Australia’s agricultural sector risks losing out to global competitors unless it understands its competitor isn’t its neighbour, but the rest of the world.
Currently, food is our third largest export market, with agricultural exports forecast at $48.7 billion.
But complacency could kill Australia’s ability to win new markets. Having recently attended several agriculture conferences in the US, I’ve heard - more than once - companies speak about their plans to take market share from Australia.
While Australia has built goodwill with the Asian consumer, we can’t take it for granted that they’ll always source from Australia.
Without innovation, local producers will be blindsided by competitors, including non-traditional competitive threats.
For example, take Ripple Foods, a US startup that’s making a pea-based milk alternative.
What’s interesting is that the company isn’t targeting the soy and nut milk sector. It’s going directly after dairy.
Ripple’s tag line is that it makes “dairy-free as it should be: a good source of protein, lower in sugar, and delicious.”
Its product is higher in calcium and protein than other milk alternatives, and it sits on the refrigerated shelves with other fresh products, not the long-life aisle.
Then there’s the red meat space.
Australia is one of the world’s biggest beef exporters, in the top three alongside Brazil and India.
Up to three-quarters of our beef is shipped overseas. But technology advancements could alter the shape of the market.
As a net exporter and high cost processor, the major risk for Australia is that our agricultural producers become global laggards in the adoption of technology that drives productivity and quality.
The major risk for Australia is that our agricultural producers become global laggards in the adoption of technology that drives productivity and quality.
Technology could provide a competitive advantage for other countries looking to take the lead in global markets.
This is less of a risk for countries like the US, because the American domestic market is so big that it’s hugely attractive to entrepreneurs.
It’s also less of a risk for other countries that unlike Australia, are not a net exporter of agricultural produce.
If we’re not building technology in Australia, we’ll be laggards when it comes to innovation.
But if we do it well, there are huge gains to be had for our already strong agriculture sector.
Just imagine, if we could adopt innovation to add a day or two to shelf life, fresh fruit producers would have a far bigger market opportunity. They would be able to reach much further into Asia, with higher quality and trust, and lower costs.
If we prove we can deploy innovation quickly, the global agtech community would capture Australia as a test market, giving Australian agricultural business first mover advantage. Our local agtech businesses could also use this situation to their own advantage, using Australia as a springboard to the world.
What’s needed to make it work?
- More Australian entrepreneurs need to be closer to the workflow of agribusinesses, working side-by-side with them, so they’re building solutions in a way that they can be adopted.
- Australian agricultural service providers, such as banks and insurance companies, need to encourage and incentivise agribusinesses to adopt more technology, as well as build fintech solutions for them.
- The government needs to promote connectivity in rural areas, so businesses can take advantage of data in real time.
- Agtech is a newer space for agribusinesses to put money into. So an education process is needed, to get them to invest money in companies building the solutions for them.
- Businesses and the research sector need to be a bit more cognisant about the opportunities of IP. Not enough is getting out. There’s theoretical value in IP and patents, but there’s real value in products and someone using them. We need to get more IP commercialised so we can have more research coming out of Australia.
- Agribusinesses need to be onboarding for pilots and beta testing opportunities frequently to help drive their exposure, assessment and adoption of technology in an informed way that will help lift the strike rate of success in finding value in technology into their business.
Above all, it needs to be done right.
What’s worse than not adopting technology is adopting it poorly.
It wastes money, and it creates a negative association with the space. We need good technology and good adoption.
If Australia can become an agri-tech hub, we’ll get a critical mass of building technology here and enjoy first mover advantage that will benefit farmers, agri-businesses and tech companies.
Remo Carbone is a co-founder of South Austrailan-based agtech betaworks Availer, which builds startups by commercialising research and next-gen technology. He spends his time between Adelaide and New York, where he helps Australian startups break into the US market