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Agtech sector poised for more growth: RSM

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agtech report
// // A new report from RSM predicts the sector in Australia could be worth $100B by 2030...

Australia is covered in farmland – 61% of the land mass in fact, with 135,000 farms, making up 12% of the country’s GDP. It’s not surprising then that ‘agtech’ is a strong sector, and will only become stronger.

Driven by the increasing demand for food from a growing population, the need to improve agricultural output and address climate change, the agtech sector is projected to continue its strong growth, according to a new report from RSM (‘Breaking new ground: A report on the state and future of agtech in Australia’).

Managing cash flow, attracting and retaining staff and moving into new markets are the main challenges being felt currently by agtech firms, with the prevailing economic outlook remaining positive.

The global downturn in tech investment over the last 18 months has hit the sector somewhat, with investors reticent to confidently stride into a sector that has clients (such as farmers) that are so spread out, and harder to convince and sell to.

Cyber threats remain a cause for concern, with connected devices across large swathes of farmland susceptible to attack. 61% of respondents in a recent survey cited cyber as a threat, and where understanding and investment were under par.

AI is on the move, with more and more farmers using some degree of artificial intelligence to test and trial new products, predict rainfall and fertiliser usage.

Overall though, the survey (conducted by RSM in June and July this year) results were positive, with 70% of respondents expecting a growth in revenue in 2023/24 compared to the previous year.

The concerns centred around increasing prices and availability of supplies and labour, and changing consumer preferences.

Key agtech trends

  • Robotics and automation: being used for planting, harvesting and livestock management, helping to improve the efficiency of framing processes, reduce time and lower labor costs.
  • Precision agriculture: a farming approach that uses data and technology to target inputs (such as water, fertiliser, pesticides) more precisely, resulting in increased yields, lower input costs and reduced environmental impacts.
  • Big data and AI: help farmers make informed, data-driven decisions about crop production, livestock management and resource allocation.
  • Sustainable farming technologies: help farmers reduce their environmental impact by monitoring and conserving water, feed and fertiliser.

The agtech industry is still in the “early stages” in Australia compared to global players, but there are a “wealth of opportunities to develop new technologies fit for purpose and tailored to Australia’s unique climate, growing conditions and supply chains”, said the report.

Barriers to agtech adoption

Naturally, not every farmer is convinced, and some are slower than others to adopt new technologies. Some of the main reasons for concern include:

  • Showing clear benefits: running a farming business means being time poor, so farmers need to see clear benefits and results to make it worthwhile to change existing processes and practices and adopt agtech solutions. Proven, measurable results and return on investment are vital proof-points for an agtech solution.
  • Regulatory considerations: ag and food production is subject to a range of regulation and therefore farmers will need to consider the regulatory settings when considering adopting any agtech solutions across their farms.
  • Potential risks: some solutions can be expensive and complex to implement, and may not deliver the expected results. Farming businesses have high input costs and can’t afford to adopt new technologies that won’t deliver a return on investment.
  • Resistance to change: some farmers prefer to stick with traditional farming practices, being unsure of the benefits, uncomfortable using new technology or finding it less effort to use tried and tested methods.
  • Integration with existing processes: farm management systems today are complex. A potential agtech solution will need to be compatible with existing systems on the farm while also having scope to be customised to its needs. That’s a hard balance to get right.
  • Limited rural connectivity: in some rural areas, a lack of reliable internet or technology infrastructure can make it difficult to implement agtech solutions.
  • Data privacy, cybersecurity threats: farming businesses face the rising cybersecurity threats that all businesses must contend with today. In addition, the growing adoption of technology in farming practices is introducing new security concerns. IoT technology, sensors, automated machinery and GPS tracking can open up opportunities for cyber criminals and threat actors to do nefarious things. Furthermore, agtech systems collect a lot of data about farms and farmers, which can be highly sensitive and valuable, and the concerns about security and privacy risks can stymie the rate of adoption.
  • Environmental and ethical implications: some farmers may have concerns about the environmental and ethical implications of agtech adoption, with worries about solutions that require the use of more water or pesticides, or other practices.

When it comes to agribusiness, cybersecurity, and even an understanding of IT (information technology), hasn’t really been a strong point with the sector. Organisations, before they actually deploy these technologies, need to think about security as part of the deployment process. Security need to be built into the project itself so the technology is being rolled out securely.

Ashwin Pal Director, Cyber Security and Privacy Risk Services, RSM

2 WA agtechs: Origo and Laconik

Of the three agtech case studies in the report, two are from WA: Annie Brox’s Origo Farm and Dr Darren Hughes, Director at Laconik.

Origo provides a whole product suite, connectivity, gadgets and platforms – all in the suite. Annie has a background in IT telecoms and farming.

Agtech sector poised for more growth: RSM
Origo Farm’s technology. Image supplied.

A solution is not a product, and there is a real difference between the two. Just buying bits and pieces from overseas is a solution, it’s not a product. A product comes through owning the technology, from the electronics to the software, owning the platform and developing and owning the services.

Annie Brox, Origo farm

“We provide a service with every device. So we see the heartbeat of each one of the numerous devices that we have out there and this comes back to the operation centre.”

Meanwhile, Laconik provides precision farming using AI, allowing variable fertiliser spreading down to a tenth of a hectare.

“With agtech, it’s 99% hype and 1% reality. But that 1% really will produce some pretty cool innovations. For us, the improvement in image recognition technology has now enabled green-on-green demarcation, which gives us the ability to identify and spray a green weed on a green crop,” said Darren.

Agtech sector poised for more growth: RSM
Dr Darren Hughes, Laconik.

Genuine agtech is in the deep tech bucket. It takes years and lots of validation to bring new technology to market. It doesn’t happen overnight. But over the five to 10-year timeframe, that’s when we’ll see some very cool technologies come to market.
It takes patient investors not looking for quick, short-term gains. But it’s challenging because you’ve got to find a product-to-market fit as quickly as possible. And rule 101 is to know your customer.

Dr Darren Hughes


You can download the RSM Report here; and visit Origo or Laconik for more information. Annie Brox also appeared in episode 71 of the Startup West podcast.

Disclosure: RSM is a sponsor of Startup News.

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