatives and events.
“The opportunity is to develop a larger Trans-Tasman agritech sector,” says O’Connell. “When foreign investors look at agritech in this part of the world, they usually don’t distinguish between NZ and Australia. They see us as one market. It makes sense for NZ agritechs to be listed or operate in both countries and develop a Trans-Tasman focus.”
Trans-Tasman learnings
New Zealand’s agritech journey has important insights for Australia. Both countries excel in primary production and food exports. Both have much to gain by forming globally focused tech sectors around their strongest industries.
By volume, agritech sectors in NZ and Australia mostly comprise privately owned companies in the start-up or scale-up phase. Relatively fewer large-cap, specialist agritech companies are listed on ASX or NZX.
New Zealand is further ahead in mapping its agritech ecosystem and connecting industry stakeholders.
“When AgriTech NZ formed in 2018, there was as a recognition that agritech here should be viewed as a sector in its own right, not just as a supplier to primary producers,” says O’Connell. “To its credit, the NZ Government understood the sector’s potential and put a plan and funding in place to help it grow.”
In July 2020, the NZ Government released its Agritech Industry Transformation Plan and committed NZ$11.4 million for its implementation. In July, the Technology Investment Network launched the 2022 New Zealand Agritech Insights Report, which ASX co-sponsored.
The report identified 131 agritech companies in NZ, of which 109 are in the “pipeline” stage (pre-revenue to NZ$3.5 million in revenue). These companies have a combined revenue of $1.6 billion, of which almost half comes through exports.
O’Connell expects that revenue to increase to NZ$8-$10 billion by 2030. He says annual sector growth of 15% can rise to 20% through industry and government interventions.
“There’s a growing pipeline of NZ agritech firms,” says O’Connell. He notes that more than 400 agritech firms exist in NZ (many are still at the concept stage).
“As the NZ agritech ecosystem matures, more of these companies will mature from start-ups and scale-ups to growth companies with a global presence. We’ll see bigger capital raisings, exchange listings, agriculture multinationals investing in emerging agritech firms, and more mergers in the sector to create scale to compete overseas.”
O’Connell says ASX has an important role to play. “In some ways, ASX is ahead of the curve in agritech. There’s not a lot of agritech listings now, but there will be over the coming decade as more NZ agritech firms get to sufficient scale to list on an exchange.
O’Connell adds: “ASX has built a good platform for emerging tech companies that are raising capital and have global ambitions. That’s important for agritech because NZ is too small a market for our agritech firms. New Zealand needs more of its tech companies to build a global footprint earlier in their journey.”
ASX agritech initiatives
ASX is attracting more agriculture companies from Australia and NZ. Since 2015, there have been 35 listings on ASX in the sector, including NZ companies. The most notable is The a2 Milk Company (ASX: A2M), which is dual listed on ASX and NZX.
A2 Milk reinforces the benefits of building tech sectors around traditional industry strengths – in this case, dairy in NZ. A2 Milk also shows the benefits of cross-sector collaboration: it began in 2000 as a small biotech firm.
ASX’s agritech focus expanded with the launch of the S&P/ASX Agribusiness (AgBiz) Index in June 2022. The index draws constituents from the top 1000 ASX-listed companies by market capitalisation. Its sub-sectors include agriculture products, fertilisers and chemicals, paper products, food distribution, alcohol, packaged food and meats, pharmaceuticals, water utilities, and farm real estate.
The AgBiz Index has a similar approach to the S&P/ASX All Technology Index, launched in February 2020. That index raised the profile of ASX-listed tech stocks among local and foreign investors. It also measured sector performance and attracted passive index-tracking funds, such as Exchange Traded Funds.
“ASX is a natural home for agriculture to flourish,” wrote Blair Harrison, Senior Manager Listings (New Zealand) in the 2022 New Zealand AgriTech Insights Report. “ASX, with its global and deep investor base, stands ready to welcome and support New Zealand companies that are commercialising exciting innovations in our tech and primary industries. Complemented by the All Tech Index and now the AgBiz Index, ASX is ready to support NZ’s vibrant agritech sector as it competes on the world stage.”
Australian agritech builds momentum
Back home, AusAgritech is embarking on a large survey of the local agritech ecosystem. The goal: to understand and measure Australia’s agritech system, collect agritech data and inform policy.
Tracey Martin, CEO of AusAgritech, says better identification of Australia’s agritech sector will drive sector collaboration, connect companies and investors, and provide data that helps shape new Federal and State strategies to support the sector.
“We believe Australia has at least 500 agritech firms,” says Martin. “AusAgritech is getting 30-40 new members a month, so there is clearly a strong appetite among agritech firms and industry stakeholders to form a larger, more defined network that can drive collaborations and innovation – and create opportunity.”
Australia has much work to do. A 2018 report from the United States Studies Centre noted that per-capita investment in agritech in the US was 50 times greater than here. Although global agritech investment is booming, “Australia’s agtech investment market is small, at an early stage, and not keeping pace with global peers”, the report said.
Tracey Martin, CEO of AusAgritech
The report found that 80% of all investments in Australian Agritech in 2017 were less than A$1 million and mostly from government grants and accelerator programs. Back then, high-value and later-stage investments were largely absent in Australian agritech.
Martin hopes to raise the profile of Australian agritech. Since her appointment in November 2021, AusAgritech has been busy building its membership base, expanding its advocacy work, and overseeing the National Agritech Ecosystem Project that is expected to reinforce the potential of Australian agritech – and identify its needs.
The timing is good. With a new Minister for Industry and Science (Ed Husic) and a new Minister of Agriculture, Fisheries, and Forestry (Senator Murray Watt), there is an opportunity for the Federal Government to increase its support for agritech.
“The key is creating alignment between Australia’s agriculture strategy and its agritech strategy,” says Martin. “The two go hand in hand, but we haven’t thought about agritech in this way before from a policy perspective at a Federal level.”
Martin says a thriving local agritech sector has two main benefits. First, agritech innovations will help Australia’s agriculture industry produce more goods, at a higher value, and achieve a gross value of $100 billion by 2030 (from $73 billion in 2021).
Second, agritech innovations that drive productivity gains, require less energy, and protect the environment, can help Australia meet its climate commitments. “It’s important that we consider the broader benefits of agritech to the agricultural industry, our farmers, local communities, and the environment, she says. “There’s so much potential.”
Martin says Australia has competitive advantages in agritech. “We have a world-class agriculture sector and a climate that allows companies to test agritech innovations in a range of environmental settings. We see opportunities for significant cross-sector collaboration among mining, biotech, renewables, and agritech companies.”
Regional communities are another consideration, says Martin. “Most technologies are developed in capital cities. With agritech, there’s an opportunity to drive innovation from regional towns as agricultural companies, farmers, regional universities, and other stakeholders work together to develop and commercialise technologies.”
Martin, a lawyer by profession who specialised in global financial regulation, was exposed to agriculture through her husband’s family farm near Townsville in Queensland. The farm runs about 5,000 Droughtmaster cattle over 72,000 acres.
Martin is a member of the National Farmers Federation’s sustainable development committee and the Cattle Council of Australia’s policy council. When asked to nominate her favourite agritech innovations, she mentions GPS ear tags for cattle that track and trace their movements, helping farmers to better manage herds. Satellite pasture management and robotics in crop spraying are other highlights.
“These are examples of technologies and agriculture coming together to create productivity gains for farmers and better outcomes for the community. With ear tags, graziers are getting real-time data on animals, from a satellite, that is analysed by artificial intelligence to help them make better decisions about their herd. Agritech truly is transformative technology and something Australia has always been good at.”
To learn more about AgritechNZ, visit www.agritechnz.org.nz
For more information on AusAgriTech, visit www.ausagritech.org
Where to now?
For more information contact ASX Listings Business Development
