Extreme poverty remains a challenge in Southeast Asia, where many live on less than USD 1.90 daily. As reported by the United Nations Food and Agriculture Organisation, growing populations and higher per capita incomes will likely increase global food demand by 60% by 2050. The additional food security challenges Southeast Asia expects to witness results from factors such as climate change and the rising cost of food production.
The global food-insecure population has increased year after year since the beginning of the COVID pandemic, and the war in Ukraine has exacerbated the situation as Ukraine and Russia are responsible for 29% of global wheat exports. Furthermore, climate change is causing issues with increased rain causing flooding and changes in temperature, making growing certain crops untenable.
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Meanwhile, Southeast Asia is home to several major producers of agricultural commodities. Its favourable climate and fertile soil make it a significant crop grower, and some speculate that the region could become a major food supplier. Still, ASEAN producers are in the spotlight due to rising food inflation and food security threats. However, these factors present an opportunity for agritech startups in the region to work towards solving the issues.
The current crisis has created more agritech opportunities in Southeast Asia, with increased investment in the sector leading to the emergence of innovative and tech-based solutions. Let us take a closer look.
Vertical farming
Singapore produces less than 10% of its food as it is a land-scarce country with few natural resources. The government launched a “30 by 30” plan in 2019 to increase the city state’s capability and capacity to produce 30% of its nutritional needs locally and sustainably by 2030.
Singaporean-based company Sky Urban Solutions adopted an agritech solution based on vertical farming by converting rooftops into spaces where food is grown. These urban farms use high-tech systems to increase crop output in limited space, allowing them to produce more food while using fewer resources. According to Trade Data Monitor, the food and agricultural market size in the city-total state is likely to reach USD 2.51 billion in 2021, with local food and agricultural production valued at USD 261 million.
In neighbouring Malaysia, Saturn Agtech, through its subsidiary HydroFresh, is supplying pesticide-free lettuce grown in its indoor vertical farms to one of the country’s biggest supermarket chains, Aeon. Meanwhile, AugustFame provides local cafes and businesses in Penang with its vertically grown produce as urban farming trends take hold in the country.
Other countries in the region, such as the Philippines, are looking at urban farming as a possible solution to some of the food security issues they face, while companies, such as Orlar, are changing farming methods in Vietnam.
Dual farming through Aquaponics
One of Singapore’s leading urban farming startups is World Paradise Farm (WPF). It has developed its patented Smart Recirculating Aquaculture Aquaponics System (Decoupled RAAS), a climate-optimisable system with software that can track growth and analyse crops. This system allows WPF to implement precision and predictive farming to increase crop yield using high-tech sensors and analysis tools.
WPF’s farms can maximise production per unit area through a vertically stacked hydroponic system. The nutrient-rich wastewater is recycled throughout the system, reducing water wastage. By 2024, it hopes to produce 20% of Singapore’s leafy vegetables locally.
Agritech innovations and investments
Technology is changing the agriculture landscape all over Southeast Asia, from using cell culture technology to grow meat and fish in laboratories to smart irrigation systems and data analytics that help farmers maximise their yield. With the increased use of technology in agriculture and food production, governments and investors are funding startups and innovators in the sector.
According to the 2020 ASEAN AgriFoodTech Investment Report, Singapore-based startups received USD 177 million in agri-food tech funding across 37 deals in 2019, the highest level among ASEAN countries. Aside from private equity investments, the Singapore government has committed to supporting the local agri-food industry as part of its four-year Research, Innovation, and Enterprise 2025 (RIE2025) plan. The goal is to increase the amount of food produced per unit area by 100% while reducing the energy cost of indoor farming by 90%.
The Singapore Food Agency (SFA), the government agency implementing the “30 by 30” plan, has funding measures to assist agritech startups, including the USD 43 million Agri-Food Cluster Transformation Fund. It will provide farm capital to expand crop cultivation capabilities and capacities. Singapore’s efforts to collaborate with and invest in food and technology startups have resulted in significant growth in vertical and rooftop farming.
As the food security challenges Southeast Asia faces persist, agritech startups are vital to strengthening the region’s resilience and preparing it for future disruptions. This need will present even more agritech opportunities in Southeast Asia as it strives to innovate better solutions and save the region from food shortages.