Globally oriented smart agritech ecosystem
Transforming the agritech sector
The Agritech ITP was launched with the intention of scaling up the agritech sector, building on its existing high-value proposition, rather than fundamentally shifting the nature of the sector. This remains the case – the agritech sector’s productivity and existing growth are already strong. The ITP seeks to unlock the sector’s potential as an economic driver in its own right and to speed up this process.
To focus what the ITP seeks to achieve and how, we have refined the ITP’s vision and purpose in line with stakeholder feedback and Government priorities:
- Vision: A globally recognised agritech sector creating solutions for a better world.
- Purpose: Accelerate the growth and success of the New Zealand agritech sector, growing its contribution to the New Zealand economy to $8 billion by 2030. This builds off a current estimated agritech sector of $2-3 billion. The assumptions for this estimate are set out in the 'Measuring the agritech sector' section.
Measuring the agritech sector
The agritech sector’s growth has continued in the past 2 years
While a comprehensive view of the sector is yet to come through the ITP’s work on a comprehensive firm survey and data-matching work, a series of reports published by the Technology Investment Ne2rk (TIN) detail a number of statistics based on a limited number of the sector’s firms. TIN profiles 131 of over 500 agritech firms in New Zealand, with detailed insights about the sector’s larger firms. The 2022 Agritech Insights Report noted:
- The largest 22 agritech firms had combined revenues of $1.6 billion, including exports of $814.9 million. This builds off a 5-year compound annual growth rate of 14.6%. These firms employed 5,389 people, with 3,910 employees in New Zealand. Employees have average wages of $94,956 per annum and produce average revenue per person of $296,197.
- The number of deals and total value of investment in the sector continues to grow, with 2021 seeing $15.4m of investment across 11 deals, compared to around $4-7m worth of deals from 2015-2020.
- The agritech sector is a strong contributor to our regional economic development. The Waikato region is home to the highest concentration of agritech companies, with over $1 billion of revenue. Most other large agritech companies are in Tauranga and Auckland, but there is a strong pipeline of earlier stage companies found across all regions.
A globally focused domestically connected sector for the benefit of New Zealand
In refreshing the ITP, we have heard clearly from stakeholders that our aim should be for global recognition and collaboration, rather than competition. In realising this aim we should continue the close connections between our agritech sector and food and fibre industry. This decision recognises that New Zealand’s agritech sector will ultimately be small in the global context but can provide world-leading solutions to the issues of the food and fibre industry, while delivering high-value work across New Zealand. It further recognises that our path to success will be through collaboration – both within New Zealand’s agritech sector and with its international partners. Finally, this shift recognises that the path to growth for the agritech sector must be rooted in a strong mutually beneficial relationship with our food and fibre sectors intertwined with a global focus.
The ITP aims to develop a smart agritech innovation ecosystem that attracts international attention and investment. This means moving the sector towards being aligned to reduce duplication of efforts across the sector, and further that the sector collaborates strategically, rather than competes internally, for its overall benefit. Collaborating with international partners will be key to ensure the international success that we have outlined as important to the sector’s overall success.
A key contributor to this aim, and a driver for investment interest, is for New Zealand to be a test-bed for developing and trialling agritech with clear pathways to customer acquisition and scaled deployment.
The ITP’s vision is domestically rooted and globally oriented. To be an internationally successful sector, the agritech sector needs to target international opportunities for global relevance.
In turn, the agritech sector’s increased scale and global relevance will benefit Aotearoa New Zealand’s food and fibre sectors either directly, because agritech solutions are developed and trialled in New Zealand in partnership with these industries or indirectly, as export opportunities adapt in turn for domestic use if a thriving agritech sector exists.
Without global relevance, our agritech sector would be limited to adapting international solutions rather than creating new ones. To create world-leading agritech solutions, our agritech sector must look to globally relevant issues with market demands that enables scaling.
This international focus entails being a global sector – meaning that investment will come from domestic and international sources. In growing the agritech sector, the ITP must build a compelling case for agritech businesses to develop, scale and remain connected to New Zealand. This will ensure the benefits of our agritech industry’s growth are retained here. This will be achieved through building on our comparative advantage of off-seasonality to major markets in the Northern Hemisphere and developing a smart innovation ecosystem. This includes pull-factors such as proximity, access, and connection to New Zealand farmers and growers willing to trial technology, broader testing facilities to develop and progress agritech solutions, the sector’s connections to the research, science, and innovation system, and the availability of skilled labour.
The relationship between agritech and the primary industries
New Zealand’s agritech and primary industries are symbiotically linked through shared aims, interests, and challenges. New Zealand’s agritech expertise is rooted in our strong food and ﬁbres sectors and the agritech sector’s proximity to them. This is a recognised comparative advantage that the sector trades on internationally and therefore must continue fostering. Both sectors are faced with the difﬁcult task of servicing international markets from a globally isolated position – collaboration within and between the sectors will better enable them to compete globally.
New Zealand’s and the world’s food and ﬁbre sectors face signiﬁcant challenges such as adapting to climate change, increasing demand for demonstrated environmentally sustainable food and ﬁbre products, reducing emissions and water inputs while increasing outputs, labour supply uncertainty, and increasing regulatory requirements. In order to lead the world in meeting and overcoming these challenges, our food and ﬁbre sectors need a strong agritech sector to create and scale solutions, developed in New Zealand and scaled in the global market. A globally relevant agritech sector will therefore enable New Zealand to contribute solutions to domestic and global food and ﬁbre challenges, creating mutual beneﬁt to both the growing agritech sector and the food and ﬁbre sector being provided with solutions to its key challenges.
Agritech has the unique opportunity of providing solutions that concurrently improve productivity and sustainability. It can create solutions to increase food and ﬁbre output with reduced environmental inputs. This value proposition places the agritech sector at the heart of how we can think about the relationship between productivity and sustainability, particularly how our conception of productivity can be more holistic beyond just monetary considerations.
Growth in our agritech sector will beneﬁt our food and ﬁbre industries – through unlocking access to agritech they could otherwise not, and through reduced costs enabled by production of solutions at scale. The growth for New Zealand’s food and ﬁbres sectors, as set out in the Fit for a Better World roadmap, will be difﬁcult to achieve without a world-leading and globally relevant agritech sector.
In particular, New Zealand’s agritech will be key to addressing the challenges that climate change presents to our, and the world’s, food and ﬁbre sectors. This includes mitigation by reducing emissions, as well as adaptation to the effects of climate change. Through this contribution, the agritech sector has the potential for further signiﬁcant spillover beneﬁts to our economy.