Remo Carbone is the CEO of MEQ Probe, the agtech company behind a device measuring lamb intramuscular fat. Here he shares what he thinks 2022 will bring in the agtech space.
Agriculture is one of Australia's most prominent and lucrative sectors, renowned for its top-quality produce. But climate change, the COVID-19 pandemic, and digitisation is fuelling global demand for better sustainability, transparency, and cost-efficiency. It's forcing Australia to follow suit if it wants to maintain its reputation as a premium produce provider.
These challenges have brought forth the rise of Agricultural technology or Agtech: using advanced technologies to drive efficiencies in agricultural production. As we move into 2022, here are five of the key trends we expect for the sector.
1. Uptick in the adoption of technology
AI, machine learning and the Internet of Things (IoT) are big investments for Agtech. The new solution includes autonomous agricultural machinery, dietary supplements for animals like Asparagopsis (edible red algae that inhibits very effective in inhibiting methane production in livestock), and vertical farming.
The arrival of 5G is also enabling new technologies such as drones to transmit high-definition images of agricultural land, track livestock, weeds, and pests. There have also been trials using nanosatellites and smart sensors to monitor water tanks and wind turbines.
HD videos and images, including thermal and topographical images, track and identify objects like livestock, weeds and pests using AI, and act on commands seamlessly controlled from kilometres away, enabling agribusinesses to better analyse field conditions, distribute seeds and sprays, and manage crops and livestock.
2. Acceleration of automation
Many production plants are struggling with employment issues, unable to hire enough workers as international borders remain somewhat closed and Australians seek to stay within home states in fears of sudden lockdowns. Skills shortages are particularly severe in rural and regional areas and existing staff are being stretched too thin, which takes them away from strategic thinking. While the talent crunch may ease as borders eventually reopen, the pain point will remain.
This is driving a shift towards automation and robotics, to reduce the number of people needed, particularly for manual and repetitive tasks, and gain efficiencies. Robots are already being used to milk cows due to skills shortages as-well-as help with harvesting.
3. Continued diversification of markets
Almost three-quarters of what Australia produces is exported, so as a country, we have a vested interest in ensuring strong global relationships that increase awareness about the premium products we produce. Recent political tensions between China and Australia have forced the agricultural sector to focus on other markets, and they have done so successfully with risk now being spread across several markets. This trend is set to continue.
Since the political crisis erupted, more lamb is being exported to the US and other parts of Asia than ever before. Wine exports - very hard hit by punitive Chinese tariffs - have rallied in new and existing markets. Exports to the UK were up 23 percent, reaching their highest level in a decade. There was also strong growth in Europe and Southeast Asia, particularly Singapore and South Korea.
Meat producers are exploring opportunities in Indonesia, with ABARES predicting Indonesian meat consumption will increase 1,321 percent by 2050 and the onion industry is diving into European and Southeast Asian markets. Government support is also helping, with the Australian government investing $72.7 million through its AgriBusiness Expansion Initiative to help local agricultural, forestry and fisheries industries diversify and expand their export markets.
4. Increased investment and funding
A good nucleus of agtech companies have set a solid foundation of innovation and profitability in Australia. Loam Bio, Agriwebb, and DAS have all enjoyed successful, multimillion-dollar raisings over the past couple of years and this should serve as a boost of confidence to the investment community.
There are specific venture capital funds focused on agriculture such as AgFunder, which invests in exceptional ventures that are transforming Australia's food and agriculture systems. It estimates the global agrifood tech sector raised over $30 billion in 2020, representing 34.5% growth over 2019. Over half of this went upstream to areas such as agricultural biotech, farm management, and farm robotics.
Given the rapid rates of growth in the sector and wider market opportunities slated for 2022, investment and funding in agtech are set to boom.
5. Focus on transparency and premium product
Australia's agriculture industry is also moving from simple products being exported to value-added bespoke offerings for particular markets. Export products are becoming increasingly sophisticated; gone are the days of the bulk export of raw lamb meat. International markets now expect premium quality meat that is already packaged and retail-ready so that they can hit supermarket shelves the minute they are unpacked.
Given that processing costs are comparatively higher in Australia, our export product is held to a considerable standard that justifies our premium pricing. Demand is expected to peak next year with the progression of an Australia-UK free trade agreement and further market expansion.
This trend is also being driven by increased consumer focus on quality and sustainability. It's fuelling more standards and industry initiatives to demonstrate quality and assurance. For the meat industry transparency can help overcome misconceptions and inaccuracies. Meat & Livestock Australia has been driving an education campaign to raise awareness of how the industry is leading the way in lowering emissions, improving animal welfare and producing much higher quality meat as a result.
Supply Chain Traceability is also key to helping prevent food fraud. Pre-packaging meat helps prevent fraud and assures meat quality. Spectral analysis grading technology can also determine the quality and nutritional component of red meat such as its intramuscular fat percentage (marbling) trait. It will arm retailers and consumers alike with more information about red meat than ever before.
The Federal Government's Ag2030 initiative aims for agriculture to be a $100 billion industry by 2030. It notes that achieving this "will require a significant increase in productivity, increased market access and diversification". Industry, investment, and governing bodies will play a key role in this as we watch agtech move from strength to strength in the new year.
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