Get small and grow big! – innovation and consolidationJohn Manners, Director CSIRO Agriculture and Food

Outline

• R&D imperative & investment trends

• Big getting bigger

• Even bigger new arrivals

• Innovation ecosystem

• Small, smart, fast and agile

• Disruption dilemmas

• Get small and grow big!

A Tide of Economic OpportunityOver 2-3 billion emerging middle class in Asia

Source: Valerie Pieris, Reddit

R & D investment is critical for productivity

ABARE 2013 & DAWR 2017 Reports

Racing climate change in Australian Agriculture

Year

1900 1920 1940 1960 1980 2000Rain

fall d

evia

tio

n f

ro

m a

ve

ra

ge

(m

m)

-100

0

100

200

110 year rainfall pattern in SW Australia Wheat Belt

27% decline in wheat yield potential in 25 years but actual yields balanced by closing yield gaps

Wheat ‘yield potential’ reduction 1990-2015

Hochman et al Global Change Biology 2017 and The Conversation 2017

Agricultural R&D Expenditure – Going East & Private!

Pardey et al Nature 2016, AAS 2017 Report, Bloomberg

China, Japan & India becoming dominant – private enterprise investment growing fast

Aus Ag R&D $

Ag MNCs Global R&D

Ag-Tech consolidation of revenue and power

Source: Konzernatlas/Heinrich-Boll Stiftung

Unsurprisingly, not everyone is happy!

Bayer & Monsanto

Stay away from us!

For a farm and bee-friendly agriculture

CSIRO Partnerships with Bayer and Monsanto

Cotton – Three way commercial alliance for traits and germplasm for current cotton varieties with CSD Ltd.

• Numerous technology licenses (RNAi, Acceleron strains for BioAg, and GM traits)

Wheat – 10 year cereal alliance focused on productivity traits. Bayer opened Australian wheat breeding centre.

• Major international RNAi partner for crops• Some licences and consultancies

What is driving ChemChina? From 1959 to 1961 a famine killed an estimated 34 million people in China.

With 19% of global population but 7% of arable land, China needs to optimize its agriculture as well as readily import food.

Long game of Belt and Road led R&D and Agritech Eur-Asian alliances? Australia needs to connect to this opportunity

Food rationing in 1961

Source: Fortune.com and Bloomberg

Consolidation and Ag-Tech R&D• Drivers are efficiency and scale

– “Consolidation is generally favorable for agriculture and the economy. It will yield a lower cost structure, which in turn will lead to lower food prices and more competitive food and farm products in world markets.” USDA

• Trends towards uniformity not diversity

• New efficiency & productivity technologies will thrive

• Does not promote new higher value consumer food products

• Riskier novel food product technologies need another pathway

• Prone or protected from disruption?

E.g. Crop-biotech is focused into regions producing low nutritional diversity. We need diverse biotech adoption for nutritional security

Mario Herrera, The Lancet 2017

In Japan via Teijin Corp., more than 20 BARLEYmax™ new food

products sold through convenience stores & via

eCommerce.

Freedom Foods new B+ releases in USA

Alpine Breads in Coles

USA - HealthSenseTM

World’s first high amylose wheat flour

New CSIRO Value Added Food ProductsNew BarleyMaxTM Products

In Japan via ‘The Healthy Grain’

Gluten-free beerIn Germany

Investment partners include – GRDC, Groupe Limagraine, Wine Australia, Radeberger, The Healthy Grain

World’s Biggest Tech Investors are coming

Annual R&D Expenditure (US$B)

[Google]

Emerging digital agri-food innovation ecosystem

Digital Agriculture

Proximal Sensing

Remote Sensing

Data Analytics

AI & ML

Process and Statistical Modelling

Model-Data Fusion

Decision / Risk

Analysis

Robotics and

AutomationDisrupted

Value Chains

NetworksClouds& IoT

Examples of Agrifood R & D Investment Entities

RDCs Big Ag-Tech

Tech Start-Up Big New Tech

Strong local industry focusStrong stakeholder interestsLow risk appetiteRepeat annual R&D budgetNeed path to marketComplex R&D relationshipsSlow & bureaucratic

Focused, committed,High risk appetiteHigh & fast failure rateNeed capital $ inputNarrow market entryExit strategy focusLean, hungry and agile

Dominant strategic filtersShareholder profit drivenMedium risk appetiteLarge R&D capacity & budgetGlobal product perspective High diligence & bureaucratic

Horizontal expansion seekersAgri-food data opportunityLow domain knowledgeHigh risk appetiteSeek disruptionMonopolistic global strategiesVery large R&D/M&A budget

Australian agri-food SMEs not included in above analysis

New

Established

Virtual Fencing

Commercialised by Agersons, a small Australian start-up company

Australia’s poor ranking in innovation efficiency• Switzerland (6)• Netherlands (12)• Germany (19)• Sweden (22)• United Kingdom (29)• Finland (41)• Israel (42)• Ireland (47)• Norway (51)• Italy (52)• S Korea (54)• Belgium (55)• USA (57)• Spain (60)• Denmark (61)• France (64)• New Zealand (66)• Malaysia (72)• Poland (76)• Australia (81)

In 2014

• 8th for R&D intensity/quality

• 10th for $ inputs

• 21st for $ output benefits

• 81st for innovation efficiency

• Australia ranks last in OECD for Company/Research collaboration

Cornell INSEAD WIPO & Global Innovation Index 2014

Australia – lags in value of agri-food exports

19 |

Global capitalB

illio

n $

Technology catapult

Valley of death

<0.1 into deep tech

Valley of death – needs an innovation bridge

csiro.au/on

Australia’s science & tech accelerator

Australia’s Sci-tech Accelerator

28 University Partners, 3 PFRAs plus CSIRO

In Year 1 (NISA) 136 research teams & > 500 people

Teams in Food, Agriculture, Renewables, Medicine &

Diagnostics, Mining, Defense & Environmental Sustainability

4 Spin-Outs, 5 on Runway for Spin-Out

10+ Incubated – likely to be JV, license or service business

Leaf oils

A potential game changer for global

oil production

Surinder Singh, James Petrie, Allan Green & NextOil team

Jeremy Gutsche, TrendHunter

TranspiratiONal: Sprayable biodegradable polymers for water conservation

Reduces soil evaporation and increase plant

transpiration…

Easy to apply

Suitable for use in all cropping systems

Will replace non-

biodegradable polluting plastics

Keith Bristow and Phil Casey teams in CSIRO Ag & Food & Manufacturing

Polymer* Treatment

Water applied (ML/ha)

Water productivity

(t/ML)

Increase in water

productivity over control

1. Rockmelons2014

2.98 18.79 32%

2. Rockmelons2015

3.52 9.97 22%

3. Sorghum2015

1.76 10.85 34%

22-34% improvement in field water productivity

RapidAIM

• Real-time alert for rapid response = less damaged fruit

• Improved workflow = 8 fold reduction in labour

• Early warning of future FF ‘hot spots’ = keeps trade flowing

Unique Sensors – Behavioral “fingerprint”

Internet of Things

www.rapid-aim.com

Automated detection of pest incursions

Nancy Schellhorn and team

Future Feed: suppression of methane emissions from ruminants via Asparagopsis algal supplements

High potential as a feed additive for

ruminants to reduce GHG emissions &

increase productivity

Potential large new industry

Rob Kinley, Michael Battaglia and the Future Feed team

We Live In Exponential TimesSo get small and grow big!

Thank you

Thanks to all the amazing research teams at CSIRO and our partners that have contributed material to this presentation