How sil­i­con makes Is­rael’s desert bloom

Business Day (Nigeria) - - EDITORIAL -

Dry sum­mers and hos­tile neigh­bours have pushed Is­rael to in­no­vate

PINK BOLLWORMS are the scourge of cot­ton farm­ers. The in­sect is less than an inch long, but it has a vo­ra­cious ap­petite for the plant’s seeds. As a child liv­ing on Kib­butz Gi­nosar, in Is­rael’s north, Ofir Sch­lam would wake up at dawn to in­spect leaves for the pest. “They were re­ally hard to find,” he re­calls.

Spot­ting the en­emy has be­come much eas­ier. Four years ago, Mr Sch­lam co-founded Tara­nis, a com­pany that uses high-res­o­lu­tion im­agery from drones, planes and satel­lites to di­ag­nose prob­lems in the field—among them bollworms, dis­eases, dry­ness and nu­tri­ent de­fi­cien­cies. In­vestors are join­ing the ef­fort: in Novem­ber, Tara­nis raised $20m.

Faced with un­friendly neigh­bours and an arid cli­mate, Is­rael has had to in­no­vate to sur­vive. Tara­nis is the poster child of its stun­ning rise in agritech. Over 500 com­pa­nies op­er­ate in the field, nearly twice as many as in the bet­ter-known cy­ber-se­cu­rity sec­tor. A third of them did not ex­ist five years ago. Is­raeli agritech firms at­tracted $171m in eq­uity in­vest­ment in 2017, ac­cord­ing to Start-up Na­tion Cen­tral, a non-profit or­gan­i­sa­tion, con­sid­er­ably more than those in big­ger farm­ing coun­tries, such as Aus­tralia and Brazil.

Other coun­tries have bet big on agritech, but Is­rael is ahead of all but Amer­ica, say in­vestors. Large coun­tries with big ap­petites are tak­ing no­tice. When Wang Qis­han, China’s vice-pres­i­dent, vis­ited Is­rael in Oc­to­ber, he toured agritech ex­hibits. “Agri­cul­tural parks” us­ing Is­raeli tech­nol­ogy have mush­roomed across China. In­dian and African of­fi­cials have also made re­cent trips to Is­rael seek­ing in­spi­ra­tion.

Be­cause it trades lit­tle with its neigh­bours, Is­rael long re­lied on the kib­butzim and other col­lec­tive farms to grow food for its ris­ing pop­u­la­tion. That her­itage is pro­vid­ing rich pick­ings to­day: 54% of Is­rael’s agritech ven­tures are man­aged by some­one who grew up in a kib­butz. Con­di­tions forced them to be cre­ative. The south­ern part of the coun­try of­ten re­ceives less rain­fall in a year than Eng­land gets in a day. That led to an early break­through in wa­ter man­age­ment. In the 1950s Sim­cha Blass and his son, Ye­shayahu, greatly re­duced wa­ter use by ap­ply­ing it di­rectly to the roots of plants. They helped form Netafim, the world’s lead­ing maker of drip-ir­ri­gation sys­tems, worth nearly $1.9bn.

Newer com­pa­nies are ex­ploit­ing tech­no­log­i­cal ad­vances in ar­eas such as plant bi­ol­ogy and ar­ti­fi­cial in­tel­li­gence. Star­tups founded in Is­rael last year in­clude Sufresca, which is de­vel­op­ing ed­i­ble coat­ings that ex­tend the shelf life of fruits and veg­eta­bles; Bee­wise, which uses ar­ti­fi­cial in­tel­li­gence to au­to­mate bee­hive main­te­nance; and Ar­menta, which is work­ing on new ther­a­pies to treat sick dairy cows. Other firms are tar­get­ing trendy sec­tors like phar­ma­ceu­ti­cal crops and al­ter­na­tive pro­teins.

The new firms ben­e­fit from an over­sup­ply of pro­duce world­wide, which has led to lower mar­gins for farm­ers and greater de­mand for tools that in­crease pro­duc­tiv­ity and boost prof­its. Af­ter an un­prece­dented round of merg­ers in 2016, farm­ing gi­ants have been look­ing to cut costs. Share­hold­ers are also look­ing for new ways of do­ing things (six out of the ten biggest food com­pa­nies have re­placed their CEOS in the past three years). Many firms see ex­ter­nal in­no­va­tion as faster and cheaper than in-house re­search and de­vel­op­ment (R&D).

Is­rael’s over­all civil­ian R& D spend­ing, mea­sured as a share of GDP, is more than that of any Euro­pean coun­try. Agritech gets a chunk of this cash. The gov­ern­ment sup­ports uni­ver­si­ties and labs; it has also in­vested in ven­ture-cap­i­tal funds and di­rectly in star­tups. The coun­try is good at turn­ing ideas into prof­its. The Is­rael In­sti­tute of Tech­nol­ogy (known as Tech­nion) earns over half as much li­cens­ing patents as MIT in Amer­ica, de­spite spend­ing much less on re­search. Next year, for the first time, the gov­ern­ment plans to spon­sor pi­lot projects that con­nect star­tups with farm­ers, so that tech­nol­ogy can be tried and tested lo­cally be­fore be­ing in­tro­duced to in­ter­na­tional mar­kets.

The state also helps in other ways. Mil­i­tary ser­vice is manda­tory in Is­rael, where bright young con­scripts spend years de­vel­op­ing equip­ment or soft­ware that does well in un­pre­dictable en­vi­ron­ments. Such skills have di­rect ap­pli­ca­tions in agritech. Na­dav Lieber­mann, the chief tech­nol­ogy of­fi­cer of Cropx, a com­pany that uses wire­less sen­sors to mea­sure soil mois­ture, served in a unit that cre­ated hard­ware for spe­cial forces, in­clud­ing de­vices placed un­der­ground in en­emy ter­ri­tory to gather in­tel­li­gence. His soft­ware chief, who learned to code in the army, ran a team of 50 de­vel­op­ers at the age of 23. Two branches are par­tic­u­larly good at churn­ing out tech en­trepreneurs: Unit 8200, the army’s sig­nals- in­tel­li­gence arm, and Unit 9900, which spe­cialises in glean­ing in­tel­li­gence from geospa­tial im­agery.

Small is not al­ways beau­ti­ful The next chal­lenge for Is­rael’s agritech firms will be scal­ing up. Lim­ited farm­land means they must look for part­ners abroad early on. So does the need to un­der­stand dis­tant ex­port mar­kets with a dif­fer­ent cli­mate, like Brazil or the Amer­i­can Mid­west. Founders of star­tups are of­ten quick to sell up, rather than build­ing their ven­tures into big global com­pa­nies. Many rein­vest their riches in new star­tups and buy­ers of­ten con­tinue to use Is­rael as their base for R&D. The dan­ger is that, with­out big­ger home-grown firms, many less-skilled Is­raelis— in­clud­ing kib­butzniks—will be cut off from the boom­ing tech in­dus­try.

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