On September 19, TechNode gathered four industry experts at its ORIGIN Thailand conference, held during the True Digital Park Grand Opening 2019 to discuss “Food For Thought: Innovation in Food and Agriculture.” Thaddeus Koh, the co-founder of tech media outlet e27 and moderator for the panel, began the discussion by asking, “Why do the food and agriculture tech trends matter and how does the changing consumer behavior impact the players in this sector?”
“Food is one important aspect, and I believe this can be a huge technology playing field that can be expanded regionally and localize successfully,” said Dr. John Jiang, the chief digital officer at a Thailand-based conglomerate CP Group. Howard Tang, CTO at SmartAHC, a smart farming startup, said, “Agriculture can be made sustainable with digital nutrition, which is a new way of optimizing farmers’ performance through digitalization by using the same amount of materials to achieve higher productivity.”
However, Jiang noted while agriculture’s increased efficiency brings about valuable impact, the upstream of the food supply chain where the food source stems from, requires a much larger deal of innovation and this is where the business opportunity lies in. “There are more and more startups focusing on the upstream of the food supply chain and more innovation in farming, agriculture, while alternative proteins began sprouting up in the past two years,” said Pahrada Mameaw Sapprasert, Director of an early-stage venture fund called 500TukTuks.
Serving fresh funds
Startups in the upstream with the majority of them in the deep tech sector, typically take a longer time to achieve commercialization. “Investors will have to widen their portfolios with a combination of upstream and downstream startups,” said Sapprasert. While it seems that downstream startups such as food delivery companies generate higher and faster ROI, Sapprasert encouraged investors to also look into upstream startups which will be emerging as the next big thing, albeit the longer rate of return.
“Fund-raising for food and agritech startups is getting easier these days, as compared to five or six years ago,” said Tang. There is also a climb in corporate venture capital (CVC) in the food and agritech field, he added. “More commodity traders are looking into this area as well, to provide micro-financing to the farmers,” said Tang. Opportunities abound in the micro-financing area with 235 million unbanked adults in the agriculture industry as reported by the World Bank Group.
Thailand is paving way for its homegrown unicorn as support programs are rolling out for startups to accelerate their progress. “The top layers of the upstream, such as insect-protein food source, will face significant disruption and this is where we can expect the birth of a unicorn startup,” said Jiang, while noting that the bottom layers of the downstream can also possibly generate the next unicorn.
Food and agriculture tech ecosystem
Sapprasert called on Southeast Asia community builders to look to the California market for knowledge and insights on bringing both upstream and downstream players together, in an effort to build a strong FoodTech ecosystem.
Tang lauded the Chinese agriculture players’ grassroot effort, including relevant associations and chambers, sharing agriculture knowledge and business tips over a WeChat group, as an example to bring value to the food and agriculture tech ecosystem.
The role of government and corporates
In a survey conducted in the United States, people above 40 years old were less likely to try cultured meat (also known as lab meat), as reported by The Conversation. “It is just a matter of time where cultured meat will be the future of food, and education on its safety and health concerns has to begin now,” said Sapprasert. Majority of cultured meat producers are from startup backgrounds, which intrinsically lack credibility and trust from the consumers due to weak track record. “Education and awareness can be built up collaboratively by government bodies and corporates,” she added, noting that consumers are more likely to trust such organizations due to their strong credibility.
“There is no standards and regulations for IoT technology in food and agriculture tech yet,” noted Tang. The lack of regulations spells uncertainty and risks for IoT developers as there are no guiding rules for the developers. While the ultimate purpose of regulation is to encourage stakeholders to take into account externalities such as security and privacy, Jiang suggested that regulations are not needed for IoT technology in the food and agriculture sector.
“Corporates are becoming more active in the food and agriculture tech ecosystem with many setting up their own venture arms to invest in startups. Corporates are technology adopters and innovators in applying such technologies”, said Jiang, using the example of CP Group as a corporate supporting food and agriculture startups.
“Thailand, as a country with GDP predominantly in the agricultural sectors, has a huge problem many people are trying to crack,” said Sapprasert. “However, it is highly encouraged to unbundle the existing problems and solve them bits by bits as it is impossible to apply one solution to all problems,” she added.