Many start-up agribusinesses forced to go to US for early stage funding

‘Sprout’, the AgTech Incubator Program developed by Findex in partnership with the National Farmers’ Federation (NFF) has today received prominent media coverage in the Australian Financial Review.

CEO of NFF, Simon Talbot has argued that we need to reposition agriculture as an industry of the future – one that harnesses digital technologies and innovation to drive home-grown ideas, boost productivity and ultimately realise its potential.

The value of incubators like ‘Sprout’ goes beyond mentoring and training; they allow us to truly foster innovation at the start-up level.

The below is taken from the Australian Financial Review.

When young Victorian farmer William Pattison had the idea for a business selling farmers’ produce direct to consumers he got no joy when he approached incubators for financial backing in Australia.

So he took his idea to the US where he secured the funding he needed to launch Produce Run from an Iowa-based accelerator.

In the year since, he’s grown the business to include 30,000 organic and small farmers supplying produce direct to consumers.

National Farmers’ Federation chief executive Simon Talbot says William’s story is one he comes across all too often; young entrepreneurs exiled from their home market because of a dearth of support, both financial and structural. He came across 20 similar stories in his first few months as chief executive at the NFF.

“All of them were forced to take their idea to the US to try and get funded – and that could be a technology design or a service design. That was highly frustrating,” he says. “Some of them actually stayed in the US to commercialise their idea and Australia lost them and lost their intellectual property.”

The Turnbull government has promised to unlock the latent productivity in Australia’s booming agricultural sector, in part, by supporting innovation in homegrown agricultural technologies and start-ups.

The ag-tech industry is experimenting with sensor technology, drones and robotics, energy and water optimisation among other innovations– a growing future industry that the NFF estimates could help unlock billions in additional productivity in the agricultural sector.

Agriculture an industry of the future

“This is an important story for the Australian economy as we look to where our future prosperity lies,” says Talbot. “We need to reposition agriculture, not as an industry of the past, but of the future. Farmers now have the opportunity to harness major innovation trends – such as The Internet of Everything and Big Data – to supercharge their performance.”

For now, a lot of the data harvested through these technologies has been left “stranded,” says the NFF’s Talbot, either because farms lack basic internet connectivity, or moreover, there aren’t the organised networks, or professionals, to make sense of it.

“The data we’ve managed to partially access remains fragmented by state, by commodity and according to the platform it’s housed in – leaving the value of the data untapped.”

Tapping into this next wave of productivity in digital agriculture is essential if Australia’s agricultural sector is to realise its potential as another pillar of the economy, says Talbot.

Late last year, the NFF launched its own incubator ,”Sprout”, with a focus on retaining home-grown ideas by providing the funds to launch 10 new R&D projects.

The agricultural sector is forecast to be generating in excess of $100 billion by 2030, equalling the coal and iron ore industries in value terms, says the NFF. However, entrepreneurs are badly needed to harness technologies to cut production costs and boost output.

The Turnbull government’s overtures to make agriculture one of the frontiers of the “innovation economy”, are welcomed by young entrepreneur-farmers like 33-year-old Will Bignell, who combines working on the family sheep farm in Brothwell, Tasmania with managing his start-up drone business, DroneAg.

More than enthusiasm needed

But he urges that “innovation” needs to be about more than just enthusiasm for new ideas.
“Innovation through the whole agricultural supply chain is what has to happen,” says Bignell.
His drones, developed by adapting thermal cameras used in mining surveillance, can create three-dimensional maps of entire paddocks or, indeed, entire 750 acre-farms, within five centimetres of accuracy, he says.

While he finds there is no shortage on investors prepared to “throw money at drones”, it is actually the lack of innovation at other stages of the agricultural supply chain that is holding his business back from achieving the sort of scale he aspires to.

“It’s no good being innovative just at the farm level, or just at the distribution level, or at the big data level without every step in the supply chain thinking the same way.

“We’ve now found we’ve hit a bottleneck where the market isn’t ready for us and no one else has been adapting. No one’s been adapting irrigators and being innovative in the space of irrigators and making the systems easier. We need pivots to be smarter and more affordable and for that we need innovation.”

Farmers can use his drones to collate detailed data that can then be applied to make decisions on irrigation, frost risk, soil management and drainage, among other uses.

Currently only 5 per cent of farmers can afford his technology but that would be a lot more if there was more innovation making his systems easier to use, he says.

Bringing price down would reap benefits

“We can gather awesome data with a drone at a really good price point and the switched-on, top 5 per cent of farmers can make money from us but the top 20 percentile of producers are struggling to take up the technology because it’s a lot of work.”

He says the value of incubators like the NFF’s Sprout initiative is in the business mentoring and training provided to those who excel at ideas but lack the business smarts to get their initiatives to stick in the market. Collaboration is also missing from the agricultural supply chain, he says.

“That’s where our sector is held back whereas if we get incubators and people talking together – so the drone guy talking to the irrigator guy – saying: ‘How about we try this?’ – that’s how things come together with that sort of joint effort in thinking outside the box.”

To truly foster innovation at the start-up level, the government needs to consider changes to tax policy, the NSW Farmers Federation said in its recent submission to the Senate Committee Inquiry into agricultural innovation and productivity.

It wants tax policy changes to create a more level playing field for start-ups and allow tech entrepreneurs to gain the necessary foot-hold, beginning with lowering the tax rate on start-up income. It also wants zero capital gains tax for start-up investors and a way for investors to offset losses.

“This would help bring Australia into line with our global technological competitors,” it said in its submission. “There are structural reasons why nations such as the USA, Singapore and the UK are better at innovation. Without tax reform that makes domestic investment capital available to small cap start-ups, we will keep losing our brightest technologists and best IP to foreign-owned firms that sell the products back to us at inflated prices.”

Click here to view the published article online.

For all media enquiries please contact

James Murray
Senior Public Relations Coordinator
Stephanie Trethewey
Communications & Community Manager