Setting the scene: The UK agritech market opportunity
The UK is a prime destination, for Australian agritech SME’s, scaleups and startups, with plenty of capital, and a growing interest in agritech.
London is teeming with family office capital, and renowned as the financial epicentre of Europe, making it an attractive yet competitive market to tap into.
What’s lesser-known, is the UK’s deeply connected agritech community and its go-to sectors, that provide businesses with the edge to refine their route to market and maximise global impact.
“Agritech is a trending sector in the investment community, whereas it wasn’t probably two or three years ago,” said Christopher Horne, an agritech specialist, from the UK’s Department for International Trade, with over 20 years in the cropping sector as a plant scientist and agronomist.
Chris paints a picture of the sheer size of UK’s investment community, with the British Venture Capital Association boasting over 700 member firms, responsible for raising 11% of the globe’s total VC (almost £50 billion GBP) last year.
While the UK’s agritech investment is still a small percentage (2%) of the global sum, Chris admits, “The UK can rightly claim to be the European champions for agritech investment.”
In 2019, the UK topped the European agrifood tech funding charts, with $1.1 billion accounting for one-third of Europe’s overall total, tallying more than the next two contenders – Spain and France – combined.
To better understand the value of this exciting market opportunity, including the hot sectors, the challenges, and pathways to navigate the investor journey, we’ve teamed up with the Australian Trade and Investment Commission (Austrade) and the UK Department for International Trade (DIT).
We spoke with industry experts, Christopher Horne, Lawrence Brown, and Johnny Henwood from the UK’s DIT in a thought-provoking discussion in October, guided by Michael Macolino, BDO Australia’s associate director of agtech.
Market comparison: Australia versus the United Kingdom
Key challenges for UK’s agricultural sector
“There’s a lot of challenges UK farmers need help with and agritech companies can potentially contribute to,” said Chris.
Sectors of interest include aquaculture, controlled environmental agriculture, precision farming, data capture and animal nutrition, among many others seeking innovative agritech solutions and research to reduce global food security risks.
“There’s a big demand on the farmer to become more and more sustainable, and efficient in production.” Not only does this highlight the need for agritech but it can be helped by agritech, he added.
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The UK may harvest some of the highest average irrigated wheat yields in the world, said Chris, but there are many challenges arable farmers face. “In fact, the yields of many of UK’s leading crops, like wheat, are rather plateauing.”
“There’s definitely a yield gap between what farmers are achieving and what the potential is – so we need help in closing that.”
Wheat crop pest and disease resistance is a growing problem in the UK, Chris added, and one that Australia faces too.
UK markets for inputs, like crop protection, fertiliser, seeds, and animal health are among the largest in Europe.
Accelerating innovation for sustainable food systems
The COVID-19 pandemic has highlighted the globe’s greatest challenges and weakest links in our supply chains – but more importantly, the value in collaborating to build more resilient food systems.
“It’s an incredible time for agriculture at the moment in the UK, as is across the world,” said the UK’s DIT sector specialist for animal sciences and aquaculture, Dr Lawrence Brown, based in Edinburgh, Scotland.
“While the economy is going to go through a bit of a challenge over the next few years with everything that’s happening with COVID,” Lawrence said, it’s a reason for accelerated innovation.
“The companies that have forward-thinking technologies and concepts that make a big difference on farm, are the ones growing rapidly and seeking investment to take their technologies to the next level.”
Lawrence said collaboration and partnerships are very important when it comes to entry to market. “If you’re an Australian startup coming to the UK, you need to have that instant network and support for your business to grow,” he said.
There are strong clusters of agritech innovation throughout the UK, he said including the South West of England and in the Midlands, where the dairy sector and precision engineering companies have a major presence.
The UK’s strategic innovation agency (Innovate UK) has been a driving force in this arena launching four Agri-Tech Centres across the country in 2013, worth £90m, each with its own focus: crops, livestock, agricultural data and precision engineering.
“The agritech centres are a great asset and useful for navigating UK’s innovation funding landscape, as they coordinate big projects and help maximise partnerships with large retailers or agritech industries.”
The South West Dairy Development Centre, a 108-cow dairy farm in Somerset, is one of the state-of-the-art centres, providing startups with an environment to trial new technologies, like robotic milkers, precision grazing technologies and automated feed troughs.
Preventative agritech solutions to boost animal health and transparency
As a trained vet with clinical practice and pharmaceuticals experience, Lawrence has a nuanced understanding of UK’s livestock sector, and animal health particularly.
The UK’s animal feed sector is worth a massive £5.5b. “So nutritionists are valued partners in the livestock farming sector, as are the vets with annual veterinary expenses, around £500m each year.”
Lawrence highlights the ongoing importance of transparency and traceability. “There’s a huge opportunity for food safety and animal welfare.”
“Our farmers are proud of their farming practices and understand that welfare and productivity go hand in hand. It is by no means a trade-off, and the UK food and drink sector has a very strong reputation – and that starts with how animals are produced on-farm.”
For many years livestock farming has been focused around therapy, Lawrence said. “But now there’s a shift towards technologies around diagnosis, prevention and prediction of diseases, with performance adding another continuum of care – and this is where agritech can help.”
Where to learn more about the UK agritech market opportunity
DIT UK’s business relationship manager for NSW and ACT, Johnny Henwood, based between Sydney and his family’s Northern NSW mixed farming property, urges businesses to reach out to him and his team, across Australia and New Zealand, who specialise in maximising these opportunities.
“Our team’s job is focused on getting Australian businesses and other foreign businesses physically set up with a presence in the UK.”
“After having a meeting to discuss market entry plans, I can direct them to their respective investment office in the UK, to speak with Chris or Lawrence, depending on the sector.”
There is no specific timeline, Johnny said, as every business is different, as are their needs. “We take an adhoc approach, and work with clients for up to three or four years,” he said depending on their maturity to ensure a smooth transition.
For information on the UK please visit www.great.gov.uk or contact Johnny Henwood, business relationship manager – Sydney, UK DIT [email protected]. For more information on Australia please visit www.austrade.gov.au/agriculture40 or email [email protected].
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