The three lead 11 categories that make up the agritech sector, as defined by Coriolis Research for NZTE.
Overall, the report found NZ agritech exports are broad-based and growing strongly but comparison with competing countries showed considerable room for improvement.
Coriolis did not comment on the ongoing debate on the desirability of NZ exporting its pastoral expertise.
But NZTE said NZ was a world leader in efficient and low-cost conversion of pasture to protein and the systems that surround it.
Although NZ had strong trade growth and capabilities in these areas, there was some confusion in the past as to what constituted NZ agritech, Coriolis said.
Coriolis analysed the Statistics NZ trade (HS) codes to identify the contributors to agritech exports and described them collectively as “onfarm products and equipment that add value to pastoral agri-businesses”.
They were divided into predominantly agritech, being 80% or more of farm-based, value-add products and partial being 20-80% agritech.
The first category included fertilisers, herbicides, milking machines and semen while in the second were wire, scales, unspecified antibiotics, medical equipment and electrical equipment.
Coriolis identified the significant areas of growth and compared NZ’s performance with Israel, Ireland and the United States.
It said the whole sector in NZ grew at 4% annually compounded over the five years from 2008 to 2013, heavily weighted in favour of the predominantly agritech participants.
Animal genetics was a fast-growing segment because of recent live cow exports to China, as Fonterra populated its China farm hubs. It had a 32% compounded annual growth rate (CAGR).
Plant genetics was a $200m-plus category, growing at 10%.
Machinery and systems were not far behind at 8% CAGR, the report said.
Comparisons with key competing countries showed that NZ was underperforming in size but showing good growth.
For example, Israel was a small, desert country the size of NZ’s West Coast but exported 10 times as much agritech.
The agritech area held a great deal of promise for trade, in that it was “not a race to the bottom” with China’s manufacturing might.
“Rich, developed countries can be successful in agritech exports – comparison suggests growth upside potential of five-10 times current value.
“Our market mix is reasonably well-balanced but skewed towards Australia – Europe and North America stand out as having capability to take significantly more exports.
“We are achieving good CAGRs relative to peers and we appear to be on a roll with agritech.
“We have a robust product mix and most areas have significant growth potential,” Coriolis said.
“Rich, developed countries can be successful in agritech exports – comparison suggests growth upside potential of five-10 times current value.”
CORIOLIS
It singled out the removal of the dairy quota system in Europe and the need to increase farm efficiencies in South America.
“China’s sizeable demand for meat and dairy products provides NZ agritech firms with a significant opportunity to be the go-to agritech solutions provider.”
Coriolis thought the key features of the more successful exporters included products, systems and IP that was difficult to replicate, use of sophisticated technology, patent protection, a well-established skill set and consumer willingness to pay a premium for quality.
For 2013, exports including all 96 HS predominantly agritech codes and 124 partial agritech codes gave Coriolis a total of $1.85b but its best guess under the relevant definitions was only $1.2b.
Australia took 28%, US 15%, China 5%, Pacific Islands 6%, the UK 4% and the rest of Europe 17%.
China, Canada, South Korea, US and Saudi Arabia led the way with trade CAGRs over the past five years.
Turnover leaders were PGG Wrightson (about $200m), Gallagher Group ($150m), Tru-Test Group ($75m), Agriseeds ($60-70m), Schering Plough/MSD, Argenta, Ballance, Carr-Elders, Simcro, Waikato Milking Systems, LIC and Donaghys, accounting for $800-$900m in total.
Digging down into the competing countries, Coriolis found animal health products dominated trade for Israel (58% of its total agritech exports), Ireland (90%) and the US (27%).
But the animal health categories contained significant human health products, which could not be separated. The same compounds were often applied to animals and humans.
Israel also had a sizeable fertiliser category and Ireland was strong in pumping, irrigation and water products and in agrichemicals.
Understandably, Israel’s and Ireland’s agritech exports went mainly to Europe and North America.
China had 5% share of each country’s exports, including NZ and the US.
NZ CAGRs over the past five years were strongest in China and North America while Ireland grew trade with Australia and NZ by 24% CAGR and with North Africa, the Middle East, Central and South America by 18% each.
