In the south of the Netherlands, Jacob van den Borne has garnered a reputation as the Elon Musk of potatoes.
Since taking over the family farming business in 2006, Mr van den Borne has become a model of precision agriculture, introducing everything from GPS systems to autonomous tractors and soil sensors. This has improved his potato yields by up to 1% annually since 2010, and he is already eyeing the next set of advancements. “We now see the potential of big data, robotics and artificial intelligence (AI) to help further optimise yield and quality,” he says. “If we can really understand all of mother nature’s processes, then I think the opportunities are a lot bigger than what we do now.”
Among the Dutch, Mr van den Borne is no anomaly. The Netherlands has emerged as a leader in all forms of agritech, which improves crop resilience and farming efficiencies while minimising land use. It has helped the tiny country become the world’s second biggest exporter of food, beaten only by the US. Much of this crop yield is produced in high-tech greenhouses: “In open fields in Spain you can harvest around 4 kilograms of tomatoes per square metre. A Dutch high-tech greenhouse produces 80 kilograms per square metre and with four times less water,” notes Ernst van den Ende, managing director of the plant sciences group at Wageningen University & Research, which ranks as the world’s best agricultural university.
Ripe for disruption
In a 2019 report the World Resources Institute warned that if today’s food production levels continue, most forests will have to be cleared to feed the world’s nearly 10 billion people in 2050. Agritech is the only sustainable way to avoid global famine: a fact that astute investors started latching onto a decade ago. Pitchbook data shows that venture capital in global agritech grew from $322m in 2010 to $4.1bn in 2019, at a compound annual growth rate of 32.7%.
Just like other sectors before it, farming is transitioning into the 21st century. “The belated technology revolution hitting the food production sector is an opportunity to invest in exciting, young technologies that move the needle in terms of sustainability,” says Alastair Cooper, senior investment director of ADM Capital’s food-focused Cibus Fund. “The industry is late to the tech party, but it’s coming fast and promises very strong financial returns.”
Investors say consolidation at the top of the agriculture sector — thanks to a spate of megadeals between the likes of Bayer and Monsanto, and Potash and Agrium — has stifled innovation within the industry’s big corporates. “It’s all been pushed down to smaller players,” says Mr Cooper. “This is where you see an explosion in the number of new strategies, opportunities and brands.”
Adam Anders, managing partner of Anterra Capital, which became Europe’s first agrifood-tech focused venture capital fund in 2013, agrees that early-stage businesses are driving advancements: “To start a movement like this you need risk-taking, visionary entrepreneurs backed by high-risk private capital. We have seen this happen in every other sector, be it telecoms, movies, taxis or music. And it will be the same in food and agriculture.”
The Netherlands’ rise
As often happens with venture capital, in its early years Amsterdam-headquartered Anterra focused on the advanced US market. But Mr Anders now finds more opportunities closer to home: “The fundamental technologies and ideas are well-placed in Europe, and extremely well-paced in the Netherlands.”
He sees the country leading innovation in five main agricultural areas: dairy, piggeries, vegetable seeds, greenhouse and flowers. “Its history as a trading nation, through which it gathered the best of technology from around the world, made it open to new ideas and fostered an entrepreneurial mindset,” Mr Anders adds. “That has translated into developing a nimble and tech-first food system.”
While the Dutch are nurturing these advancements, the instigators often come from further afield. “Everyone is looking to the Netherlands to come up with new food production systems. But that doesn’t mean everything is being done by the Dutch,” says Maarten Schans, Invest in Holland’s agrifood specialist. Indeed, much is happening through international consortia. “If you want to be a part of that, it makes sense to have a presence here, to be connected to the right people and opportunities,” he adds.
The region surrounding Wageningen University has been a magnet for international food companies and research centres, earning it the name ‘Food Valley’ and making it a hive of collaborative activity. It is also home to Startlife, an accelerator which connects local and foreign entrepreneurs with funders. “We now have over 350 start-ups, and investments and new players are coming from all over the world, including Silicon Valley,” says Mr van den Ende, who chairs Startlife.
In 2020, the UK-based Cibus Fund invested in two Dutch agritech firms: Connecterra, a start-up using AI to improve productivity and sustainability in dairy farming, and The Kingfish Company which farms Dutch Yellowtail using recirculating aquaculture system (RAS). “We’ve probably looked at 25 RAS opportunities in the past two or three years, but Kingfish … is the highest-quality opportunity that we’ve seen,” says Mr Cooper.
The secret sauce
The Netherlands offers lessons for governments wanting to improve food security, particularly after Covid-19 revealed the fragility of global supply chains. It is difficult to replicate its farming heritage and being home to Rabobank, the world’s biggest agriculture lender, but other targets are more achievable.
Horticulture and agrifood are among the government’s nine so-called ‘top sectors’, in which it encourages innovation via public–private partnerships and bringing together academia and business. While Wageningen University is world-renowned, the sector’s success is supported by a broader knowledge cluster that includes strong ICT, life-science and robotics capabilities. “The challenges being addressed by agritech can only be solved using multiple technologies and a multidisciplinary approach,” says Mr Schans. “That is something we in the Netherlands can handle very well because we have expertise in all these fields and a collaborative mindset.”
For governments and investors alike, now is the time to get on board. “The industry is at the start of a period of enormous disruption,” says Mr Cooper. “This is just the first rung of the ladder.”
This article first appeared in the February/March print edition of fDi Intelligence. View a digital edition of the magazine here.