Episode 60 - An Analyst's Perspective on Innovation Demand with Dennis Voznesenski

I had the chance to catch up with Dennis Voznesenski, who hosts a regular Commonwealth Bank Agri Podcast. Dennis is an Agricultural Economist and author of War and Wheat: navigating markets during global conflict and is a frequent commentator on Australian agricultural markets and dynamics. With a general sense in Australia that we struggle for demand side innovation, I felt a conversation with Dennis who is focussed on industry would make for an interesting set of perspectives.

Dennis shared insights on the current challenges facing Australian farmers, particularly regarding rising costs of fuel and fertiliser due to global events. It was interesting that he framed the innovation opportunity around cost of production as he described Australian farmers as price takers and as such, this is what they could control.

We spent some time exploring the role of agtech with Dennis sharing some operational examples. More specifically, I was interested in blockchain or the broader concept of traceability. Dennis noted that the need for traceability could result in two parallel supply chains forming. In the absence of a premium to cover these additional costs, I wondered how value could then emerge. We touched on the notion of 'mass balances' and Closed Loop Identity Preserved (CLIP) approaches to traceability and value creation. Dennis highlighted that systems are being set up, for example around emissions, and some markets are calling for this but there is no immediate ROI. As an afterthought, as I reflect on our conversation, there could be additional costs borne by producers and the broader supply chain!

We circled back to the price taker concept and shared a few personal examples of higher value ag products, such as Nufarm omega-3 canola and Arista high-amylose wheat and wondered if they were simply too small to be seen in the bigger picture? It was interesting how these examples of genetics lead us back to production costs and the importance of innovation and commercialisation of input traits to deliver scalable benefits.

Given the contemporary challenges in Australian fuel security, we closed our conversation around the opportunities for agricultural feedstocks and their local conversion to low carbon liquid fuels. Dennis reflected on his book and noted that fuel, fertiliser and ships were critical factors to production and trading security. We briefly explored a few scenarios for biobased low carbon liquid fuels before Dennis concluded, noting the endless opportunities for innovation that addresses production costs.