The future of fintech in Agribusiness
Wed 5 June 2019 - 2:30 pmAgri-Business | Business Tech | Expert | Industry | Opinion | Tech
Thought leadership byline: Sam Fitzpatrick, Agribusiness Lead, Western Union Business Solutions
Agribusiness in Australia: the lay of the land
Australia’s agribusiness sector is currently estimated to be worth $256 billion, with the economic impact reaching communities around the country.
Currently more than two thirds of agricultural commodities produced on Australian farms are exported each year, with production and exports of beef, wine and dairy products having increased considerably over the past twenty years.
In recent years, Australia has also diversified its exports, shifting from a heavy reliance on a handful of key destinations, including the UK, the US and Japan, to a more varied customer base. In 2017, the top three markets accounted for just 55 per cent of Australia’s red meat export volumes, compared with 72 per cent in 2007.
Beyond our strong history in primary industry and the diversity of our natural climate, other competitive advantages enjoyed by Australia’s agricultural sector include its commitment to innovation, high biosecurity status, and close proximity to its main export markets.
However, the sector is not without challenges, and ensuring its continued growth involves navigating a range of issues; from the impact of climate change and prolonged drought, to managing complex supply chains and export risks.
Considering this, AgTech solutions that help better manage production demands and drive more efficient supply chains warrant consideration.
Agribusiness and technology: a case for collaboration
Broadly speaking, AgTech refers to a nascent industry that exists at the intersection of agriculture and technology. The industry is broad and includes products and services in the agriculture value chain, which contain, or are enabled by technology.
Australia’s AgTech sector has seen impressive growth in recent years, with an estimated 300 AgTech and foodtech enterprises currently operating around the country.
As agribusinesses look to grow and expand internationally, their financial supply chains will evolve and become more diversified. The single point of financial service that was once provided by a bank may become obsolete for businesses who are now faced with managing international payments, cashflow and risks associated with currency exposure.
AgTech solutions that facilitate business-to-business trade and supply chain finance therefore have an important role to play, particularly as Australia looks to attract international investment and establish itself as a global leader in agribusiness.
Digital solutions, particularly fintech solutions that process global payments and cash flow, may work to enhance value chain efficiencies and reduce frictions in agribusiness supply chains.
Agribusinesses should also recognise the value of specialists when managing issues related to international trade and exports.
Western Union Business Solutions provides industry expertise coupled with local and global market knowledge to help Australian agribusinesses navigate the myriad complexities that come with expanding into international markets.
The National Farmers’ Federation aims to reach $100 billion in Australia’s agricultural output by 2030.
While we’re heading in the right direction, Australia’s agricultural industry still has a way to go if it’s to reap the rewards of the digital age and drive positive growth in the sector.
Australia’s agriculture sector currently has one of the lowest proportions of ‘innovative-active’ businesses in Australia, highlighting the need for stronger collaboration.
Businesses servicing the agricultural sector can benefit from working hand-in-hand with government and industry to ensure Australia’s agricultural industry reaches its full potential.
Simultaneously, as Australia’s agribusiness sector expands to foster a larger and more diverse industry, technology should be leveraged to help manage complexities and drive efficiencies in supply chains.
As supply chains diversify, fintech has a considerable role to play in the future of Australia’s AgTech sector, most notably in relation to global trade and exports, cash flow management and traceability.
Agribusiness is currently considered one of the ‘fantastic five’ industry sectors, with the potential to become a key driver of growth opportunities for the Australian economy.
Agribusinesses and their business partners should capitalise on the growing opportunities presented by fintech solutions to ensure they are well placed to reach their growth potential.