For true innovation, many companies need fresh ideas from outside the business. “That is why start-ups in the agrifood sector are so important”, says Jeroen Leffelaar, managing Director Food & Agri Innovation at Rabobank and one of the founders of F&A Next.
Mr Leffelaar notices that agri food companies are increasingly starting to realise that the fine tuning of their own research and development is no longer sufficient to keep up. Starts-ups can help. Although the agrifood sector differs from other sectors regarding innovation speed and implementation, many investors and start-ups are attracted to the agri and food sectors.
In the build-up to the next F&A Next, an annual event that brings together start-ups, investors and companies (corporates) in Wageningen, the Netherlands (May 15-16) we caught up with Mr Leffelaar to talk more about the need for innovation and the role of start-ups in this.
Why does innovation in the agrifood sector differ from other sectors?
“For starters, the agrifood sector depends on natural influences set by mother nature such as the growing seasons. This means that innovation takes more time than in other sectors. In addition, the agrifood sector is a bit reserved. People in the sector, farmers for example, prefer to wait with the implementation of new products, services or technologies until it is confirmed that the technology works and contributes to a higher yield. Don’t get me wrong, they want to innovate, but not overnight and it really needs to pay off. They won’t take a gamble on their farm when implementing new farming methodologies.”
“Additionally, laws and regulations are impacting the pace of innovation and this is specifically the case for the agrifood sector. Take food safety for example. The European Union is not very motivated to reduce the boundaries in law and regulations to stimulate innovation in agri and food. The new regulations on insects as food or feed took – and still takes – a long time for example. Also, consumer acceptance is an important factor regarding innovation speed. This has led to the fact that the sector has been under invested in for a long time and compared to other industries, a complex, pretty inefficient sector with a low rate of digitization.”
Why is innovation in the sector so important?
“The need for innovation is high, fueled by a growing global population and an increasing purchasing power in emerging markets. These trends are likely to further boost the demand for meat, amongst others. Other constraints include limited natural resources, climate change, and the bare fact that about a third of all food (ingredients) is wasted along the value chain (from farmer to consumer). Current food production systems are simply unsustainable, even with today’s population. In other words, the need for innovation in agrifood is bigger than ever. We also need to be better in creating opportunities for entrepreneurs to disrupt an inefficient industry by creating and implementing new solutions and ingredients. At the same time, innovation and change is not always easy for established companies.”
Why do companies struggle with innovation? They often spend a lot on R&D, right?
“Companies are often restricted to their own R&D department. But on a certain level, they acknowledge they have to do things differently. Start-ups are a great opportunity to refresh a company’s view on innovation, new products and ideas. However, the actual implementation of disruptive innovation is undoubtedly one of the biggest challenges for a company.”
What does it take to get a good cooperation between an established company and a start-up going?
“From both sides, getting in touch with either a start-up or a big company is not easy. For start-ups it’s often a huge step to get in touch with the big companies. Smaller start-ups stay often out of a corporate’s sight. Additionally, confidentiality is a major concern for start-ups as they obviously do not want that larger companies to benefit from their ideas and get away with it.
When the 2 have finally found each other, the implementation of start-ups within companies is quite a challenge. Large companies tend to have a specific culture including a way of running their business. So how much room does that leave for any start-up? Companies therefore should ask themselves how they can let the start-up blossom in their own business.”
You are one of the organizers of the F&A Next event. What is the event about?
“With F&A Next we share the latest industry insights and offer a place where companies, start-ups and investors can meet. As I previously mentioned, it’s difficult for all parties to find the right partner for cooperation or funding. Since there is growing interest in external innovation among large companies, this is the ideal place to connect and to jointly bring innovation in this industry to a higher level.”