New Zealand is the best country in the world to run your business, according to the World Bank’s 2019 ease of doing business index. It has a diversified market and heavy international trade agenda. To add to that, the scale of New Zealand’s production makes it an economic powerhouse for its size.
Having a rich culture of endorsing foreign investments, New Zealand has a range of thriving industries. These industries could be very interesting for investors looking into company formation. Some of these, for example, construction and engineering, have already been discussed by Biz Latin Hub.
However, one of the best performing industries is agriculture. Specifically, the technical agriculture industry (agritech) is showing very promising signs of growth. Read on to learn how Latin American businesses could share in the success of the agritech sector in New Zealand.
New Zealand and Latin America – Firstly, what is agritech?
To explain agritech, it’s best to first explain New Zealand’s dominant agriculture sector. This powerful sector is the bread and butter of its local
and export economy. In spite of its size, the Pacific Island nation is one of the largest dairy exporters in the world. This is centralized by the country’s dairy-dealing kingpin, the Fonterra Co-operative Group.
Additionally, the country’s red meat exports reached $6.7 billion in 2018. New Zealand meat and dairy products are regarded as high-value, high-quality commodities. These commodities reach as many as 140 countries worldwide, and global demand is increasing. Demand for New Zealand meat and dairy in Asia, for example, is rising with the growing wealth of the region.
Since New Zealand has such a rich and dominant agriculture sector, the country is home to world-leading agriculture-focussed institutions and universities. These companies have been searching for new ways to improve their competitive edge.
Here’s where agritech comes in
The nation’s agriculture expertise goes beyond quality dairy, meats, and animal by-products. Since the agriculture sector has been so dominant, New Zealand is seeing a wave in innovative agricultural technology (agritech). Agritech is providing alternatives to traditional farming methods and revolutionizing the sector. New innovations can increase productivity and maximize profitability for the primary sector, benefitting New Zealand and its customers.
Agricultural sustainability is a major focus, due to New Zealand’s globally-coveted food products and awareness of a growing global population. Generations of farming families and vast agribusiness opportunities have thus developed a complementary farming technology sector. Kiwi ingenuity is making waves internationally, as local agritech startups are successfully navigating the biology and technology intersection. These startups are one of the main reasons agritech in New Zealand is doing so well. The sector’s exploration of sustainable farming makes it an ideal investment choice for interested investors.
An example of one of these startups is a Palmerston North-based start-up company, Koru Diagnostics. It has had impressive success with its first funding round. Another one is New Zealand based BioLumic, which has raised US$5 million in funding. This funding is to help deal with growing global demand for increased agricultural crop yields. They do this by using short-duration ultra-violet treatments rather than genetic modification or chemicals.
However, farming technology is not something that necessarily has to remain in a specific country. This technological advancement is a value that New Zealand companies can add across the world.
Agritech and Latin America
Agricultural production in Latin America is projected to expand by 17% over the next ten years. This is stated in a report from the Organization for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization of the United Nations (FAO). More than half of this growth (53%) can be attributed to an increase in crop production and about 39% is due to the livestock sector.
According to the Agricultural Outlook, total crop production in the region is projected to grow by 1.8% per year until 2027. About 60% of this growth will be due to yield improvements, which will rise across the region over the coming decade by 11% on average. The most important changes are expected in the cereals and oilseeds industries.
Furthermore, Latin America is expected to remain an important global supplier of various food commodities. Consequently, the region will account for 56-59% of global trade of soybeans and sugar, and 30% of global meat trade by 2027.
Current trade policies in countries like Argentina, such as the removal of export taxes on maize and wheat, should encourage export-oriented production of those goods. The US has recently classified cane ethanol as an Advanced Renewable Fuel. Latin America’s position as a net exporter of ethanol will therefore strengthen over the outlook period. This will be particularly felt by ethanol giant Brazil. The value of net trade is projected to increase by 11% per annum.
This means Latin American agriculture is looking healthy and poised for further growth. Due to global changes, certain sectors are looking at a very promising future. Other sectors have proven their reliability in terms of steady growth and output.
The gap in the market
Since Latin America has such rich agriculture, it should look towards New Zealand moving forward. When analyzing New Zealand’s rise to the very top of the global agriculture sector, the region should understand there is a need for innovation. This innovation can be introduced with the help of agritech.
When providing alternatives to traditional farming methods, countries like Chile could anticipate problems like climate change. Moreover, agritech could provide pathways to an increase in production for traditional farmers throughout the continent. This increase in production thus contributes to the growth and enhancement of industry.
Since Latin America as of yet is not seeing a massive or targeted boost in agritech business, companies would have first-mover advantage. This advantage could allow businesses to grow into one of the world’s agricultural strongholds for years to come.
Follow agritech developments
The agriculture technology sector could be described as the service sector. And just like in any other service sector, it all resides around knowledge. The agritech sector’s biggest strength is knowledge of innovation. This versatile knowledge can be appropriated to various cultural and commercial models. Therefore, New Zealand agritech companies should find the right stage to introduce innovative value.
A report by research institute Callaghan Innovation points out that “New Zealand is seen as one of four locations to watch for agritech solutions alongside Silicon Valley, Boston, and Amsterdam.”
Companies like Zespri are experimenting with breeding, and incorporating robotics into the way they analyze and harvest fruit. New Zealand’s ‘Te Mana lamb’ has a grazing pasture consisting of carefully selected herbs to unlock omega 3 fatty acids in their system, changing the taste of the meat. Kiwi company Halter has created a collar for cows to track their health – an innovative response to the outbreak of certain diseases that affect livestock.
New Zealand’s connection to its land and livestock offer Latin American farmers the opportunity to tap into this creative industry and find ways to bolster their food security and sustainability. Investors should take notice of New Zealand’s developments, and consider how their business models could be applied to diverse regional agricultural conditions in Latin America
Work with Biz Latin Hub
At Biz latin Hub, we’ve helped businesses around the world enter new markets and expand their businesses in today’s competitive times. This goes for companies based in Latin America that want to export your goods and services to New Zealand. However, also for companies based in New Zealand that believe that they can add value to Latin American businesses and industries. You can depend on our time-served and experienced team to deliver across all back-office services.
Covering everything from commercial representation through to visa processing, accounting, taxation, and due diligence, make Biz Latin Hub your partner when trading between Latin America and New Zealand. Contact the team on [email protected] to find out more.