Essay: Feeding the Future
Jul 30, 2021 | Zachary Milewicz
The global population is expected to reach nearly ten billion by 2050, up from its current total of approximately 7.8 billion. With this rise comes a growing demand to produce more food – a task easier said than done. Meeting this demand requires an increase in agricultural output and productivity, while maintaining sustainability.
Fortunately, there is hope this can be achieved. At the forefront of this global food challenge is an up-and-coming industry essential to the future of agriculture: AgTech (also referred to as agricultural technology, agrotechnology and agritech among other variations).
AgTech is defined as “the use of technology in agriculture, horticulture, and aquaculture with the aim of improving yield, efficiency and profitability for farm managers and growers.” It encompasses several sectors, using technology ranging from advanced machinery (e.g. drones, robots) and internet of things data-collecting sensors to intelligent software analysis (for plants and soils) and water management systems.
Many of these capabilities were not around 30 years ago, but in the next 30, they will become increasingly indispensable. The global AgTech market is estimated at A$681 billion and is expected to grow to A$995 billion in the next three years; an annual growth rate of 8%, according to one recent estimate.
The promising future of AgTech is also reflected in the global attention and funding it has received in the investment world. In 2012, AgTech received investments of A$205m; by 2018, this had grown exponentially to A$7.1bn.
Australia and Israel are both countries with the potential to play major roles in the coming AgTech revolution. This is all the more true if the two countries cooperate – especially via a proposed free trade agreement between Australia and Israel currently being seriously contemplated in Canberra.
Israel is a global leader in the AgTech industry. This is no surprise, given the country is known by many for inventing drip irrigation and extended-life cherry tomatoes, as well as “making the desert bloom.” From 1948 through 2010, Israeli farmland increased from 165,000 hectares to 435,000 hectares, while agricultural production increased sixteenfold.
In the country’s early days, faced with conditions not naturally favourable to farming and scarce water resources, Israelis had little choice but to innovate. Similar stories apply across Israeli industries and the country is today the world leader in number of start-ups per capita.
According to “Start-Up Nation Central”, a nonprofit focused on building bridges to Israeli innovation, the ‘Start-Up Nation’ is home to 390 companies within the AgriFood-Tech industry, 29 of which it categorises as “established” and nine as “public.” Israel is also home to a number of multinational corporations with R&D operations in Israel such as Bayer – one of the largest pharmaceutical and life sciences companies in the world.
Israel’s AgTech success has been encouraged through its supportive ecosystem, comprised of academic institutions, incubators and accelerators, venture capital firms, and government support. For example, the Israeli Innovation Authority (IAA) is a publicly-funded agency that works with incubators to provide grants to startups, including AgTech pilots.
One of the best-known Israeli AgTech companies is Netafim, a manufacturer of irrigation equipment. This world leader in drip irrigation was valued at US$1.9 billion (A$2.46b) several years ago, but Netafim is far from the only success story.
Taranis, a precision agriculture intelligence platform, was founded in 2015 and has raised over US$60 million in funding. The company helps growers and crop consultants by using drones to capture high-resolution images of fields (at “leaf-level precision”) and artificial intelligence (AI) to detect a variety of risks (including diseases, insects, weeds, and nutrient deficiencies). It has expanded to the US, Brazil, Russia, Bulgaria, Australia, New Zealand, and Indonesia.
Also founded in 2015, CropX “sells cloud-based software which aims to boost crop yields by focusing on saving water and energy.” Its self-installable sensors are placed in soil and, using real-time data, its AI-based analytics provide actionable insights, resulting in 30% water savings and 10% crop-yield enhancement. It has expanded its market to include the US, Mexico, Australia, New Zealand, and the United Arab Emirates.
Agriculture is a vital part of Australia – not just to its economy but to its national identity (research conducted in 2012 found 69% of Aussies believe agriculture “plays a significant role in what it means to be Australian”).
Agriculture accounts for 55% of Australian land use and contributes 3% to GDP – but taking into account value adding such as processing and retail, that contribution rises to 12%.
Australia exports over two-thirds of its agricultural production and ranks as the world’s 12th largest exporter of agricultural products. The industry has an expected value of A$71.2 billion this year. However, many have higher aspirations for the industry’s future. The National Farmers’ Federation (NFF) has set an agricultural production goal of A$100 billion by 2030, and much work has gone into making this objective a reality, particularly by the NFF and the Australian Government. This year’s estimate is up from the A$59 billion in 2017, but there is still a long way to go.
The Department of Agriculture noted in a recent report that achieving this goal “will require a significant increase in productivity, increased market access and diversification.”
The key to all this? AgTech. It has the potential to “boost the value of [Australian] production by $20.3 billion” according to analysis by the Australian Farm Institute.
As previously noted, AgTech is undergoing significant growth across the world, but, as the Australian AgriTech Association put it, “Sadly, Australia has not yet managed to attract a significant proportion of this investment” – only US$29 million of the US$16.9 billion invested globally in 2018. This statistic is unfortunate given how well-positioned the country appears to be at the forefront of AgTech.
The Australian Trade and Investment Commission (Austrade) breaks down “Why Australia?” into several key factors, including: “Research excellence,” “Strong government support,” and “An ideal test market.”
In terms of research, Australia is home to 43 universities, six of which are among the top 100 universities in the world and 24 of which are rated world-class and above for agriculture. These universities are producing cutting-edge agricultural research, but commercialisation often falls short.
Australia is home to six different climatic growing conditions and a diversity of soil, making it an ideal test market. Austrade states, “The nation’s high-quality raw materials and ingredients, infrastructure and multicultural population allow organisations to trial and develop solutions relevant to multiple markets.”
As outlined in a report on “realising the potential of AgTech for Australia” produced by StartupAUS, KPMG, the Queensland Government, and the Commonwealth Bank, boosting AgTech would create significant opportunities for Australia, including in terms of more sustainable use of resources, new exports, improved productivity, new investments, increased revenue, and jobs created.
But Australia does not need to do this alone. Collaborating with other countries, such as Israel, can potentially speed up this essential transformation.
A joint effort involving Australia and Israel could elevate the two as AgTech powerhouses, each offering unique benefits – Australia as an agricultural production hotbed and Israel as a hi-tech “Startup Nation.”
As mentioned, Australia is an ideal test market. For Israel, this means the country is the perfect place to pilot its innovations while preparing for a global launch. Several companies have done exactly that.
Edete is an Israeli startup that offers artificial pollination solutions; its technology collects, stores, and distributes pollen, helping increase production yields – a particularly pressing issue given 75% of crops rely on pollination even as bee populations are declining.
Edete’s technology has been applied to almonds, and its insect-pollination methodology can be used across other plants too, ranging from apples and cherries to pears and plums. So far, the company has developed pollen banks in Israel and Australia, and it is also expanding into the US. Unfortunately, due to COVID, it has had delays in Australia; however, when it resumes efforts – hopefully next year – its technology could well be especially impactful.
The almond market, estimated at US$7 billion, suffers the most from the pollination problem. Australia is one of the world’s top almond growers. For this reason, Edete has chosen to focus its initial efforts there, according to Keren Mimran, Edete co-founder and Vice President for Business Development and Marketing.
Edete is also in the midst of securing funding for its Series A round. It has already attracted the backing of major investment companies in both Israel and the US, and Mimran says it’s also in discussions with Australian companies.
Mimran also commented on the potential for another type of Australia-Israel collaboration beyond testing and funding: research. Edete was recently approached by a leading researcher in Australia studying artificial pollination and while nothing is underway yet due to COVID, there is a strong possibility of joint research efforts in the near future.
Another Israeli AgTech company following a similar trajectory to Edete is the previously described CropX – focused on soil analytics using sensors. CropX also views Australia as an attractive market.
Matan Rahav, Director of Business Development at CropX, commented exhaustively on the reasons for Australia’s attractiveness for Israel AgTech companies: it being an “an agricultural country,” recent technological advances that go hand in hand with local receptiveness, seasons opposite to the US, English-speaking and culturally approachable for business, and an established need for careful irrigation management.
Collaboration opportunities go the other way too. Israel’s innovation success offers policy strategies that could be adopted in Australia to help grow the local AgTech scene.
Ben van Delden is a partner at KPMG Australia and its head of AgTech. In 2017, van Delden took part in an Australian Agri-Food Trade Mission to Israel run by the Australia-Israel Chamber of Commerce, and observed first-hand the Israeli approach to agricultural innovation.
Since then, he’s been at the forefront of helping Australia adapt some of these lessons. One of many things van Delden emphasises is a need for commercialisation of research. He says of the more than $3 billion Australia invests into research, “too much of that just stays in the local lab. As I discovered, that doesn’t translate into the hands of industry for application and commercialising.” Meanwhile, universities in Israel prioritise commercialisation, have extensive technology transfer offices, and retain entrepreneurs as professors. One of van Delden’s recommendations is more such cooperation and collaboration between Australia and Israel, including research exchanges between the top universities in each country.
One prominent example of such increased cooperation and collaboration came about recently through the efforts of the Blue River Group, an Australian impact investment services firm. Blue River Group established BridgeHub three years ago as an Agri-food Tech innovation centre. Its work has included operating an Australian ‘Landing Pad,’ which, in the words of co-CEO and co-founder Craig Shapiro, helps with “bringing technologies from overseas to trial and testbed to build their exposure and opportunities in Australia.”
Much of this technology originates from Israel, where BridgeHub established its first global office.
Shapiro also commented on the opportunities offered by Israel’s innovation ecosystem: to collaborate but also to learn from and replicate elements of what Israel does.
Like van Delden, Shapiro draws attention to the fact that Australia has been poor at “converting really good research” into commercial products – an area in which Israel has excelled. He further notes “that was the beginning of our process of trying to look for a way to build that connectivity between Australian and Israel but also the whole globe, because we need to – here in Australia – be more globally connected.”
One of BridgeHub’s primary goals is to “try and commercialise research from Australia and take it global” – what it calls “launchpad activities.”
One Australian startup that has benefitted from the efforts of BridgeHub is FarmLab – which produces “agronomy and project management software”, and offers a “platform to help agronomists, consultants and farmers better map, sample and analyse soil using the latest in soil science and digital soil mapping techniques.”
In 2019, through the evokeAG Pitch Tent competition, FarmLab won the Austrade Bridge Hub Special Prize. This included a 10-day trip to Israel for FarmLab founder and CEO Sam Duncan.
Duncan says this trip opened his eyes. Before it, he says, “I’d heard about Israel on the periphery, and I knew a little bit about it.” Now, he comments extremely positively about what he observed, and notes one cultural challenge perhaps standing in Australia’s way: “tall poppy syndrome”.
Overcoming this attitude could greatly benefit Australian AgTech startups, FarmLab included, he says.
Duncan has stayed in touch with connections he formed in Israel, particularly entrepreneurs focused on analytics and databases. With these “potential partners over there,” Duncan notes, there is major scaling potential for FarmLab to enter the US market through this “combined effort.”
But besides challenges to collaboration such as the cultural one pointed to by Duncan, there are also logistical hurdles. The two countries are at near opposite ends of the globe, and with this, comes lengthy flights. Moreover, other travel restrictions also make things more difficult. Even with the possibility of direct flights in the future as we emerge from COVID, as Shapiro put it, “flights are one thing, but …if you can’t have free-flowing movement because of visa restrictions, then they’re not really worth too much in a business sense.”
This is one of several impediments to collaboration that a proposed Australia-Israel FTA could directly resolve.
Another opportunity for collaboration exists around carbon emissions, Van Delden says of Australia. One product offered by FarmLab is a soil carbon offset report. Given its huge landmass and relatively small population, Duncan believes Australia has “not just an opportunity, but a… duty to provide carbon offsets” – projects that remove greenhouse gases from the atmosphere in order to compensate for emissions made elsewhere.
He refers to the trade in carbon offsets as a “big opportunity…over the next five, ten years.” While it’s still being developed, he calls attention to the benefit that some sort of trade agreement could have related to this area. Early collaboration could have huge benefits on climate change globally, he says.
There are also other “real game changers” – as van Delden refers to them – that need some focus. These are the opportunities further up the value chain, including around creating more sustainable packaging and reducing waste, and “the capabilities of Israeli technology and research” could help on this front.
Collaboration – around the world – does pose a risk, though. The rapid digitization of agriculture is accompanied by an increased threat of cyber-attacks, warns van Delden. He notes how this new technology can serve as a “weak link entry point” to the “hundreds of thousands of animals,” “feeding systems,” “harvesting solutions,” “the list goes on.” With safeguards in place, however, particularly from an FTA perspective, this risk can be mitigated.
Safely opening more doors between the countries has the potential to get more Israeli companies (like Edete) testing and expanding in Australia, more Australia entrepreneurs (like Sam Duncan) excited about forging ties, and more ways to sustainably move into the future. But all of this hinges on removing as many barriers as possible to doing business.
Free Trade Agreement
Since February of this year, Australia’s Department of Foreign Affairs and Trade has been conducting a feasibility study on strengthening trade and investment with Israel, with a view to possibly seeking an Australia-Israel free trade agreement (FTA).
This potential FTA is not the first attempt to strengthen trade ties between the two countries. In 2017, they signed a Technological Innovation Cooperation Agreement, and in 2019, a Double Taxation Agreement. That same year, the Australian Government also opened an Australian Trade and Defence Office in Jerusalem, and a few years prior – in 2016 – Austrade established the Australian Landing Pad in Tel Aviv.
But there’s still room for further encouragement of bilateral trade and investment – and an FTA would enable exactly that.
While traditionally defined as “An agreement between two or more countries under which they grant each other preferential market access,” these days, FTAs often encompass more than just tax and tariff agreements. Modern FTAs go as far as including stipulations regarding visas and intellectual property protection, two areas that could play an important role in strengthening future AgTech ties between the two countries.
As stated by DFAT, Australia’s FTAs provide: “better Australian access to important markets, an improved competitive position for Australian exports, more prospects for increased two-way investment, reduced import costs for Australian businesses and consumers alike, new or better access to markets for services exports, guarantees of existing services access in some areas, reduced regulatory barriers in different service sectors, improving mobility for business travel, and enhanced protections and certainty for investors.”
This possible FTA is very much in its early stages; negotiations are yet to begin, and once they do, they could take a long time.
For its feasibility study, DFAT received 28 non-confidential submissions from businesses, groups and individuals, which are published online – including one by AIJAC. Numerous submissions pointed to an agreement’s tremendous potential benefits, spanning numerous different industries.
An FTA would further open doors to the collaboration opportunities previously described – particularly related to development, commercialisation, and scaling – and thus help promote the future growth of AgTech more broadly.
Australia has already seen the value of such agreements, demonstrated by the 15 it currently has in place with 26 countries.
AgTech’s counterpart, agriculture, is likely to be the most complicated sector to negotiate, as is often the case. FTAs carry a great deal of importance in that industry, especially in Australia where the majority of agricultural production is exported.
The NFF notes that “More than 80% of Australia’s farm exports go to countries which have signed FTAs with Australia.”
In Israel, in contrast to most imports, high tariffs are imposed on a range of agricultural goods coming into the country. If this can be alleviated, there is a significant opportunity for Australia. As noted in an article published by the Australian freight company TGL (“Australia Exploring the Benefits of Free Trade Agreement with Israel”, May 4), “without a free trade agreement between the two countries, Australia’s export of agricultural goods has little chance of competing in the [Israeli] market due to Israel’s established agreements with USA, Canada and the EU.”
There is less opportunity for Israeli agricultural exports to Australia to grow, given that over 90% of the food consumed in Australia is produced here.
Yet regardless of how the agriculture clauses pans out in any FTA, AgTech’s benefits from an FTA are clear and strong. Given how important this industry sector is likely to be in the future, and the opportunities it will almost certainly create, the benefits to AgTech alone make a strong case for an Australia-Israel FTA.