New technologies are a vital component in ensuring we can produce enough food for our growing global population. Here we analyse some key trends in the agritech, or agriculture technology, market as well as some exciting use cases emerging from the startup ecosystem.
Major challenges face tomorrow’s agriculture sector
Have you ever asked yourself: what does it take for a strawberry to make it into my yoghurt? While there has been a growing public awareness of the health and social implications of some agricultural practices, most consumers are still very much disconnected from the process that makes the production of the food on their table possible. We often take it for granted that our grocer will be fully stocked with a large variety of produce year-round and we forget how important the agricultural sector is to our lives.
This is in part due to the continuous progress agriculture has undergone and still goes through today. Thanks to technological advances, from machinery to genetics, the growth of crops and farming of animals has become increasingly efficient and reliable.
Yet, the future of agriculture is faced with major challenges: climate change is making weather conditions less predictable and natural disasters more frequent, as was shown by the major bush fires, storms and floods in 2019. The sector is also increasingly pressured to adopt more sustainable practices when it comes to carbon emissions, pesticides and water usage as well as meet increasing demand from a fast-growing global population.
New agritech (or agtech) solutions are thankfully emerging to help farmers meet these expectations in a sustainable manner.
Agritech: a market with growing potential
While it hasn’t received as much attention as foodtech, agricultural technology – aka agritech – is definitely garnering momentum. It is estimated that the global agritech market will reach USD 13.50 billion by 2023, at a CAGR above 18% until at least 2025.
Far from being the top target market, we are still seeing that several venture capital (VC) and corporate VC funds are now looking to reap the fruits of this emerging trend (excuse the pun). In fact, Forbes reported that in 2019, startups operating upstream in the food production chain scored USD 7.6 billion, so USD 100 million more than the previous year.
Among these, for instance, the rated startup Fieldin completed a USD 12 million Series A with the participation of Cavallo Ventures (the investment arm of the agricultural chemicals company Wilbur-Ellis Company Inc.), Gal Ventures, Zeev Ventures and others.
Tech for smart plantation management
A recent analysis highlighted that within the agritech market, there is a segment of particular interest: the Smart Plantation Management System market is predicted to reach USD 1.48 billion by 2026 globally, growing at a CAGR of 6.5 % between 2020 and 2026.
Indeed, innovative solutions that can enable farmers to plant, monitor, irrigate, fertilise or harvest their crops in a smarter way are highly sought after. By smarter, it is generally implied that decision-making can be done based on the collection and analysis of data, also referred to as plantation intelligence (PI). IoT devices (such as specialised sensors which are connected to the crops, online and between each other) coupled with big data analytics software are providing a wealth of actionable information to plantation managers.
Moreover, machine learning algorithms and data visualisation tools can empower non-tech savvy workers to understand this data more easily, take follow-up actions accordingly and even automate some of these actions (e.g. adjusting irrigation systems). There are also interesting new use cases for drones and satellites to be used in weather predictions and crop monitoring.
Focus on Phytech and IoT for crop stress monitoring
Within this trend, Early Metrics has identified a startup with very strong growth potential: Phytech is an Israeli company, also based in the US and Australia, which has developed innovative algorithms to process data from in-field sensors to improve crop performance.
Phytech’s IoT sensors are placed on the crops themselves and track micro-changes in their diameter, which relates to their level of hydration. As a plant photosynthesises, it loses water which leads to its trunk or stem to slightly shrink, a change that is picked up by the startup’s connected sensor. The data collected is then analysed and visually presented via a platform and app. This IoT device can also detect when a plant is over-irrigated. Indeed, too much water can lead a plant to reduce photosynthesis and yield less fruit.
By being able to measure and visualise this stress indicator, plantation managers can rapidly identify plots of lands that are under-irrigated and reduce irrigation where it is less needed. This means they can optimise their plantation management, reducing wasted water, costs and risks as well as improving crop yield.
An agritech startup going from strength to strength
Already in 2017, when it underwent the independent rating process by Early Metrics, Phytech placed itself in the top 5% of thousands of analysed startups mainly thanks to its rapid international expansion, its solid early traction and its well-matched, complementary team.
Since then, the startup has met our predictions, raising a total of USD 20 million and expanding its client base. For example, the Australian agricultural group Nutrano shared that it was able to yield a great mandarin harvest despite new Covid-19 protocols partly thanks to its collaboration with Phytech. Moreover, last year, the San-Diego based Stehly Grove Management shared how the startup’s innovation was helping it face climate change:
We are confident that agritech solutions, like the ones developed by Phytech, will continue to emerge to make our agriculture sector more future-proof and resilient. Greater resilience in the context of global warming and climate change will have to be secured by food and beverage players in order to meet the needs of tomorrow’s population. Finally, it will be interesting to follow how developing markets with fast-growing populations and a large agricultural sector, such as India, Brazil and Nigeria, to name a few, will drive and adopt agritech innovation.