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Why the agrifood tech investment bubble could burst - or succeed

January 25 2024

This article was originally published in The Land 

Food production systems had an extraordinary moment in the sun at the end of last year.

Agriculture was called out for the first time at COP 28; a new Australian Cooperative Research Centre for Zero Emissions in Agriculture opened its doors with an unprecedented $87 million of federal funding; and the Department of Agriculture, Fisheries and Forestry's first consultation on emissions in agriculture was extended to accommodate the flood of responses.

Global investment in agrifood tech increased more than tenfold in the past decade, from $3 billion 10 years ago to around $30 billion today. With such strong tailwinds, 2024 is bound to be a bumper year, and this brings both opportunity and risk.

There is no doubt that agriculture will be key to meeting our emissions targets. Contributing around 18 per cent of Australia's overall emissions, there is no transitioning away from farming - we all have to eat. And agriculture will be pivotal to removing carbon from other sectors, too.

From finding land to build renewable energy plants; to growing biomass for green fuel; to creating meaningful carbon offset schemes; agriculture sits at the heart of our decarbonisation journey.

Technology - specifically agrifood technology - is the key to unlocking our carbon goals. The good news is that technologies exist today that are very adept at both reducing the emissions from agricultural practises and sequestering atmospheric carbon, and many of these technologies are Australian.

Right now, we have the tech advantage to lead this race. But we need these technologies, and the new ones yet to be discovered, to scale and be adopted much faster than they are today.

One fast and efficient way to speed up this process is via public-private co-investment schemes. When undertaken with the required due diligence, leveraging the right expertise, co-investment schemes could - and should - be profitable. Such schemes could go a long way toward gluing the capital in this sector together and amplifying it in transparent, accountable vehicles.

While the upside for both the planet and the wallet is real, it's also time to exercise caution.

With such strong tailwinds, the risk of an agrifood tech bubble is real. The last thing investors or innovators need is an artificial inflation of this sector, as opportunists rush toward the wall of money on offer - $17 billion just within the UAE's AIM for Climate fund, with numbers climbing all the time.

Ensuring investments in agrifood tech will yield real, measurable results is pivotal to achieving the real goal of slashing emissions and securing the future of food. Profitability underpins the sustainability of this sector, but it must not come at the cost of real results on farm.

It seems almost too simple to state that farmers will be the drivers of this transition, yet the ecosystem today is very siloed - more has to be done to link producers, innovators, funding sources and regulators together in a farmer-led way.

Establishing State and Territory-based representatives specifically tasked with bridging this gap; and better utilising the existing ecosystem of agricultural events and education programs will be a valuable first step.

This future also hangs on one pivotal, difficult problem - digital equality.

Rural and regional access to fast, reliable broadband has been a thorny issue for government for decades now. Federal delivery of these services is slow and massively expensive, but this need not be the case.

Australian-born technology is scaling now with the expansion of farm-wide broadband off the back of existing sources. Wagga Wagga company, Zetifi, for instance, is already giving farmers the ability to implement emissions-reducing technology, and as we become more sophisticated in our measurement and reporting on these initiatives, will underpin the capture and sharing of data we need to inform our decarbonisation journey.

Finally, governments have done a lot of talking at COP 28. They now need to put their money where their mouths are. The Future Fund, and indeed all government funds, should align their allocations to agrifood to the priorities of this sector, ensuring we're all able to eat, with produce from a sustainable food system, long into the future.

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