Why AgTech is hot and what to look out for
Food & Agriculture
Food & Agriculture
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Agriculture as an investment theme has received significant publicity over the past two years and a number of ASX listed companies have performed exceptionally well.
AgTech — technology that improves farming productivity — is expected to help push agriculture into a $100 billion industry in Australia by 2030, according to research commissioned last year by tech accelerator StartupAUS.
The global AgTech opportunity could reach $US189 billion ($239 billion) in the next five years, fuelled by $US1.5 billion in venture capital investment, according to the report, Powering Growth: Realising the potential of AgTech for Australia.
Agriculture’s long-term growth drivers include:
These factors suggest companies with farmland — or an ability to improve the use of arable land — may outperform other assets over time.
Companies that can consistently demonstrate they can do any of the following — at a relatively low cost – will be of particular value:
There are a number of small ASX-listed ag-tech companies working to help farmers in this area.
Abundant Produce (ASX: ABT) is Australia’s only listed plant breeder and agricultural intellectual property developer, operating with the University of Sydney’s Plant Breeding Institute.
Abundant breeds hybrid vegetables with better yield, disease resistance, temperature tolerance, taste, texture, colour and shape, and sells seeds to food producers via a multinational seed distributor, worldwide.
In the past 5 years Abundant has had success improving crops such as better tasting tomatoes with optimal colour and heat tolerance; crunchy cucumbers with high early season yield and insect resistance; and self-pollinating zucchinis and aubergines.
Another AgTech play Roots Sustainable Agricultural Technologies — which is due to list in October — has a proprietary root temperature optimisation system that works by heating and cooling roots at various times to improve yield and quality.
CropLogic, uses monitoring technology from New Zealand’s Institute for Plant and Food Research to advise farmers on best practice to increase output and reduce costs.
Anatara Lifesciences (ASX:ANR) is the developer of a plant-based, non-antibiotic therapy that prevents and treats diarrhoea in pigs
After recently announcing an acquisition, Sensera (ASX:SE1), a manufacturer of micro sensors, has entered the AgTech space with a livestock monitoring product.
Sensera sells livestock ear tags that can monitor animal location, temperature, feeding, lethargy and sexual receptivity.
Matthew Langsford is a portfolio manager at boutique investment manager Terra Capital. Matt is a qualified Chartered Accountant and has worked in corporate finance at Ernst and Young and in institutional and high net worth broking, specialising in small caps.
More information: www.terracapital.com.au
Terra Capital owns shares in Sensera, Roots Sustainable and Abundant Produce.
This advice has been prepared without taking into account your objectives, financial situation or needs. You should, therefore, consider the appropriateness of the advice, in light of your own objectives, financial situation or needs, before acting on the advice.
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