AgTech is a growing field of agriculture-related innovation, meant to improve the efficiency, profitability, and sustainability of traditional agriculture. As the world's population continues to increase, including a steadily growing middle class across the developing world, innovation is needed to address challenges of limited resources and associated commodity price pressures, as well as greenhouse gas emissions and water scarcity.
AgTech can be used to describe any innovation in the sector at any step in the production process, including hardware, software, and business models. From sensors and LED lighting, to drones and autonomous vehicles, to blockchain, cloud computing, 5G, and VR, all have found a place in improving agriculture. Now more than ever AgTech is relevant amidst ongoing supply chain disruptions, recession fears, inflationary pressures, and ambitious net zero goals.
Funding is not lacking either, with billions invested globally in AgTech startups. Hundreds exist in the UK alone. Today we're focusing on two publicly traded companies that made news recently: Light Science Technologies and Agronomics.
Light Science Technologies
Light Science Technologies (LST ) said in a Q3 trading update that it had increased demand for the company's controlled environment agriculture (CEA) products. Light Science specialises in light and sensor technology used in greenhouses, polytunnels, and vertical farming setups.
Increased demand for Light Science CEA division's growing product range was recently highlighted by the commencement of several major paid-for customer trials. If successful, these trials would result in orders worth c. £3m, the company said.
One such new order may come from a leading UK manufacturer of marmalades, preserves and related products that has contracted a 400 sqm 6-month trial using Light Science's "nurturGROW" LED lighting product. This contract would be worth c. £1m if it materialises. Another nurturGROW trial has commenced at a vertical farm R&D facility, which would yield a £1.95m contract if successful.
These would be major wins for Light Science, currently valued at £11.3m. The company says its sales pipeline is currently worth over £61m, including £19.6m of forward contracts.
Agronomics and Clean Food Group
Another exciting company in the space is Agronomics (ANIC ), which invests in biopharmaceutical and AgTech companies. We recently covered Agronomics' investment in Clean Food Group, to result in 35% ownership of the latter.
Clean Food Group is an agriculture company focused on the commercialisation of palm oil by fermentation. Clean Food Group recently acquired IP from the University of Bath for the technology that produces a bio-equivalent palm oil alternative. The technology has the added benefit of yielding natural 2-phenylethanol as a byproduct, which is used worldwide as a rose fragrance and flavour.
Agronomics participated in Clean Food Group's founder round where it invested £323K, now worth 10x more at £3.23m. Agronomics identified an opportunity in the US$50.6b palm oil market, projected to reach US$65.5b by 2027. Due to sustainability concerns and potential health risks, demand for palm oil alternatives has steadily grown as well, which is where Clean Food Group's technology can make an impact.
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