Action plan to accelerate the agritech sector's growth
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Context
The Industry Transformation Plan aims to accelerate and enhance the agritech sector’s growth. We expect that the sector will continue to grow in terms of its companies, but also through its ecosystem maturing, such as in an increase in the number and maturity of services, ancillary actors, funding mechanisms, and overall connections that support the agritech sector. Our aim through the ITP is to speed up this process and to more deliberately direct this growth in line with the aspirations of industry, Māori, and government. Our action plan is the mechanism to achieve this aim.
The refreshed ITP aims to build on our successes and progress to date and focus our efforts to achieve the greatest impact for the sector. In refreshing the ITP’s action plan, we have moved away from a structure of workstreams with specific agency leads to focus areas with multiple responsible actors in each area. This recognises the cross-cutting nature of work across each focus area while better encouraging collaboration across the ITP’s delivery partners.
Our reshaped 6 focus areas for the refreshed ITP are:
- Enabling company growth by ensuring business capability services are provided consistently and well
- Building skills for diversity and growth and ensuring effective coordination between industry and the education sector
- Enabling a smart innovation ecosystem through collaboration that attracts international interest
- Increased Māori interests and participation that ensure Māori aspirations are realised
- Building a supporting and patient investment environment suited for agritech
- Increasing global connections for growth to build a globally connected sector
This action plan lays out our current view of the ITP’s actions until mid-2024. There may be shifts in priorities and different opportunities for effort or investment may arise over this time.
Focus area 1: Enabling company growth
Enabling companies to scale up quickly and successfully is a critical enabler for achieving the aims of the Agritech ITP. While New Zealand agritech firms have traditionally been strong in product creation and innovation, a step-change in the success of the sector will require a higher number of companies successfully exporting at scale. Success in globally-based company growth needs stronger dynamic business capabilities across the sector. This may include the understanding of IP, capital, talent, supply chains, market validation, manufacturing, channels to market, capacity, and how to scale up a business across all of these aspects.
The Agritech ITP will continue to grow business capabilities by continuing and expanding collaborative work across New Zealand Trade and Enterprise (NZTE) and Callaghan Innovation (and others as appropriate), addressing gaps in business capability support in the current environment. This includes:
Scale for Global Growth
NZTE and Callaghan Innovation will work together to run further cohorts of a programme developed in the first phase of the ITP. The Scale for Global Growth programme aims to help New Zealand agritech companies think and scale globally earlier in their growth journey through a team of experts with strong experience in building and scaling globally successful businesses. This includes developing a full programme and a tailored modular approach.
Global opportunities
NZTE is working to ensure that New Zealand agritech firms are provided with the support that increases their awareness of and capability to seize opportunities in markets overseas, including tailoring their products to those markets. This awareness and capability is key to the growth of a globally-focused agritech sector.
International immersion programmes
Callaghan Innovation will build opportunities for agritech firms to validate their products, build knowledge, and connect to early adopters overseas. These visits will be timed with international events.
Global Signals
Callaghan Innovation will expand the Global Signals service designed under the ITP’s first phase, which aims to help New Zealand agritech companies monitor and interpret early market signals.
This will enable these companies to innovate ahead of the curve by predicting where market disruptions may occur or may be possible through their own innovation. This service includes a newsletter, workshops, and a tailored offering for more detailed support.
Agritech Support Explorer
Callaghan Innovation have launched a tool to help agritech companies navigate over 130 private and public funding and support mechanisms offered in New Zealand. This website will be maintained and updated to ensure timely and correct information.
Focus area 2: Building skills for diversity and growth
The agritech sector requires a unique overlap of skillsets: technical skills such as engineering, data science, and software coding, but also an ability to understand and apply these skills in the context of the biological systems that the agritech sector works on. These technical skills are in strong demand across the world.
While agritech can face the difficulty of finding specialised workers with skills across technical areas (for example, engineering, data science) and farming/biological systems, it also presents the opportunity to find workers from either area and provide applied learning to teach them the other skills required. We are seeing encouraging developments in the tertiary sector responding to demand for agritech-specific skills, such as through the University of Otago’s newly provided Agriculture Innovation major. However, more work is required to ensure the sector can access and develop the skills required for its growth.
In conducting this work, the ITP will work towards encouraging and increasing diversity and inclusion within the agritech sector. This will include taking account of existing work across government and industry, such as the Employment Strategy and its enabling Employment Action Plans, and work already underway through the Digital Technologies ITP in this area.
For the next phase, we are putting the focus on understanding skill needs to inform building a skill pipeline for the sector.
This includes:
Understanding skill requirements and how to address these
Across industry and government, the ITP will work to develop a strategic view of the agritech sector’s future skill requirements and the opportunities, barriers, and challenges that the sector faces in accessing these skills. This may include the level of employees needed to support a sector of the size that the ITP aims to grow.
Collaborative industry approaches
Encouraging and exploring collaboration between industry and educators, for example, to increase applied learning and the industry-readiness of workers coming through the tertiary education system through the work of the Workforce Development Councils (WDCs) or new tertiary degrees relevant to agritech.
Focus area 3: Enabling a smart innovation ecosystem
A key enabler for the success of New Zealand’s agritech sector will be its ability to work together as a smart innovation ecosystem. As outlined earlier, this means ensuring greater alignment across the sector to reduce duplication and that the sector collaborates strategically, rather than competes internally, for its overall benefit. Collaborating with international partners is also key to ensuring international success, and the sector’s overall success.
The ITP aims to ensure New Zealand can seize its advantage of being a ‘test-bed’ for agritech development, through our counterseasonal position to the northern hemisphere. This counterseasonality creates the unique opportunity for agritech businesses and investors to double their growing and testing times. Capturing this advantage will require clear pathways from developing and trialling technologies, through to customer acquisition and scaled deployment domestically and internationally.
Concerted effort will be needed across several areas that contribute to our ecosystem, which are laid out below. Underpinning the ITP is collaboration and alignment across the sector – a key principle for the ITP to progress.
Improving collaboration across the agritech sector
Across the ITP’s work, we will actively look for opportunities to encourage and strengthen collaboration, including:
Industry and Science Partnership Models
Callaghan Innovation is working to encourage stronger connections and partnerships between industry and science sector participants, with the overarching goal of increasing the speed and relevance of commercialisation activities. This includes building on existing work with winegrowers and apple growers, as well as considering further sectors for acceleration.
Improving the underpinning infrastructure for the agritech sector
The agritech sector’s growth must be enabled by the appropriate ‘building blocks’ to underpin it. This includes physical infrastructure (for example, internet connectivity and research facilities) and soft infrastructure (for example, human capital, institutions, and regulations). Through the ITP’s implementation to date, we have identified 2 areas to speed up the development of agritech solutions:
Access to trialling and testing facilities
The ITP will, taking account of lessons learned through our hosting of Farm 2050 nutrient trials, explore options to develop a broader programme of testing and trialling that increases the number and speed of agritech solutions. This could be through new or refocused funding and effort, targeted (for example, for climate change-related technologies) or at a system level. This work will include examining international models such as ‘smart farms’ to trial technologies through strong connectivity and highly skilled staffing.
Market signals for the value of agritech solutions
Investment in the development and testing of agritech solutions could be improved through clearer market signals on the need for and value of solutions. Effort and investment could be incentivised through clear information of what solutions end-users need and what they are willing to pay. In turn, this will provide investors with a clear view of the potential returns and market size for agritech solutions. The ITP will explore mechanisms to achieve this type of clear investment signaling, in conjunction with improving access to trialling and testing facilities for developing these solutions.
Beyond these 2 streams of work, the ITP will further explore options to improve the sector’s underpinning infrastructure where projects could be strategically valuable. For example, this could include work on the connectivity of productive land to enable remote technologies or analysing existing data collection from satellite and on-farm technologies that could be better utilised across the system.
Inputting to Te Ara Paerangi – Future Pathways
Agritech companies are keen to see a stronger flow of IP and research out from the science system, as well as stronger consideration of global issues and needs in relevant research. These issues have been identified as key to the success of a globally-focused agritech sector. Ensuring that IP is commercialised will better enable returns on the investments of science in New Zealand, while also strengthening the investment propositions of agritech businesses. At the same time, ensuring that research and resulting IP is relevant to domestic and global issues will further support these outcomes.
The ITP will work with industry to ensure the agritech sector’s views are accounted for through the ongoing review of New Zealand’s science system, Te Ara Paerangi – Future Pathways. This will include coordinating across the broader programme of ITPs to ensure the views of innovative industries are accounted for more broadly.
Ensuring data interoperability in New Zealand’s primary sector
There is a lack of data interoperability and data openness across agritech offerings, which limits uptake of agritech and can impede innovation. On top of this, regional and international inconsistency in measurement and reporting requirements also inhibits new agritech product development.
Government and industry are partnering through a range of projects to create the conditions for digital integration across the food and fibre sector. Our aspirational state is of an integrated digital food and fibre sector driven by single-capture, multi-use data that can be shared seamlessly and securely to protect our environment, increase our productivity, and strengthen our economy.
In practice, this will mean we will have created the conditions for a digital ecosystem in which a food and fibre producer can choose their preferred technology to manage their farm planning, and share it with their other chosen digital tools.
This work has included and will continue to build on:
- A Geospatial Interoperability Working Group which has developed minimum-viable-product specifications for farm boundaries, as well as on-farm hazards, planned versus actual activities such as fertiliser sprays, and land cover elements such forests and riparian planting.
- A proof-of-concept project within the horticulture sector aimed at highlighting the barriers to and value of data sharing along the value chain.
- Progressing work on enabling a digital identity framework through encrypted, verifiable credentials and decentralised identifiers.
- A process to begin the standardisation of key farming data.
- The scoping of Link Aotearoa, which will be a regularly-maintained and updated public repository of standardised farming data (to act as a guide to the agritech sector when developing products and solutions).
The Data Interoperability Working Group, a collaborative partnership between industry organisations, Crown Research Institutes and central and regional government, will continue to lead this work.
Focus area 4: Increased Māori interests and participation
This focus area aims to ensure that the growth of the agritech sector is inclusive and sees benefit across all of New Zealand, with a particular focus on realising Māori aspirations. The Māori economy is strongly focused on the primary industries, so there is an opportunity and an obligation to ensure that the benefit of the agritech sector’s growth is strongly felt in the sectors where Māori have significant interests.
In the immediate term, we are co-designing initiatives under this focus area with a Māori Advisory Group. In doing so, the ITP aims to bolster the roles of Māori as creators of agritech businesses, users of technology, and kaitiaki of whenua.
To enable this, the ITP will:
- Provide opportunities for Māori to participate in domestic and international events with a strong agritech focus, to increase their knowledge and connections.
- Increase opportunities for partnership between Māori agribusinesses and agritech businesses, and indigenous-to-indigenous ventures. Identify future-focused Māori agribusinesses and collectives interested in utilising technology and facilitate connections with domestic and international agritech businesses.
- Provide employment opportunities to encourage more Māori into agritech careers.
- Promote Māori excellence in the agritech sector.
Developing a robust work programme will require ongoing discussions with a range of Māori stakeholders across the primary sector. This acknowledges the varied and different roles and perspectives that Māori play in relation to agritech, and our intention to reflect and weave in Māori aspirations from these different roles throughout the ITP’s actions and outcomes.
Acknowledging the strong connection between Māori and their whenua, the Māori Economic Resilience Strategy recognises the Agritech ITP as an enabler of future economic prosperity, resilience and whānau wellbeing.
Focus area 5: Building a supporting and patient investment environment
Where there are robust and investable propositions with scalable paths to market, investment for agritech companies can usually be found. However, some companies (such as those with higher up-front capital intensity and in particular, manufacturing companies) are less likely to find investment easily.
On the whole, there is a lack of ‘patient’ capital – that is, investment that expects returns over a longer timeframe than some venture capital may be comfortable with. Further, while investment may be available in the research, seed, and early stages, its settings may not necessarily be attuned to the growth of an internationally focused sector and supporting businesses through the commercialisation pipeline.
Attracting and retaining smart capital investment and capability to the New Zealand agritech ecosystem is critical to the establishment, growth, and longer-term sustainable success of our agritech companies. This will require New Zealand to continue developing and promoting high-quality investment opportunities for capital providers.
For this phase of the ITP, we are proposing several targeted actions to address specific gaps or opportunities in the investment landscape.
Harnessing the Business Growth Fund
In May 2022, the Government announced the investment of $100 million into a Business Growth Fund, aiming to help fill a gap in the capital market for small and medium sized enterprises (SMEs) that require growth capital not available through current market providers.
This Fund will go some way to address the issue of patient capital that the agritech industry has identified. We therefore consider there is an opportunity to work with banks and other parts of government to ensure the settings of this Fund will work for and encourage the growth of the agritech industry.
Incentivising capital investment in New Zealand
The high cost of capital in New Zealand, particularly relative to the rest of the Organisation for Economic Co-operation and Development (OECD), has been identified as a barrier for investment into technologies and equipment through the Advanced Manufacturing and Food and Beverage ITPs. These high costs of capital reduce productive investment and capital stock because fewer investments will generate the required hurdle rate of return for businesses. This high cost of capital impacts the manufacturing-based agritech businesses, particularly at their early and scale-up stages.
Incentivising capital investment is noted as being key to the growth of a number of innovative and productive industries in New Zealand, such as agritech and manufacturing. In recognition of this issue, government is developing advice across the programme of ITPs to explore options in incentivising greater capital investment across a number of sectors.
Assessing the settings of institutional investments
Government makes significant investments into a variety of early-stage, research, and development areas that are highly relevant to agritech, such through the Ministry for Primary Industries’ (MPI) Sustainable Food and Fibres Futures (SFF Futures) and science investment funds held by the Ministry of Business, Innovation and Employment (MBIE). Industry has affirmed that, compared internationally, government support for many early-stage research and development activities is strong, particularly for activities related to the primary industries.
However, the settings of some funding sources have been noted as potentially restraining growth for a globally oriented agritech sector. In particular, these funds tend to assess investments through a lens of ‘benefit to New Zealand’ that may be limited to direct benefits to domestic food and fibre sectors, rather than a broader consideration of economic benefit (such as jobs and exports in the agritech industry). These settings may also prevent growth in agritech focused on sectors that are small in New Zealand but large globally (for example, wheat and citrus). To ensure that New Zealand is able to capture the maximum benefit from its investments in this area, the ITP will explore options to progress reviewing criteria in relevant funds with a broader, more holistic definition of “benefit to New Zealand” in mind.
In this work, it should be noted that total public good will still drive what benefit looks like. This means that while the ITP acknowledges and encourages the role of international connectivity and exporting, the ITP’s focus is on growing a flourishing agritech sector in New Zealand, rather than seeing the ultimate benefits of this support be felt overseas.
Investment attraction
While the overall availability for investment in the agritech sector is deemed good by companies and investors (given the right investable proposition), we must continue an active role in attracting investment. This is particularly the case for ‘smart’ capital that will benefit the sector through talent and international connections.
The ITP work will be in alignment with and support the overall NZ Inc direction outlined in the Investment Attraction Strategy led by MBIE. The ITP will explore the development of joint actions under the ITP and the Investment Action Strategy, such as for a feasibility study for company-to-company or greenfields investment into New Zealand’s agritech sector.
Focus area 6: Increasing global connections for growth
A global outlook is key to the growth and success of New Zealand’s agritech sector. The ITP ultimately aims to grow the agritech sector and the companies that it comprises. This growth will be constrained without awareness of and capability to understand the international opportunities for exporting agritech at scale, as well as the connections that allow companies to seize upon these opportunities. These connections and the broader understanding of international markets that they bring are needed to ensure that the products being developed by our agritech firms are fit-for-purpose for the markets that they are targeting.
With international travel resuming, the ITP has already sent missions to Australia for Hort Connections and WineTech, and to the UK and Ireland to attend the National Ploughing Championships and the Agritech Summit in London. This focus area further builds on the ITP’s progress to continue building international connections. We are also building global connections through major events in New Zealand – such as by supporting the Oceania 2035 Agri-Food Tech Summit and the National Fieldays.
Our actions for this phase of the ITP builds off our work to date:
- NZTE will further activate the NZ Agritech Story in the UK in a more extensive campaign, building on their 2021 UK Story Activation Campaign.
- The ITP will support a limited number of high-value international events and/or the attendance of events by New Zealand agritech firms.
- The ITP aims to continue to test and expand new and more deliberate ways of connecting New Zealand agritech firms and innovative international partners. This includes supporting NZTE to build and maintain international partnerships for the sector, and ensuring greater coordination across NZ Inc.
- NZTE will run a further accelerator programme for New Zealand agritech firms, building on their previous experience with Hatch and AgTech Garage, to help companies identify international markets, build robust value propositions, and find international mentors in support of their aspirations.
Trans-Tasman and other international collaborations
There is a significant opportunity to collaborate more strongly across the New Zealand and Australian agritech sectors, recognising that each of Australia’s and New Zealand’s agritech sectors are relatively small, on a global scale, but recognised for strong innovation capabilities. By working together, the sectors can attract international recognition and investment to the region as a whole, rather than competing and risking the division of scarce international attention. The ITP will support this collaboration, such as through the Australia New Zealand Agritech Council established in 2019.
The ITP will further explore other opportunities for international collaboration for example, with the UK, enabled by the recently ratified NZ-UK Free Trade Agreement.