Rabobank: more investment in agtech needed

More investment in agri technology is needed to meet increasing food demand in the face of population growth, the author of a new Rabobank report has warned.

The report, Building a smarter food system, said technology and data have the potential to offer productivity gains of at least 5 percent. However, while the move to more intelligent systems is happening, the investment is not enough, the lead author of the report told Agri Investor.

“Investment flows are clearly in train but more is going to be needed,” said lead author Justin Sherrard, a global strategist at Rabobank. Figures earlier this week revealed that the first six months have seen a record number of investors back agtech companies globally, to the tune of more than $2 billion.

While the numbers indicate growing interest in the sector, Sherrard said the key to a smarter system “is not about start-ups, angel investment, or large R&D investment but the bit in between. How do we get established food and agri companies to provide off-take agreements which take the risk off the table for investors”, and enable technologies to be piloted and commercialised.

The report identifies drones, big data and smart irrigation as examples of technologies being used to create the industry of the future.

All these sub-sectors have seen significant investment in recent months, such as Advantage Capital Agribusiness Partners’ backing of California-based irrigation management company Hortau, Osmington and Mitsui’s investment in Canadian data management company Farmers Edge and Accel Partners’ $75 million into Chinese drone technology developer DJI.

As well as ensuring large food and agri companies play their part in ensuring technologies backed by investors are harnessed, Sherrard said supply chain complexity is a barrier to this smarter future, with “clearer connections between buyers and suppliers and the sharing of data, risk and reward”, needed.

He also noted the importance of agtech and smart food production solutions not moving “too far ahead of societal acceptance. People want to know where their food comes from and how it is produced. A smarter system can help with this… but one of the risks we face is people who favour simplicity saying ‘it is too complicated’.”