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OPINION: In the wake of COVID-19, New Zealand should be focusing on industries that can help drive our economic recovery and growth over time.
While some of our key sectors have been hit hard, the dairy industry – and wider food sector – is well-positioned to continue to deliver for Kiwis through Covid-19 and help our economy get back on its feet.
But like all sectors, particularly at the moment, the dairy industry needs to keep evolving to meet new challenges head-on and maximise new opportunities.
With Kiwis relying on the primary sector to help lead them out of this crisis, agritech has a vital role to play.
Agritech is one of our fastest growing export sectors, and a key area of focus for investors globally. The reason the sector is attracting so much interest from investors is because food demand, including demand for dairy, continues to grow.
With food security a top concern and dairy considered a stable commodity through Covid-19, the agritech sector has shifted further into the spotlight and more companies are likely to raise capital in the near future.
Agritech encompasses a broad variety of on-farm technologies and innovations, from cow genetics based on genomic evaluation to the software that helps farmers run their day-to-day operations.
New technologies and innovations stand to revolutionise the dairy industry by enabling farmers to increase cow productivity, while achieving better environmental outcomes.
It is critical that New Zealand continues to invest in our agritech sector to cement our position as a world leader and to keep our farmers leading the global pastoral dairy system. To do this, we need innovative products and services to propel us forward. New Zealand’s strong reputation in pastoral systems and in producing high-quality products means we have a sound foundation to build upon.
The amount of investment pouring into the agritech sector globally continues to grow – as does the $1.5 billion value of agritech to New Zealand’s export economy, highlighting the sector’s importance with further opportunities for growth.
Given we are competing globally in one of the most well-capitalised sectors it’s encouraging to see the Government looking to support the transformation of our agritech sector, announcing $11.4 million direct investment in implementing the Agritech Industry Transformation Plan. But more private investment in R&D is also required.
Last year $97.3m was spent on R&D by the top 20 New Zealand agritech companies, according to the TIN Agritech Insights 2020 Report.
LIC spends the highest percentage of revenue on R&D of any established primary sector company. Our R&D spend makes up about 20% of all agritech R&D spend in New Zealand.
Increased investment in R&D will help to secure our leadership in the fast-growing agritech market.
It’s also important that the innovation pipeline that brings our farmers new ideas and technology solutions is supported and that we have the money to take great ideas from incubation through to full commercialisation.
Over the last five years, we’ve seen significant capital flow into agritech start-ups worldwide. New Zealand’s emerging agritech businesses will struggle to scale in the global market without access to the capital they need, so early stage investment will be important in addressing that capital gap.
LIC invested $16m on R&D last year, but we know we also need to look externally. That’s why we recently launched a new agritech start-up investment fund, LIC’s AgCelerator™ Fund. This aims to identify and support individuals and entities seeking to develop innovations that will drive improvements in the health and wellbeing of the national herd, aid in more sustainable milk production and ultimately disrupt the dairy industry in a positive way.
It’s important New Zealand retains its leading dairy reputation at this critical time and investing in new innovations and technology is central to that.
Harnessing investment interest in New Zealand agritech companies will not only support our economic recovery, create jobs, help businesses to scale faster and be a great export earner. It will also help our dairy industry evolve to meet new challenges and keep our farmers (and country) ahead of the game.
• Wayne McNee is chief executive, LIC