Grain is a thriving industry in Australia. It’s the country’s second-largest agricultural subsector by value, accounting for 27% of total gross value of ag production. In 2020-2021, there were 22,500 Australian grains farmers, who propelled the country to its highest yields on record for wheat, barley, canola, chickpeas, field peas, and lupins. Over the same period, the gross value of production of the grains industry was A$13.8 billion ($9.62 billion), with 36.5 billion metric tons of grains exported overseas worth A$12.4 billion ($8.65 billion).
To secure these spectacular gains and bolster the industry for the future, the Grains Research & Development Corporation (GRDC) – an Australian government-linked statutory body that invests in research, development and extension to drive the grain industry’s productivity and profitability – has partnered with Farmers2Founders to launch TEKFARM Global: a new scouting program aimed at bringing the world’s best agtech solutions to Australia to boost the grains sector to new heights and create new commercial opportunities.
Fernando Felquer, head of business development and commercialization, GRDC tells AFN that Australia’s grains sector presents a wide range of potential opportunities and advantages for international agtech ventures.
“The GRDC is currently committed to a five-year Research, Development & Extension Plan [RD&E] for 2018 to 2023, designed to create enduring profitability for Australian grain growers. The current key industry priorities and the commitment to RD&E creates a significant opportunity for investment in innovation, and makes the Australian grains sector a perfect launchpad for international agtech ventures,” he says.
Key investment targets under RD&E — which will also be focal points for the TEKFARM Global program — will center on innovations and technologies under the following objectives:
- Improving yield and yield stability. Maintaining yield stability under the impacts of various environmental factors is an important consideration in limiting exposure to production risk and underpins stability of supply. Investments in this area may involve relatively high risks and long timeframes to delivery.
- Maintaining and improving prices. Traceability and demonstrated food safety are likely to remain key customer requirements in the wake of Covid-19, and are expected to increase in importance in the short-to-medium term. While the export of bulk commodities will remain a significant part of future Australian grain trading, opportunities to change the functionality and composition of traditional commodities will underpin future increases in demand and prices.
- Optimizing input costs. A wide range of opportunities exist that can lead to incremental and transformational reductions in input costs while optimizing productivity. The challenge is to identify and prioritize the incremental opportunities to match costs with production at a regional scale while also identifying transformational opportunities on a national scale.
- Reduction of post-farmgate costs. GRDC will continue to support R&D into understanding the variables that drive supply chain costs, to inform policy on these issues. In addition, GRDC will consider transformational investments with the capacity to improve freight efficiences, as well as developing extension packages that assist growers in minimizing post-farmgate costs.
- Management of risk to maximize profits and minimize losses. Risk management that is too conservative can limit profit in above-average production years, while approaches that are too aggressive can expose the grower to equity issues that adversely impact profit and future operations. In addition, grower attitude to risk is a key determinant of the speed and scale of uptake of new technology.
In recent years, the Australian grains sector has remained stable and “the value of grains production over the five years to 2020 has remained steady despite market access challenges and seasonal conditions that reduced production” according to GrainGrowers, a group representing Australian grain farmers. Additionally, “production is forecast to increase with a return to better seasons.”
Speaking to AFN, Chris Murphy, business development manager, North, GRDC, highlights several priorities for the Australian grains sector that could help ventures interested in TEKFARM decide whether they might be the right fit, including:
- The development of new, high-value uses of products and byproducts targeted at plant-based alternatives, human health, nutrition, and allergenicity, as well as high-value animal feed uses, new industrial uses, and biofuels.
- Accelerated development of new crop varieties that can thrive in hotter, drier climates, such as Australia’s far north.
- The creation of new technologies that reduce labor costs and improve the efficiency of repetitive, intensive tasks such as seeding, fertilizing, spraying, and harvesting.
- Maintaining and improving the price of Australian grain through differentiation based on advanced genetics, functionality, food safety and traceability, sustainability of production, reduced downgrading, new and enhanced grain classification processes, and optimal management of biosecurity issues.
- Developing new herbicides and pesticides that reduce environmental impacts.
- Providing solutions that enable grain growers to optimize costs, increase profitability, and manage risk through new engineering solutions and data-informed decision making.
- Developing the capabilities and capacity of the agricultural ecosystem to accelerate research, development, and adoption of novel solutions.
AFN sat down with Felquer (FF), Murphy (CM), Farmers2Founders managing director Christine Pitt (CP), and GrainInnovate portfolio manager Robert Williams (RW) to discuss the TEKFARM program and the opportunities that await international agtech ventures in the Australian grains sector.
AFN: What is the role of GRDC in supporting agtech innovation in Australia?
FF: GRDC’s purpose is to invest in RD&E to create enduring profitability for Australian grain growers. Our innovation strategy is aimed at delivering more impact to grower profitability through targeting and support of the agtech startup innovation ecosystem.
We have various programs which aim to address different unmet needs in the innovation process. Those initiatives include support for startups to participate in accelerator programs across the existing Australian agtech accelerator capacity, as well as with GrainInnovate, a A$50 million [$34.9 million] venture capital fund run in collaboration with Artesian. In addition, GRDC actively participates in the global Australian agtech marketplace, GrowAg, in collaboration with other similar research corporations across Australia’s ag space.
AFN: How does the TEKFARM program facilitate these opportunities for international agtech ventures interested in the Australian grains market?
CM: The TEKFARM Global program was created in collaboration with GRDC to provide innovative, international tech ventures with the opportunity to connect, collaborate, and scale new technologies in the Australian market. The initial pilot of the TEKFARM program will run in mid-2022 and will provide international agtech ventures with the opportunity to learn about Australian market conditions, build a local team, and gain access to infrastructure to establish a business in Australia.
They’ll also be able to connect to industry and research partners and gain exposure to investors including GrainInnovate; undertake supported tech trials, cost benefit analyses, and refine their value proposition; access facilitated introductions to end-user customers and build route-to-market via customer validation; and develop marketing and commercialization assets and build an enhanced profile in the Australian market.
CP: The global agtech companies that we are working with find that the TEKFARM program helps to smooth the way for market entry into the region as it provides a ‘crawl, walk, run approach’ to the market and allows confidence in all steps of the process along the way.
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Farmers2Founders delivers Australia’s largest and most comprehensive pathway for creating and scaling new agtech ventures and commercializing new technologies along the entire agrifood and fiber value chain. We operate nationally across all sectors and we are very active in supporting and building the agtech and food innovation ecosystem. Our partners include government, industry bodies, research organizations, investors, and — most importantly — farmers, who we place at the center of the innovation process.
TEKFARM is an exciting new initiative that we launched in 2021 and we are already seeing results as we work with agtech companies and their customers to accelerate the adoption of new technologies across Australia’s farming businesses and agricultural value chains. We help make Australia a great place for fast growing global agtech ventures to do business.
AFN: What are the stand-out features or differentiating factors of the Australian grains sector?
FF: The Australian sector is characterized by the predominance of winter cereals, produced across a wide area in a number of distinct agroecological zones with differing climate, soil characteristics and farming systems. Recently, strong export market demand together with access to improved varieties and farming systems has driven the expansion of pulse production, particularly chickpeas in northern Australia and lentils in southern Australia. Australia exports a significant volume of grains each year and demand from new and existing markets is increasing.
AFN: What is the Australian grains sector really good at, that should attract international interest?
FF: Australian grain growers are experts in overcoming challenges and are by their very nature innovators. Farming systems in Australia are very different and unique due to challenging environmental conditions such as climate, weather patterns and soil types. Grains growers are constantly looking for innovative, practical solutions to overcome farm constraints and realize opportunities. Because Australian growers understand the value of constant innovation, they are eager adopters of new technology and we want to encourage them to link with international startups.
AFN: How can technology boost the sustainability of the grains sector in Australia?
CM: Australian grain growers are amongst the most competitive in the world. To remain sustainable, competitive and profitable, the grains sector needs to be able to access innovations from across the globe. In the agtech space artificial intelligence, ‘Internet of Things’ (IoT), digital information, remote sensing, fintech and other technologies, are all being explored as tools to maximize profits, and as a result ensure sustainability. If we expand the definition of “Agtech”, biotech and crop genetics also have a strong potential to sustainably create value for Australian growers.
RW: From a broader industry lens, agriculture is poised to be one of the next, if not the next, big drivers of the Australian economy and GDP. Through scaled investment in, and engagement with technology providers, the Australian grains industry has the potential to increase farm productivity, create new jobs, maximize our food exports globally, and export new agrifood technological advancements overseas. GrainInnovate, along with the other initiatives GRDC have established to support agrifood tech innovation, are playing a leading role in facilitating scaled investment in, and engagement with, relevant technology providers.
AFN: Why should international agtech businesses consider trialing and commercializing their technologies in the Australian grains sector?
FF: It is about fast-tracking solutions for the benefit of both agtech businesses and grain growers. We recognise that the contribution of start-ups to the innovation ecosystem is increasing steadily in Australia and abroad, using new technologies in applications across various industries. Our aim is to attract scalable, high-growth potential startups that are developing novel services and products that can adapt well to Australia’s grains-specific constraints.
AFN: What does the agtech investment landscape look like in Australia?
RW: Australian agtech-focused VC funds and firms such as GrainInnovate-Artesian, Tenacious, and Mandalay VC, plus vertical-agnostic, but with a strong interest in agtech, such as Main Sequence. In addition, corporates and family offices have started to engage in the agtech space. Australian agtech startups have also attracted interest from large global corporate and VC funds such as Cargill, Microsoft’s M12, TIME Ventures, Acre VC, and Ajax Strategies. See Loam Bio’s and Regrow’s recent funding rounds as an example.
AFN: Why don’t more international businesses perceive Australia as a good place to undertake agricultural trialing and commercialization?
CM: Many do, but factors such as distance from international innovators and startups, market size, and awareness are all issues. GRDC is committed to attracting more international innovators to Australia. Our Herbicide Innovation Partnership with Bayer is an example of GRDC working in close collaboration with international businesses in order to overcome some of these perceived barriers for the development and deployment of products and services in the Australian market.
AFN: How do we make it easier for international organizations to engage with the grains industry to undertake new trials and commercialization opportunities?
FF: To support agtech startups, GRDC launched several initiatives over the past two years. These include the GrainInnovate venture capital fund, Growers as Innovators, TEKFARM, and the GRDC Accelerator Program. This innovation strategy is about extending the range of organizations with which we partner. Our aim is to target a diverse range of partners and technologies, which we are confident will deliver transformational value to growers. While the pathway might be different to the way in which GRDC traditionally invests most of its RD&E funds, the intent and outcomes remain aligned to the corporation’s RD&E Plan.
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RW: One of the key and unique features of GrainInnovate is that the Fund has been established to invest in world leading agrifood tech startups that may be located either domestically, or internationally. GrainInnovate leverages Artesian’s broad partner network to identify and provide engagement opportunities for international organizations, through its relationships with global incubator/accelerators, research institutes, industry and corporate partners, and international venture capital funds and co-investors.
AFN: Is TEKFARM only looking for mature agtech businesses that are already successful commercially or can earlier stage ventures looking to undertake tech trials apply?
CM: Both are of interest, as long as they can demonstrate that they are aligned to the priorities of Australian grain growers.
RW: Furthermore, from a GrainInnovate perspective, the fund has the ability to consider both early-stage and scale-up stage companies for investment. This provides the opportunity for both trial and investment partnership opportunities associated with international agrifood tech startups undertaking Australian market development activities.