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Learnings from the road: How New Zealand is leading the agritech revolution

By Julia Gabel
Fri 8 Jun 2018
FYI, this story is more than a year old

By Claudia Rössler, Microsoft WW Industry Director, Chemical, Agricultural, Life Sciences Industry

Last month, I had the exciting opportunity to join a delegation of agriculture investors and market experts on a tour organized by Finistere Ventures and New Zealand Trade & Enterprise to learn more about New Zealand’s agricultural maturity and opportunities.

The trip also corresponded with New Zealand's' Techweek and 10 Billion Mouths Summit in Tauranga, the Sprout Summit, and the opening of the BioLumic R&D Lab in Palmerston North.

A recurring theme throughout these events was that agriculture is transforming and growing more quickly than ever before.

During the 10 Billion Mouths Summit, Arama Kukutai, co-founder of Finistere Ventures, stated in his keynote that the food and agriculture industry all-up is a $5 trillion industry and he is seeing more market consolidation, larger investments and innovation than ever before.

In a compact week, I had a tremendous opportunity to meet with farmers, leading agriculture producers, representatives of government, and investors.

They showed me just how much New Zealand is leading the industry as a strong contributor to world's agriculture business.

There were three key themes that came from my discussions that I’d like to dive into here: innovation, sustainability & trust, and collaboration.

Food innovation

New Zealand is quite proud about its high-quality and high-value produce.

In order to stay on top of the market, producers need to match consumer demand.

New Zealand’s goal is to create local, provenance brands. During an audience poll at the 10 Billion Mouths conference, 53% of the audience said that premium foods will be the key success driver for New Zealand agriculture in the future.

Several companies are already leading in local food innovation, including the Plant & Food Research center as well as Zespri, who taught us about the next level of innovation in fruit. Zespri is the world’s largest marketer of kiwifruit, managing 30% of global kiwifruit volume.

The company’s focus is on variety innovation purely through breeding. The diversity of food tastes changes from country to country, with variants ranging from edible skins, colors, size and nutrition.

It’s exciting to think about what flavorful new varieties of kiwifruit we are going to eat in the near future!

How can you match this kind of innovation in an economy where consumers are becoming more sophisticated?

There is an increasing demand for more diversified, value-added products providing personal benefits like nutrition for consumers, and we, as an industry, need to be prepared to meet this challenge.

However, the innovation cycle of breeding a new food variety is roughly 10 years. Beyond the product research challenge, more diversified products will put even higher pressure on demand planning and avoiding food waste.

To address both research and food waste, data and analytics are the answer.

While it will always be a challenge to truly to predict the ongoing change in consumer demand, data and artificial intelligence (AI) will be what helps us "fail faster."

What I mean by that is, data and AI will be what helps us more quickly eliminate the variants that are not successful, so we can find what does work faster.

This will allow companies to iterate innovation in shorter and more accelerated cycles, such as increasing the number of indoor farming trials.

So far, New Zealand has decided against gene-editing, which is putting their innovation pressure at a higher level compared to some other parts of the world.

Throughout the week, there was also much discussion about the lower demand for meat in the future, based on perceived health and environmental concerns. Based on what I learned, in 2016, New Zealand exported 92 percent of its sheep meat and 83 percent of beef to over 120 countries.

New Zealand also represented more than a third of the global trade of lamb (36 percent) in the same year. So, as companies work to continue to meet the needs of meat lovers and flexitarians that value healthy food, it’s important to track quality, sustainability and provenance throughout the value chain.  

Obviously, developing precision farming solutions and technology innovation in agriculture is top of mind. 

In many ways, New Zealand farmers and farmer co-ops are on the leading edge here, for example, global dairy nutrition company Fonterra, who is shaping the industry in quality and innovation.

Many of the great innovations I saw during the week were centered around precision farming (an area that is already bustling with innovation).

There was a great example of remote monitoring or life stock management, such as the digital fence from Halter that allows farmers to shift, manage and monitor their herd remotely.

There were also mobile labs that detect disease or monitor farm animals such as Mastaplex, and those around food technology innovation such as Sunfed meats, a product made from pea protein but cooks, feels and tastes just like animal meat and is healthier for both people and the planet.

Sustainability & Trust

As the agriculture industry matures, so do the tastes of the consumer.

People want to know where their food comes from, if it has been produced in an environmentally safe manner, if it is safe to consume, and if there is any nutrition value to their health.

High quality and sustainability are two key attributes that New Zealand food producers claim as differentiators in the market. In order to stay "clean, green, and pure," control and transparency of the food production process is mandatory.

However, as Professor David Hughes from the Imperial College London stated at Techweek, "Suddenly, green and clean becomes normal and the bar continues to move up.

You don't get a premium when you are on top of the bar, but you get discounted if you are not."

When it comes to food traceability, we know this concept by many names: “farm to fork," "pasture to plate," and "grass to glass."

Traceability is about building trust with the consumer, a key point made by Adrian Percy, Head of Research & Development at Bayer Crop Science at the 10 Billion Mouths conference.

If we pay a premium for food, we want to know if it's worth it. If we buy strawberries in the winter, we want to understand their provenance. This is also important in the context of food waste. The biggest losses happen during harvest and production.

Adding to this complexity are the vast array of closed systems, for example, a particular sensor for precision farming that is providing insight to farmers.

In these closed systems farmers cannot marry information with other existing farm information. In addition, there are companies that still see themselves as the owner of the data that is collected, versus the farmer who is applying the system.

These narrow applications and closed systems will be difficult to maintain in the long run.

Technology to ensure food traceability is here today: Blockchain is a powerful tool to combat traceability, bio-security, and fraud, as well as drive accountability and transparency throughout the agriculture value chain.

Blockchain creates a distributed ledger to record and share records with assurance that the records cannot be manipulated.

Having said that, in order to make those reliability concepts "real," it requires the trust of all value chain participants. Microsoft believes the foundation of those concepts is trusted and secure data sharing.

Participants in the agriculture value chain—from farmers to input providers to equipment and food producers—all agree to share data in a secure data vault by defining policies that determine what data is shared, what encryption is applied, what rules have been defined, and what the desired outcome looks like.

This is essentially a secure, walled garden approach to sharing data in a controlled, encrypted and monitored way.

In order to discuss these kind of high-value measurement standards, Microsoft recently joined the World Business Council for Sustainable Development (WBCSD) with the goal of achieving benchmarks in how we measure the impact of agriculture and food production in a sustainable manner.

WBCSD’s Reporting Matters initiative around sustainability makes recommendations and shares best practice examples to help companies demonstrate how they create value, engage with their stakeholders, and learn from their peers. 

This leads me to our third theme around networking and collaboration.

Value chain collaboration

Throughout the week, I was lucky enough to experience the growing start-up community in New Zealand.

And Finistere says that "Strategic investors will continue to look for great technology and great teams.

Agritech has exploded as a niche opportunistic clade of the venture investment class, to a legitimate asset class attracting focused and generalist funds.”

I had the opportunity to see investment pitches from about 16 start-ups, driven by great passion and knowledge of the industry.

Two of my favorite start-ups in New Zealand were BioLumic, who said it can slow the growth of plant-threatening diseases and get plants to positively respond to UV light.

This gives farmers the ability to grow stronger, more appealing, and more productive plants with less water usage and risk of pest attacks. BioLumic is using light as an agritech treatment during critical stages in a plant’s development. Another great example was Robotics Plus, who is using high-tech, intelligent robotics solutions to change the way the world cultivates fruit.

However, across several of the start-ups there was not a lot of differentiation, as we saw companies presenting similar solutions.

As Kirk Haney, CEO and Managing Partner of Radicle Growth, said during his 10 Billion Mouths presentation, investors look at market, technology and execution risks.

The agritech market is growing so rapidly that it will be important for startups to orient their business around existing technology.

Instead of coding everything themselves, start-ups need to align around partnerships and build a network that will maximize their value-add.

Programs like Microsoft FarmBeats can help companies jump-start innovation around predictive farming.

FarmBeats brings IoT edge computing to the farm, applying machine learning on complex sets of data coming in from sensors and imaging, as well as public and historical data sources.

This enables capabilities like the smart application of fertilizer or herbicides.

What’s most unique about FarmBeats is that it sends large amounts of data from ground-based sensors, tractors and cameras to a computer on the farm using TV white spaces, a type of Internet connectivity similar to Wi-Fi but with a range of a few miles.

The issues we are trying to solve in agriculture are not trivial. This week has shown that only a strong network and collaboration between farmers, corporations, investors, government and agritech is the only path forward.

We need the business acumen of companies like Fonterra and Zespri, entrepreneurship and innovation coming from start-ups and universities like Massey, the power of investors being able to differentiate from "next" to "me-too," governments coming in and supporting the industry, and agritech building the foundation of future innovation.

Collaboration and a broad ecosystem is a fundamentally different concept than how business has been done in the past 50+ years, when individual success, competition and entrepreneurship were key.

We look forward to seeing New Zealand leading the path.

Growing the future on New Zealand farms

Here at Microsoft, we plan to build on the great connections coming out of this trip.

But, I'm hoping to see more global lighthouse innovation coming from New Zealand, for example, involvement in the Microsoft AI for Earth program that puts the power of artificial intelligence towards solving some of our biggest environmental challenges, or collaboration across local and global ecosystems as part of the Microsoft for StartUps program.

If there is one country that has the innovation, resources and passion to make the difference, it will be New Zealand.

Agriculture is the largest sector of the tradable economy as the GDP from agriculture alone in New Zealand has increased over the past three decades, reaching a high of $3.3 billion in 2016.

Despite the country’s population of roughly 4.7 billion, New Zealand is more like a large village, with everyone wearing multiple hats, focusing on collaboration versus competition.

This allows for agility and innovation at the highest of levels.

It’s clear that New Zealand is well-positioned to lead us into the next agricultural revolution as we come together globally to feed our world through a safe, innovative and connected food ecosystem.

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