Agritech Industry Transformation Plan - GROWING INNOVATIVE INDUSTRIES IN NEW ZEALAND
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GROWING INNOVATIVE INDUSTRIES IN NEW ZEALAND Agritech Industry Transformation Plan JULY 2020
ISSN (Online): 978-1-99--001912-8 ISSN (Print): 978-1-99--001913-5 July 2020 Photo credits: New Zealand Story and NZTE ©Crown Copyright 2020 The material contained in this report is subject to Crown copyright protection unless otherwise indicated. The Crown copyright protected material may be reproduced free of charge in any format or media without requiring specifc permission. This is subject to the material being reproduced accurately and not being used in a derogatory manner or in a misleading context. Where the material is being published or issued to others, the source and copyright status should be acknowledged. The permission to reproduce Crown copyright protected material does not extend to any material in this report that is identifed as being the copyright of a third party. Authorisation to reproduce such material should be obtained from the copyright holders. 2
AGRITECH INDUSTRY TRANSFORMATION PLAN
Contents
Foreword: Hon Phil Twyford, Minister for Economic Development....................... 2
Foreword: Peter Wren-Hilton, Executive Director, Agritech New Zealand............. 3
The future for New Zealand Agritech ................................................................... 4
› Document overview ................................................................................................................ 5
› Relationship to industry policy ............................................................................................... 7
› Process for creating this industry transformation plan ......................................................... 7
› Agritech and Mātauranga Māori .............................................................................................8
Part 1 – Context, Challenge and Opportunities ..................................................... 9
› Context and history.................................................................................................................9
› Agritech and the food and fbre sector................................................................................. 10
› New Zealand’s agritech sector............................................................................................... 11
› Why agritech? ........................................................................................................................13
› Megatrends affecting agritech ..............................................................................................14
› Obstacles and constraints .....................................................................................................15
› Advantages & opportunities..................................................................................................21
Part 2 – The Response........................................................................................ 24
› Vision..................................................................................................................................... 24
› Strategic decisions................................................................................................................ 24
› The agritech ecosystem ........................................................................................................ 26
› Dependencies and linkages................................................................................................... 27
› Outcomes .............................................................................................................................. 27
› Existing agency work programmes.......................................................................................28
› Industry (Agritech New Zealand) Workplan .......................................................................... 29
Part 3 – Action Plan............................................................................................ 33
› High Impact Projects............................................................................................................. 33
› Ecosystem development plan ...............................................................................................36
Conclusion and next steps ................................................................................. 49
1
Foreword
HON PHIL TWYFORD,
MINISTER FOR ECONOMIC DEVELOPMENT
In New Zealand, agritech is in our blood.
New Zealand’s frst innovation was in agricultural
technology. Our earliest settlers – both the Māori
and the Europeans who followed them many
years later – found a land rich with opportunity
and potential, but also with challenge. They
needed to learn how to work with the whenua,
the land, to nourish and feed themselves, and
the technology they created helped New Zealand
become a world leader in farming innovation.
Today the world needs healthy and trustworthy
food and fbre products more than ever before.
While we are not perfect, New Zealanders have
been on a journey to work out how best to
be productive and sustainable in our farming
practices and we believe we have value and
ideas to offer the world.
We know we need to learn from others,
The plan outlined in this document will be a
and accelerate our efforts, and that is why
collaboration between government, industry,
I am pleased to introduce this ‘Industry
investors and the research communities working
Transformation Plan’, which is a blueprint for
in unison to grow the agritech sector. It will
how to build on New Zealand’s traditional
evolve as we learn more about how best to
strengths while also accelerating our
work together to achieve our vision of a globally
development of technology for use on the farms,
competitive agritech ecosystem, producing
oceans and orchards of Aotearoa, and beyond.
ingenious value-adding companies that provide
New Zealand has the opportunity to be a meaningful jobs, solving New Zealand and the
world leader in this area, and to see signifcant world’s sustainability problems
economic beneft from our activities, while
We believe that New Zealand Agritech is good
also using technology to reduce our impact
for the world.
on the land. Agritech is right at the nexus of
New Zealand’s past, and future.
In recognition of the importance of the agritech
sector, the Government has committed
$11.4 million in funding as part of Budget 2020
to support the implementation of this plan. Hon Phil Twyford
2
AGRITECH INDUSTRY TRANSFORMATION PLAN
Foreword
PETER WREN-HILTON, EXECUTIVE DIRECTOR,
AGRITECH NEW ZEALAND
The opportunity for New Zealand to
be a global leader in agritech is clear.
It’s this opportunity that brought the industry
together to form Agritech New Zealand,
representing a wide cross-section of over
130 members of New Zealand’s agritech
ecosystem – industry, research, government
& investment.
Over the past year, Agritech New Zealand
has hosted over 500 sector professionals at
workshops around the creation of the Industry
Transformation Plan (ITP) and that input has
helped us collectively ensure the ITP meets
the needs of the sector and is focussed on the
opportunity we have. That’s critical.
Agritech New Zealand has acted as the key
sector interface with the government’s agritech
taskforce, and we are delighted to see the depth
Agritech New Zealand looks forward to working
of collaboration between government and
with government and the wider New Zealand
industry in the preparation of this Plan. It has
agritech ecosystem as we move onto this next
been inspiring to watch the real and valuable
critical phase.
inter-agency collaboration that has taken place.
Collectively, we have successfully transitioned
our sense of shared purpose into a meaningful
set of actions and initiatives. I believe this can
only assist with the next phase of the Plan’s
roll-out – its delivery. Peter Wren-Hilton
3
The future for
New Zealand agritech
This document captures an overview of While the above remains true, it is also clear that
the agritech sector in New Zealand and our strong food and fbre sector and expertise
in this area represents an opportunity to grow
outlines a series of actions to accelerate
the agritech sector as an economic driver in its
its growth. own right, particularly as an export industry.
Agricultural technology, or agritech, is an area of This is the primary reason why the sector has
signifcant interest for New Zealand. Historically, been selected as a priority area under the
agritech has been predominantly valued for its Government’s refocused industry policy.
input into New Zealand’s food and fbre sectors Through this Industry Transformation Plan
and as a key driver for increasing productivity, (ITP), the Government aims to provide the
quality and sustainability across the entire food agritech sector with the support to accelerate
and fbre production and supply value chain for its growth, attract necessary investment,
New Zealand. Agritech is central to driving more increase commercialisation of New Zealand
effcient land use and management for better agritech intellectual property (IP), address global
environmental outcomes spanning water quality, opportunities and increase exports, develop
reduced methane, nitrous oxide and carbon needed skills and address regulation and data
dioxide emissions; both domestically and across interoperability issues.
export markets.
DEFINING AGRITECH
We use the phrase ‘agritech’ broadly. For the purposes of this document, the ‘agritech’
sector refers to manufacturing, biotech and digital-based technology companies that are
creating product, service, IP and value chain solutions for the agriculture, horticulture,
aquaculture, apiculture and fshing sectors, with the aim of improving yield, effciency,
proftability, sustainability, reliability, quality or adding any other kind of value. Forestry
is excluded because forestry and wood processing is the focus of another dedicated ITP.
Figure 1 opposite shows some of the different aspects captured by ‘agritech’.
4
AGRITECH INDUSTRY TRANSFORMATION PLAN
Figure 1 – Agritech’s broad applicability
DOCUMENT OVERVIEW We look at the constraints and obstacles
to growth for the sector and explore why
This ITP sets out an approach to the long-term
New Zealand agritech has failed to meet
transformation of the agritech sector to make
its potential to date. We will also look at
it more productive, sustainable and inclusive
New Zealand’s advantages and opportunities
as part of a zero-carbon economy. It has been
for growth.
prepared with a cross-government approach and
in consultation with industry and the broader In Part 2 of this document, we set out an agreed
agritech ecosystem. vision for the sector, outline a response to the
issues presented in Part 1, focusing primarily
In Part 1 of this document, we present the
on the factors that industry, government,
context, challenges and opportunities for the
workers and the broader agritech ecosystem
sector. We start with an overview of the context
can collaborate on together. We also note the
and history of the sector, outlining why agritech
ongoing work in this area by both government
is of importance and interest to New Zealand.
and industry.
We will examine some of the major factors
In the fnal section, Part 3, we outline an action
impacting the sector globally, and their
plan, consisting of High Impact Projects and a
implications for agritech in New Zealand.
broader ecosystem development plan, to help
the agritech sector achieve its vision.
5
CASE STUDY
Halter
1
Harnessing Natural Intelligence The system lets farmers shift livestock
remotely or bring them in for milking
Halter’s innovative animal management
without even stepping outside. It also tracks
system opens up new possibilities for
individual feed intake and gives early alerts
livestock farming.
for potential health concerns – all adding up
Halter features a GPS-enabled, solar-powered to time and labour savings, healthier animals,
cow collar that uses sound stimuli to gently and the potential to transform pastoral
direct livestock on-farm and keep them away livestock farming.
from waterways or hazards, all controlled via
www.halter.co.nz
smartphone or tablet.
Halter.
Source: NZTE
6
AGRITECH INDUSTRY TRANSFORMATION PLAN
RELATIONSHIP TO INDUSTRY fbre sector, and our existing expertise and
POLICY investment in this area. The emergence of
Agritech New Zealand and their role in providing
In July 2019, the Government released its
a cooperative partner for the Government in this
refocused approach to industry policy. This
sector was also an important factor.
approach was subsequently updated in
June 2020 in response to the impacts of New Zealand agritech will be transformed
COVID-19. The core of this new approach is through the application of the guiding principles
the development of sector plans or Industry of industry policy: taking a partnership-led
Transformation Plans (ITPs) for selected sectors approach; building a strong evidence base
of the economy where there are opportunities for action; using specifc sector strategies;
to lift productivity and growth, and for those leveraging international connections; providing
sectors where signifcant transition is required. clear and consistent signals from government
and industry; ensuring activity is supporting
For some selected sectors, an ITP will be
better jobs ; working in partnership with Māori;
developed. An ITP is a long-term strategy
ensuring short-term actions are consistent with
developed with key stakeholders across the
our long-term vision; and ensuring our activity is
wider sector ecosystem that provides a clear
contributing positively to sustainability goals.
picture of the challenges and opportunities faced
by each sector, agrees on a long-term vision We know that a ‘business as usual’ approach
and sets out an action plan that spans a wide will not result in transformation. Funding the
range of areas, including research, science and activities and initiatives resulting from this work
innovation, trade, education and skills. will be a critical part of ensuring the actions
lead to meaningful growth. Refecting this, the
Agritech was selected as a priority sector
government has committed $11.4 million as part
because of its importance to New Zealand’s
of Budget 2020 to implement the action plan of
transition to a highly productive, low-emissions
this agritech ITP.
future, its adjacency to our strong food and
A VISION FOR AOTEAROA’S AGRICULTURE, FOOD AND FIBRES SECTOR
A future vision for the food and fbre sectors of New Zealand, developed by the Primary
Sector Council, was launched in December 2019.
The vision, Fit for a Better World, is ambitious and provides a guiding point to the overall
direction of the food and fbre sectors. It speaks to the role of our food and fbre sectors
through the values of integrity, guardianship, ingenuity and respect. It can be found at
www.ftforabetterworld.org.nz.
Though the agritech ITP work has a distinct focus, the agritech sector has an important
role to play in the realisation of the vision, and the agritech ITP will help enable this by
describing the actions and industry progress that need to happen to deliver on elements
of the overall food and fbre vision.
7
PROCESS FOR CREATING THIS This shows how this ITP should be seen as a
INDUSTRY TRANSFORMATION PLAN ‘living document’, and a continuing process
of defnition, refnement, execution and
The ITP process is an iterative and continuing one
measurement as we continue to work on
beginning in February 2019, with engagement
ways to accelerate the growth of the sector.
between industry and government agencies on
the concept of developing a transformation plan. AGRITECH AND MĀTAURANGA
Over the subsequent months, progressively more
MĀORI
complete drafts were developed and released
for comments and consultation. Between July We acknowledge the special role of mana
2019 and March 2020 a series of workshops and whenua in all discussions relating to the land
1:1 meetings were held to revise the draft plan and we believe Māori have important roles
and develop the set of actions that make up this across many parts of this ITP.
fnal agritech ITP. In all, well over 500 people As a treaty partner, Māori have rights and
and organisations have helped to strengthen interests in the development of a vision and
this plan. action plan for the agritech sector, but beyond
In developing the detailed action plan, it is this obligation, they also provide a unique
apparent that the plan will continue to evolve viewpoint that improves the ITP as a whole.
as we have a number of activities that can be As such, a deliberate effort has been made
accelerated, and some High Impact Projects to include their perspective in this document
that are suitable for additional focus. In and this will continue as the ITP evolves and
addition, there are other activities we have throughout implementation.
highlighted that will require further refnement Māori are involved as kaitiaki of the land, as
and defnition, and workstreams will continue creators of agritech businesses, and as users
to develop. of technology. They are investors, researchers
After an analysis of the potential impact of the and help to govern and regulate the agritech
COVID-19 restrictions on global travel mobility, ecosystem. In this way, the representation of
we have reworked aspects of the action plan mana whenua cannot be understated.
to accelerate activities that are within New In addition, we see that the results of the work
Zealand’s control and borders. We will work to outlined in this ITP will help create high-skilled
ensure we keep relevance and market share in work opportunities both on-farm, and within
international markets of interest, but while we agritech companies.
await a more normalised travel environment, we We intend to continue with consultation with
will work quickly on the items of the plan with a Māori as we implement the action plan, and as
strong domestic focus initially. it becomes clearer how the agritech ITP works
alongside other initiatives in the food and
fbre sector.
8 Invert robotics.
Source: NZTEAGRITECH INDUSTRY TRANSFORMATION PLAN
Part 1 – Context, Challenges
and Opportunities
Agricultural innovations have long been a vital part of Aotearoa New Zealand’s
economy.
CONTEXT AND HISTORY innovation has allowed us to further improve the
productivity of our work and serve new markets.
Innovation comes from necessity, and the frst
Māori settlers to New Zealand were faced with The innovation of refrigerated shipping in 1882
that necessity on their arrival. Finding the climate allowed New Zealand to sell meat overseas,
too temperate for growing their favoured crop, adding to the export staple of wool. New breeds
the sweet potato, they created a way to build of sheep and new farming techniques increased
small walls around the pits the kumara were the variety and yield of the agriculture sector.
grown in. This allowed the rays of the sun to be Dairy farming innovations and novel cooperative
absorbed during the day, and warm the earth in models allowed New Zealand to establish
the evening, elongating the growing period. ourselves as a leading provider of globally traded
dairy products.
New Zealand’s agricultural technology sector
was born. The 20th century saw the creation and adoption
of technology that propelled New Zealand to a
The story of New Zealand is entwined with the
leading position in agritech. Innovation such as
story of the land and sea, and how ingenuity has
the electric fence, the milk meter, improved grass
allowed the last major land mass on the planet
cultivars, and selective breeding techniques and
to be populated. From the early settlers learning
understanding of genetics all allowed for higher
to work with New Zealand’s incredibly varied
productivity and helped the food and fbre sector
landscapes, to the variety of crops and animals
to be the major factor in growing New Zealand’s
the land has come to support, technological
economy.
Farming couple use a device to survey their farm.
Source: NZ Story
9In response to the shock of the UK’s entry into Minister Helen Clark. The activities and initiatives
the European Economic Community in the 1970s, set in motion from that conference set to further
and the rapid restructuring of the economy diversify the New Zealand economy and reinforce
through the 1980s and 90s, the food and fbre the strategy of a diversifed, value added
sector continued to diversify into new areas like economic development approach.
deer farming, wine production, aquaculture, In 2018, the agritech industry group ‘Agritech
honey and a large variety of horticultural crops. New Zealand’ formed as part of NZ Tech’s ‘Tech
Each stage of growth has required innovation, Alliance’ and has successfully brought together
an increasing reliance on the benefts of a number of industry parties and companies.
technology and an eye to changing global They have subsequently joined with the Precision
markets. Agriculture Association of New Zealand (PAANZ),
In 2001, the country considered the role of and this combined industry group provides a
disruption and innovation during the ‘Knowledge good counter-party for government activity
Wave’ conference, co-hosted by then Prime in the sector.
DEFINING THE PRIMARY SECTOR AND THE FOOD & FIBRE SECTOR
In the context of this document, when we refer to the primary sector, or the food and
fbre sector, we are referring to agriculture, horticulture, aquaculture, apiculture and
fshing, and excluding forestry and mining/extraction.
Forestry is excluded because forestry and wood processing is the focus of another
dedicated ITP.
Additionally, throughout this document phrases such as ‘farmers’ or ‘on-farm’ are used.
These should generally be interpreted in a broader context e.g. farmers refers to those
individuals directly involved in producing primary products, including growers, beekeepers
or fshers; while on-farm refers to the area where primary activity is occurring, including
orchards, vineyards, or marine farms.
AGRITECH AND THE FOOD AND to the levels of sustained growth and value
FIBRE SECTOR creation the sector would like to see. Nor has it
adequately addressed a number of sustainability
Since 2001 however, while there has been
and environmental issues such as those around
progress in many dimensions, it is also true
water quality, climate change and the provision
that we have not achieved the productivity
of secure, high-value jobs.
levels expected, given our favourable economic
settings. The food and fbre sector has had Today, the food and fbre sector remains a huge
impressive growth, but not to the degree part of our economy. In addition to the direct
anticipated. On-farm productivity of the benefts the sector provides, there are signifcant
agricultural sector has grown at a compounded fow-on impacts to the wider economy. The
annual rate of 3.5 per cent over the ten years to majority of our manufacturing output depends
20181. Yet, when considered alongside related on the food and fbre sector as its key input
manufacturing, the sector overall is still not and a huge number of service industries exist
reaching its potential, and our farmers continue to support either the food and fbre sector
to face many challenges. So while agritech or the manufacturers adding value to our
has enabled improved productivity, quality food and fbre products. Including processing
and yield, it has yet to provide a breakthrough and commercialisation activities, the sector
1 Labour productivity of agriculture 2008-2018, Productivity Statistics, Statistics New Zealand, MBIE analysis.
10AGRITECH INDUSTRY TRANSFORMATION PLAN
accounts for 11 per cent of GDP, and 15 per Size of the New Zealand agritech industry
cent of employment2. Additionally, the sector
Government is aware of over 950 likely agritech
contributed $36.3b in exports, or 44 per cent of
companies that have engaged with Callaghan
New Zealand’s total exported goods and services
Innovation, New Zealand Trade and Enterprise
in 20183.
(NZTE) or are members of Agritech New Zealand4.
It is also the cornerstone of our regions. Far and This is only a subset of the broader agritech
away the majority of economic activity outside sector but is expected to capture the most
of our cities is dependent on our food and fbre signifcant frms in the sector.
sector.
Agritech frms’ areas of activity
NEW ZEALAND’S AGRITECH For Callaghan Innovation customers we can
SECTOR provide a breakdown of areas of activity by
frm number. The largest sector is ‘Growing &
Due to the absence of a universally agreed
Harvesting’, with ‘Data Solutions’, ‘Environment
defnition of agritech and the cross-cutting
Management’, and ‘Animal & Crop Health’ of a
nature of the sector, providing statistics on the
similar size5.
make-up of the sector is challenging. Improving
the measurement of the sector and developing
more useful agritech statistics will be an
important part of our work.
Callaghan Innovation agritech customers areas of activity
% of Callaghan Innovation agritech customers
0 2 4 6 8 10 12 14 16 18
Automation & Equipment
Farming & Aquaculture
Robotics & UAVs
Software
Sensors
Analytical Testing Growing & Harvesting
Supply Chain Management Data Solutions
Environment Management
Pest & Bio Control
Animal & Crop Health
Water, Cleaning & Waste
Other
Genetics & Breeding
Nutrition
Pharmaceutical
Fermentation
Indoor Growing
2 Due to data limitations, these fgures include forestry. Situation and Outlook for Primary Industries June 2019, Ministry for
Primary Industries.
3 Situation and Outlook for Primary Industries June 2019, Ministry for Primary Industries; Goods and services trade by country:
Year ended December 2018, Statistics New Zealand.
4 Analysis by MBIE of Callaghan Innovation, New Zealand Trade and Enterprise, Agritech New Zealand databases.
5 Callaghan Innovation database.
11Agritech start-up activity
The New Zealand agritech sector is showing mature frms amongst Callaghan Innovation
a healthy level of start-ups and new entrants managed customers6.
actively emerging. These companies outnumber
Callaghan Innovation agritech customers by life stage
Early Stage Growth Stage Mature Firms
42% 20% 38%
Agritech sector export trends
In terms of export goods revenue (according fbre sector, and that the level of investment in
to limited, but best available data), the agritech agritech worldwide has increased by 36 per cent
sector has remained fairly stable between per year for the fve years to 20188. However,
$1.1b and $1.2b over the last fve years7. This is it should be noted that this fgure only includes
a relatively static and unimpressive number goods not services, due to the lack of data
when considering the strength of our food and specifc to the agritech sector.
Value of New Zealand agritech exports over time ($ millions)
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
2014 2015 2016 2017 2018
6 Callaghan Innovation database.
7 Analysis of trade codes by MBIE using the method described by Coriolis, September 2014, New Zealand’s Agritech Sector.
The estimate relates only to agritech exports for pastoral farming and it should be treated with extreme caution due to the
limitations of the analysis.
8 Upstream Annual Financings, AgFunder, AgriFood Tech Investing Report 2018.
12AGRITECH INDUSTRY TRANSFORMATION PLAN
WHY AGRITECH? Improving sustainability and productivity
The main intention behind the Agritech provides opportunities for New Zealand
to improve the sustainability and productivity
Government’s focus on agritech is to
of its food and fbre sector. This is crucial for us
grow the sector as an economic driver in
to achieve many of the goals we have for the
its own right, with particular emphasis sector and the wider economy, particularly in
on high-value export opportunities and terms of reducing emissions and preventing
further diversifying our economy. environmental degradation. These in turn are
important for maintaining social license for
The Government’s ambition is to grow the farming, as well as a competitive advantage as
agritech sector so it is better equipped to service consumers are increasingly concerned with food
both the domestic and international market. quality and health, and with the sustainability of
New Zealand possesses a number of comparative the environment.
advantages when it comes to agritech. If we
Additionally, smart use of technology, together
can effectively exploit these advantages, we
with a skilled workforce, will enable industry and
stand in a good position to increase our share
companies to shift from volume to value, in their
of the global market. Some of these advantages
output and exports, supporting a broader aim to
include:
move New Zealand up the value chain globally. As
› Our strong complementary food and fbre markets are increasingly more sophisticated, and
industry; business models expand (eg to include service
› Our small market size – ideal for testing elements), innovation in technology will allow
technologies; New Zealand businesses to retain leading market
› Our ingenuity in developing solutions and positions.
world-class research;
Contributing to global challenges
› Our strong pasture-based management
The global market for agritech is driven
systems;
by increasing food demand resulting from
› Increased international investment activity. population growth and increasing environmental
Adopting a more global focus will help us break challenges, linked to climate change impacts.
out of our domestic-market-oriented path In order to meet the nutritional needs of up
dependency, which is particularly focused on to ten billion people by 2050, food production
pastoral based systems. Digital technology is will need to increase drastically. Clearly,
also a key part of the agritech sector, allowing for New Zealand cannot feed the world on its own.
‘weightless exports’ to be a feature of the sector However, New Zealand has the ability to develop
and helping overcome some the challenges of production-improving technology that could
our geographic isolation. conceivably have a global impact.
In addition to this primary objective, growing As agricultural emissions make up nearly half
the New Zealand agritech sector will drive other of our greenhouse gas emissions9, agritech also
major benefts for New Zealand: represents one of our most powerful tools for
reducing emissions and combatting climate
change.
9 New Zealand’s Greenhouse Gas Inventory 1990-2017, published April 2019.
13MEGATRENDS AFFECTING Demographic changes are affecting the
AGRITECH available workforces for agritech and
adjacent sectors
The landscape of the food and fbre
Whereas a changing population in market will
sector and agritech globally is changing impact the sector, our changing demographics
rapidly. There are a number of ongoing and culture will also have an impact, particularly
trends that will impact our agritech across agritech and adjacent sectors’ workforces.
companies and farmers. Our future is likely to be more culturally diverse;
with an increasing proportion of the workforce
Changing consumer preferences are identifying as non-European. Additionally, as
impacting demand for food and fbre their participation in the workforce increases,
products our young people have different expectations
With a growing, increasingly urban middle and aspirations for the work they want to do
class, especially in our key Asian markets, the and the sectors they work in. Sectors, including
demand for safe, healthy and convenient food the food and fbre industry and agritech, will
is increasing. There is a growing preference for need to adapt to match those expectations and
spending on services and experiences rather than aspirations if they wish to attract upcoming
basic nutrition. This includes a drive towards talent. Some of this is driven by perceptions
convenience meals and other value-added around social licence and working conditions
foods as well as products for restaurants and in the food and fbre sector.
hotels, which are driving changes around food Policies to support skills and workforce
presentation and packaging, business models development will need to refect the cultural
and the operation of global value chains. shift in our workforce and better meet the needs
Growing awareness about the pressures that of different cultures and ensure that they are
food and fbre production is placing on the developing the wide range of skills needed to
environment and communities is also driving participate in meaningful employment across
demand for sustainable, ethical, low carbon the agritech, and food and fbre sectors.
production and processing techniques, including
Labour supply shortages are affecting the
fair treatment of workers. We are already seeing agritech and food and fbre sectors
the impacts of changing consumer demands
Another key factor impacting the global food and
in New Zealand, as well as internationally.
fbre sector is the increasing labour shortages
Provenance and traceability from farm to plate
that occur, particularly around key seasonal
is also growing in importance. These trends are
demand peaks. The labour issues act both as a
being amplifed by social media and community
constraint to the sector, and a major motivator
opinion on purchasing decisions, requiring
for innovation. We are already seeing some
the food and fbre sector to be better able to
businesses in the sector struggling to fnd
demonstrate its credentials and tell its story
seasonal staff, often in low wage positions.
more effectively than in the past.
This situation raises questions about the
Increased market risk due to global sustainability of such business models and the
political shifts and volatility typically regional communities that may rely
Along with increased market demand, we upon such work.
expect to see increased market risk. Increasing There are additional shortages of higher skilled
protectionism, threats to multilateral institutions labour, both in the food and fbre sector (where
and geopolitical volatility are all likely to disrupt it is needed to facilitate uptake of agritech) and
market access and the competitiveness of in the agritech sector itself (where it is needed to
commodity products. Continued investment develop agritech). Shortages exist in a number
in supporting rules-based international trade of areas, including robotics, data science and
systems and agreements, reducing risks by software development.
diversifying markets and products and shifting
to value-added products and services will be
the best way to insulate ourselves from these
threats.
14AGRITECH INDUSTRY TRANSFORMATION PLAN
Climate change is changing growing COVID-19 brings a new set of challenges
conditions for the food and fbre sector for agritech companies, but accelerates
and adaptation is required some opportunities
How the food and fbre sector interacts with The impacts of COVID-19 and the restrictions in
the environment is a major driver for change. place to prevent its spread bring diffculties for
The changing climate is already resulting in more almost all parts of the global economy. Though
frequent and severe extreme weather events, impacts have been softened by agritech’s
as well as rising sea levels and more destructive strong link to the primary sector, which has
storm surge events. Over the medium- to long- maintained strong levels of demand, agritech
term, changing rainfall, temperature and drought is no exception.
patterns are changing growing characteristics in
In New Zealand agritech frms are struggling
some regions. These changes also increase the
to connect internationally. Some are limited in
risk of biosecurity incursions and have fow-on
their ability to access customers, with cancelled
effects onto biodiversity outcomes. All of this
or delayed projects as a result, while others are
requires an agritech-driven adaptive response
prevented from developing overseas connections
to increase the resilience of our farming and
and future business opportunities.
processing systems.
Start-ups are particularly impacted as there is
Technology and business model an overall hesitancy to invest from international
innovations are evolving rapidly, posing investors due to the ongoing economic
both threats and opportunities
uncertainties, and travel restrictions limit the
Globally, new business models, technologies, ability for start-ups to meaningfully engage
and processes are reinventing food and fbre with overseas investors and demonstrate the
production and consumption, posing both a value of their business. In an April 2020 survey
threat and opportunity to the food and fbre conducted by Agritech New Zealand, 36%
sector. Examples of trends that are likely to respondents noted access to funding as a big
disrupt the way food and fbre are produced issue. Start-ups also have a limited ability to ride
in the future are: out these negative impacts. In a survey during
› Changes to production processes, such as COVID-19 lockdown restrictions, 42% of Callaghan
internet enabled sensors, data analytics, Innovation agritech customers report either a
artifcial intelligence, robotics, high-tech cashfow runway that is either ‘very short’ or ‘run
extraction/packaging techniques, increased out or nearly gone’, which highlights the urgency
automation, gene editing and biotechnology; of the problem for frms.
› Relocated and replicated farming However, COVID-19 is also bringing forward some
environments – vertical urban farming, opportunities as its impacts increase the demand
hydroponic greenhouse production; for agritech products. For example restrictions
on the movement of migrant workers are
› Reinvented food production techniques –
exacerbating labour shortages in the horticulture
lab grown meats, genetically synthesised
sector and increasing demand for automation
foods and 3D printed food; and
solutions.
› The emergence of new business models
(eg social enterprise, change in ownership
models such as corporate farming) and
platforms (eg blockchain).
Some of these trends will mean that the food
and fbre producers and workers of the future
will not necessarily emerge from the current food
and fbre sector but rather, the biotechnology or
digital sectors.
15CASE STUDY
Tiaki :
Precision Seafood 2
Harvesting
A new approach to an old way of fshing
The Tiaki modular harvesting system is an fsh size, and greatly increases protection for
innovative new fshing method and handling small fsh that can swim free through ‘escape
system with the potential to change the way portals’ and non-target fsh (by-catch), which
the world fshes. are released unharmed.
It uses Precision Seafood Harvesting Developed in New Zealand and driven by the
technology. With this technology fsh are desire to deliver better quality seafood and
contained and swim comfortably underwater safeguard the future of our oceans and fsh
inside a large fexible PVC liner, where the stocks, Precision Seafood Harvesting is a
correct size and species can be selected great Kiwi story; the outcome of a Primary
before being brought on-board the fshing Growth Partnership programme between
vessel. the Ministry for Primary Industries, Sealord
The design of the harvesting system allows Group, Moana New Zealand and Sanford Ltd.
fshing vessels to target specifc species and www.tiaki.com
MTS snapper in trawl.
Source: Tiaki
16AGRITECH INDUSTRY TRANSFORMATION PLAN
OBSTACLES AND CONSTRAINTS 2. Agritech innovation has been for largely
domestic use
There are several obstacles and
While there have been a large number of
constraints that have held back
technological innovations, many have primarily
New Zealand’s agritech sector, which focused on domestic production and haven’t
help create an evidence base for action. sought out international markets. This can
be seen in two distinct forms: products and
In considering the current state of the agritech
innovations developed for New Zealand are
sector, we have developed a hypothesis for the
not being adapted for offshore markets; and
slow growth of the sector. There is no single
New Zealand innovators are not looking outside
factor; rather there are a number of interrelated
issues. Some of these are contextual and high of New Zealand for problems to solve. There
level, while others are more specifc issues where are obvious and clear counterexamples to this,
government intervention is warranted. In Part 3 but the domestic ecosystem has tended to
of this document we will build on this to create dominate activity.
an action plan to address the key issues. Large players in the agriculture and food and
1. Our agritech expertise has historically fbre sectors have not necessarily had the
been in relatively specialised areas mandate or desire to develop technology with
a broader focus than their own production
New Zealand’s agricultural expertise has
needs, meaning large potential contributors
predominantly been in pasture-based
to the innovation export ecosystem are not
management systems, refecting the country’s
participating.
longstanding economic comparative advantage
in this area. Sheep and dairy farming have relied Both the commercial and innovation sectors
on a pastoral model which has led to technology have limited international links and exposure
being developed to support this approach. to global agritech issues. Signifcant effort and
investment is required to develop these links
This has had a number of impacts:
and to suffciently understand issues and be in
Firstly, a lack of applicability to a broad range a position to develop solutions.
of international markets. Only a relatively
The Innovative Partnerships model led by MBIE
limited number of international markets have
has created successful frameworks and models
similar pastoral systems to New Zealand
for addressing the challenges of working
(eg Ireland, Chile, Argentina and Uruguay) and
with international partners to focus on global
the predominant farming systems used globally
opportunity. More can be done to build on
(ie feed lots and animals housed in barns) largely
this work.
do not utilise the same sorts of technology
developed in New Zealand. This has led to a In addition, some of the actors in the innovation
limited global demand for New Zealand agritech. ecosystem are directed by legislation, and by
historical priorities, to focus on the domestic
Secondly, the product spaces where expertise
market. This means that developing tech for
has been developed do not have straightforward
a global market will be a signifcant shift in
adjacencies in these more common systems.
operating model and structure for many of them.
Developing expertise in pasture-based systems
doesn’t mean we easily have the ability to apply 3. A disconnected fow of commercialisation
these into other farming methods (partially activity
because, for example, we lack the production Our research institutes are producing high-
testing facilities). quality, valuable research, a signifcant
In addition, the focus on pasture-based proportion of which has applicability into
agriculture has had an opportunity cost, the food and fbre sector.
and meant we have not developed as fully Though New Zealand is signifcantly
opportunities in horticulture, aquaculture underperforming on R&D spending as a
and other alternative growing systems. proportion of GDP compared with the OECD
average, agritech and food and fbre sector
17R&D is one area of strength. $640m was spent but further work will still be required to attract
on R&D for the food and fbre sector in 201810 additional necessary capital and expertise.
($310m by business, $260m by Government and There is also a perceived gap in seed funding for
$70m by higher education). R&D for the food and the agritech sector that is hindering growth and
fbre sector made up one-third of Government limiting commercialisation and the emergence
R&D spending in 2018. of spin outs. More work is required to determine
However, there is a sense that New Zealand the existence or size of any gap in seed funding.
struggles to bring research-based agritech ideas To some extent the fow of commercialisation
to market, meaning they are not fully exploited activity is curtailed by a relatively lower
or commercialised into fnished products amount of corporate venture activity (eg
and services. intrapreneurship) in New Zealand compared
This could be for a number of factors, including to other countries, which in turn has some
gaps in required commercialisation skillsets and connection to our large cooperative based
experience, or regulatory settings. There could organisations, which dominate the agritech
also be a disconnect between the actual market sector.
demand for research/IP versus the perceived
5. Geographic spread and lack of collaboration
demand, particularly if product development
(weak agglomeration)
is not suffciently informed by customer/user
needs. Further work needs to be done to better New Zealand’s geographic spread has hindered
understand these constraints. collaboration between parties, leading to some
duplication of effort, and a lack of innovation
Organisations like Kiwinet and Return on
diffusion. We have a small number of clusters of
Science as part of the Commercialisation Partner
expertise nationally, particularly around Lincoln
Network address some of the challenges in this
University outside Christchurch, around Massey
area, and Callaghan Innovation’s funding of a
University outside Palmerston North, and lately
specialist agritech incubator from April 2020
(particularly in the horticulture sector) in the Bay
show that progress has been made, but it is
of Plenty. However, these are generally sub scale
clear that more is required to smooth out the
and tend to be missing components that would
commercialisation fow.
be present in similar clusters globally, where
The Government’s introduction of the R&D tax national centres of expertise form more naturally
incentive in 2019 is expected to increase private due to a smaller geography eg the Dutch
sector investment in R&D and consequently Wageningen University & Research (WUR) centre.
increase commercialisation but will not solve
6. Barriers to uptake of some technology
other constraints.
innovations by the farming sector
4. A shortage of growth capital Though innovations are being developed, uptake
There is a general lack of growth capital in the of some technology amongst New Zealand
New Zealand technology sector, particularly in farmers has been slow. This inhibits both the
the venture capital / series A space. This general growth of agritech companies and improvements
shortage is also true in the agritech space, in on-farm productivity and sustainability.
and there historically haven’t been specialist Landcare research’s 2017 Survey of Rural
funds or investment expertise in New Zealand Decision Makers asked about uptake of precision
to fund products and international growth. agriculture and automation and robotics. Overall
Government’s recent announcement of the new uptake of precision agriculture was low, with
$300m Elevate NZ Venture Fund to be run by almost 90% of respondents indicating no use
New Zealand Growth Capital Partners (formerly of precision agriculture, and 97% indicating no
New Zealand Venture Investment Fund) will uptake of automation or robotics. Uptake varied
be signifcant in addressing this capital gap, by sector, with 44% of arable farms reporting
10 StatsNZ and Ministry of Business, Innovation and Employment R&D Survey, 2018. Due to data limitations, fgures include
spending on forestry R&D.
18AGRITECH INDUSTRY TRANSFORMATION PLAN
uptake of some novel technologies, while only › Skills shortages overall in the food and fbre
19% of dairy farms reported uptake. Some of the sector;
reasons for this include: › There is uncertainty about whether
› Owner/operators tend to rely on their change will actually deliver benefts or
peers rather than experts as a key source of create stranded assets in the face of other
information when making change; new ideas requirements (this is a particular issue when
take time to gain favour; considering efforts to deal with water quality
› Production systems based on biological and climate change mitigation);
systems tend to be more diffcult to adapt › Some rural infrastructure limitations (such as
to change because of their complex nature rural wif) hinder uptake; and
and long production timeframes; › Some technologies are not being developed
› New ways of doing things can introduce with the needs and abilities of the end user
risk (even if it is just perceived risk) into the in mind; if the value proposition is not clear,
system (especially when it comes to food then uptake will be limited.
safety), potentially damaging the integrity However, we must recognise that in many areas,
of the food system, so risk and change need New Zealand farmers are rapid adopters of
to be balanced carefully; technology, especially relative to their overseas
› There are diffculties accessing relevant counterparts. This is particularly true where
independent advice or capital to adopt there is a clear value proposition and the impact
innovations; is proven and understood.
› Many farmers already have signifcant We should also note that there is a signifcant
amounts of capital tied up, reducing their response in progress to these issues from the
appetite or ability for further investment; Ministry for Primary Industries (MPI), through its
› The skills required to implement signifcant Extension Services Model, and in time they will
change are quite different to those required publish more information on this initiative.
for traditional food production;
THE EXTENSION SERVICES MODEL
MPI’s Extension Services Model is a farmer-led, farmer-focused approach to support
sustainable land use decisions and improve economic, environmental and wellbeing
outcomes for farmers and their communities. Extension is about farmers working together
in their community groups along with rural professionals, industry groups, and government
to ask tough questions of one another within trusted circles and coming up with practical
solutions to issues. The programme aims to help:
› Expand and deepen the skill base among farmers through peer to peer learning;
› Support coordination and sharing of ideas; and
› Build on existing capability and networks within local communities.
7. A lack of openness, interoperability platform all on one farm. This means farmers are
and defned standards for technology and data required to learn and operate multiple systems
Currently, in order to incorporate the range of simultaneously. This is challenging, ineffcient,
technologies available to improve food and fbre and inhibits adoption of these technologies.
production, it is necessary to use a variety of This is particularly true when the data produced
systems which may not be cross-compatible eg by systems cannot be easily integrated into
an irrigation management platform, fertiliser other systems. Data standards exist but are
management platform and animal tracking commonly passed over in favour of individual
approaches.
19Data related to agritech is sometimes locked We expect that this agritech ITP will help address
in silos with limited data sharing occurring. this issue by setting a long-term vision for the
This protective approach inhibits innovation, sector and the actions to realise it.
and companies and researchers are not able to
10. Measurement
generate beneft from data that lies dormant
and may be of limited beneft to the data holder. The agritech industry is not clearly defned.
This approach occurs because of the investment Agritech is a crosscutting industry that includes
required to produce data and related free-rider goods and services across a wide range of
problem, and the reluctance of giving up any sectors. The lack of an agreed defnition of the
possible competitive advantage. agritech sector makes it diffcult to quantify
and to track the sector’s growth and this in turn
MPI is seeking to address some of these issues
may inhibit investment into the sector. These
through their Integrated Farm Planning work.
issues have also led to a lack of data sharing on
8. A lack of skills and focused skills agritech, which limits coordination and effective
development approach government work in the area.
The skills required to create high-value agritech 11. Regulatory differences, both at a national
businesses come from a mix of disciplines: a and regional scale
knowledge and empathy for the real-world
Differences in regulations occur both
problems of food and fbre production, plus a
domestically, making for an uneven playing feld
deep knowledge of technology, and in particular
and hindering adoption, and internationally,
emerging technology such as the Internet
making it diffcult for New Zealand agritech
of Things, 5G data exchange, and blockchain
companies to export overseas. When seeking
technology. This needs to also be coupled with
to register new products and innovations in
good insights into human behaviour and decision
foreign markets there are often strict regulatory
making, and of course how to run a strong and
settings that have to be met, and which typically
growing business. At a number of levels, skillsets
vary from market to market. This means agritech
need to be consciously lifted.
exporters must invest signifcant time and
Other countries have specifc initiatives to lift resources to fully understand and navigate the
skillsets across the range of required disciplines regulatory environments of each new market.
(eg Wageningen University & Research in the Our international engagement systems, run by
Netherlands) focused on agritech. NZTE and the Ministry of Foreign Affairs and
In New Zealand, there are some attempts to Trade (MFAT), have a key role to play here.
address skill development, and some universities 12. Complacency
have some programs to address gaps, but not
There appears to be a common perception
on a national or sustained scale. New Zealand’s
among the wider New Zealand population that
ongoing reform of vocational education is
we are already a world leader in agritech. This
expected to assist in this area.
is an assumption which is not borne out by
9. A lack of sustained and coordinated the evidence (eg exports, level of investment).
commitment from Government and industry To some extent this is a factor in the lack of
To some extent the lack of growth in the focus on agritech and lower-than-expected
agritech sector is due to the lack of a clear activity and investment into the creation of
signal from government through policy and novel technologies.
other mechanisms about the importance of the In contrast with other global agritech leaders,
sector to New Zealand. Agritech has been largely such as Israel, the Netherlands or Singapore,
neglected as a focus while the agricultural sector New Zealand hasn’t had a signifcant and
has received more attention. Initiatives have immediate crisis or constraint in our food
not been looked at as multi-year interventions, and fbre sector that often motivates action.
leaving them vulnerable to change. New Zealand has relatively large, naturally
Similarly, it has only been very recently that productive land and sea resources, meaning
the agritech industry has coalesced into an historically we were less reliant on agritech and
industry representative group focused on the have now fallen behind global leaders in food and
common issues and opportunities for the sector. fbre productivity.
20AGRITECH INDUSTRY TRANSFORMATION PLAN
ADVANTAGES & OPPORTUNITIES 2. Existing world-class research
We enjoy some advantages and We have collectively invested substantially in
food and fbre, and agritech research. We have a
opportunities when it comes to the
high level of expertise in the research space, and
agritech sector. These should provide also develop a lot of IP. If commercialisation skills
conditions and incentives for growth. and funding gaps are addressed, the scientifc
foundation for commercial opportunities is
1. New Zealand’s strong agricultural reputation
already in place. The issue is one primarily of
in pastoral systems
long-term focus and direction, rather than lack
We are known for our agricultural excellence of capacity.
and our products have a reputation for being
3. Geographic advantage
high-quality, ethical and environmentally
friendly. This reputation also extends to agritech New Zealand’s geography also offers a unique
products and provides a strong foundation for opportunity for increasing two-way tech transfer.
future expansion. Maintaining and building this New Zealand provides a base for ongoing
reputation will become increasingly important research & development as well as testing
as traceability becomes more ubiquitous; the during the northern hemisphere’s ‘off-season’.
New Zealand brand will grow as a selling point in By leveraging this dual seasonal dynamic,
itself, as long as this reputation is maintained. New Zealand has the opportunity to attract more
offshore investment into its agritech sector,
as northern hemisphere businesses look to
capitalise on our geography.
Technology makes it easier to monitor and manage the stock.
Source: NZ Story
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