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S'pore's Push For Local Produce Has Sparked A Rise In Agri-Foodtech Startups - Will It Last?

In the early days of the Covid-19 pandemic, Singapore saw several bouts of panic buying, with Singaporeans flocking to the supermarket to stock up on essential items. 

Many of the nation’s leaders had to step in to reassure Singaporeans that the city was not at risk of running out of essential food supplies. 

However, this shone the spotlight on the issue of food security in Singapore. 

According to the Singapore Food Agency (SFA), Singapore currently imports 90 per cent of food consumed in the country. A heavy reliance on imported food means that Singapore faces unique challenges in ensuring a steady supply of food for the population.

Furthermore, the island will be heavily impacted by any changes in the global food supply, including price fluctuations.

The problem has long been acknowledged, and Singapore aims to produce almost a third of the food that it requires by 2030. SFA has set a target — dubbed as 30 by 30 — of producing 30 percent of Singapore’s nutritional needs by 2030. 

With the renewed interest in food security, the nation has seen a rise in agriculture technology (agritech) and food technology (foodtech) startups, as well as a wave of investor funding and government support in the area.

Agri-Food Tech: A New Frontier In Sustainable Food Supply

There is tremendous potential in agriculture and food technology, or agri-food tech for short. 

Singapore is emerging as the foodtech capital of Asia, with the government investing S$100 billion to prepare for the effects of the current climate crisis. 

The foodtech ecosystem comprises many different tenets, from developing new food products to future foods like lab-grown meats. 

Companies might innovate on current food products to create new supplies of food that will be more sustainable for the country and its people, or even niche audiences like the elderly. 

Foodtech is a booming industry, with Forbes predicting that it is expected to exceed US$250 billion (S$342.8 billion) by 2022.

According to Dr Sherman Ho, CTO and co-founder of Hoow Foods, the foodtech industry is “very diverse and runs gamut from paying solutions, food delivery solutions, down to overlaps with the agritech industry.” 

Hoow Foods uses proprietary reformulation technology to make typically indulgent food such as ice cream healthy. 

Agritech companies, on the other hand, are geared towards redesigning farming operations that no longer need to be constrained by space, climate, and manual labour.

Of course, there are overlaps as well.

asia insect farm solutions foodtech
Cricket Flour and Black Soldier Fly Meal / Image Credit: Asia Insect Farm Solutions

Asia Insect Farm Solutions (AIFS) is one such startup that straddles the line between food and agritech. 

It is in the midst of building Asia’s first mechanised and fully-automated urban cricket production facility to acclimatise and rear crickets at industrial scale to convert to insect-based proteins.

Raavee Shanker, CEO and co-founder of AIFS told Vulcan Post that the global edible insects market is forecasted to reach US$1.3 billion (S$1.78 billion) by 2023.

Both the foodtech and agritech industries are essential in boosting Singapore’s chances of achieving the 30 by 30 goal.

Agri-foodtech startups in Singapore
Agri-foodtech startups in Singapore / Image Credit: Vulcan Post

Over the past few years, there has been a notable wave of agri-food tech startups in Singapore, as seen in the above table.

Food Is Evergreen

In an interview with Vulcan Post, Alan Phua, CEO and co-founder of Alchemy Foodtech mused that the Covid-19 period has shown him that “food is evergreen”. 

“We can work from home, but we can never consume digital food,” he said. 

Alchemy Foodtech has developed Alchemy Fibre, a proprietary product aimed at making carbohydrates healthier to target the burgeoning problem of diabetes in Singapore.

Hoow Foods also aims to emphasise on the “prevention” of diseases such as diabetes through food. The startup launched Callery’s low-calorie ice cream in 2018.

callery's ice cream foodtech
Callery’s Ice Cream / Image Credit: Eat What Tonight

“We envision making an impact on consumer health through reformulation of conventional, familiar foods to make them much more healthy whilst retaining taste and texture,” said Sherman. 

The startup tends to be associated with the group of foodtech companies that deal with alternative proteins and functional ingredients, since they utilise novel ingredients in their work.

According to Sherman, this segment now accounts for around a third of the foodtech market. 

Foodtech startups like Alchemy Foodtech and Hoow Foods also make a case for “sustainable health”. 

Sherman shared that “while a sustainable environment is important, the health of people should also be sustainable so that we can enjoy the environment and earth longer.”

Even though our environment has changed drastically, the way we consume food has remained largely the same throughout the years. 

Likewise, Raavee of AIFS shared that the food we eat for daily sustenance have not evolved as much and “we still rely to a large extent on the same food types that our parents and grandparents did.” 

The founder also questioned whether Singapore can continue on the same trajectory of importing food from over 170 countries, when these countries are becoming rapidly urbanised as well. 

That was what led AIFS to see a unique and massive untapped opportunity for insect-based proteins to be a cost-effective, climate-resilient and resource-efficient solution for an urban community such as Singapore.

Besides novel food technologies and alternative protein, vertical farming solutions are also the next big thing in Singapore’s agri-foodtech scene. 

In Singapore, a handful of multi-storey public housing car parks are earmarked by the government to be converted into rooftop farms. 

This is beneficial to companies like agri-tech startup Citiponics, who piloted SFA’s multi-storey carpark rooftop farm project in Ang Mo Kio in 2019.

citiponics danielle chan
Danielle Chan, Co-founder of Citiponics / Image Credit: Citiponics

According to Danielle Chan, co-founder of Citiponics, its 1,800 square metres farm atop the carpark at Block 700 in Ang Mo Kio Avenue 6 can grow between three and four tonnes of vegetables a month.

They grow up to 25 different types of vegetables naturally without the use of pesticides.

Meanwhile, agritech startup Singrow has repurposed a sports hall into a vertical farm and harvests up to 1,600kg of homegrown strawberries each year.

Sustenir Agriculture’s founder Benjamin Swan has also always been concerned about sustainability. Since its inception in 2013, the startup has produced lettuce, arugula, basil, and two types of kale in its indoor vertical farm in Singapore.

Due to the scarcity of land, traditional farming was phased out in the 70s and 80s in Singapore, to make space for industrial development.

Thus, many have touted vertical farming as the modern solution to growing food in cities as it can optimise land use while operating on minimal manpower. 

However, building and operating a vertical farm might require the use of novel technologies, which inevitably lead to a high startup cost — it is more expensive to start and maintain a vertical farm than a traditional one. 

Fortunately, the push for sustainability has led to heavy government support and investor spending in the industry.

Strong Investor Sentiment In The Field

According to Enterprise Singapore, Singapore startups managed to snag S$14 billion in investments in 2018. That figure represents an astounding 14-fold increase from just under a billion in 2012. 

Since the start of the year, investments of at least $40 million from both public and private sources have been made into agri-food tech start-ups.

It is evident that investors have seen a growing interest in the agri-foodtech sector, with Singapore’s state investment firm Temasek Holdings pumping in some S$6.86 billion into the sector over the past five years. 

In September 2018, SEEDS Capital — the investment arm of Enterprise Singapore — called for partners to co-invest in Singapore-based startups with disruptive agriculture and food technologies. 

Just last year, an agri-foodtech venture capital AgFunder launched GROW Accelerator in Singapore, to provide a platform for startups in this industry to receive more support. 

Vandana Dhaul, Head of Operations at GROW Accelerator shared with Vulcan Post that there has been “a heightened consumer focus on the quality and traceability of food consumed, translating to an increasing demand for locally produced, healthy, and additive-free food.”

The support from the Singaporean government has also lent a hand to these agri-foodtech startups seeking investments. 

In June 2020, Enterprise Singapore announced that it had set aside more than S$55 million to help local agriculture and aquaculture companies grow. 

Vandana shared that GROW Accelerator has recently launched the GROW Impact Fund, and every investment made by the fund will be evaluated by “reference to Environmental, Social, and Governance principles”.

agri-foodtech startups singapore funding
Funding rounds in 2020 for agri-foodtech startups in Singapore / Image Credit: Vulcan Post

The wealth of support in this industry shows that the agri-foodtech scene definitely sees a lot of opportunity for growth.  

The Woes That Come With Sustainability 

singapore vertical farming
Image Credit: Skygreens

Despite increased interest and investments, the agri-food tech startups do have a fair share of challenges to navigate. 

Harnessing technology to drive production at a scale where it can make the products’ price competitive with local imports is a hurdle in itself. 

Raavee shared that based on their market research, local fresh produce is currently priced at 1.5 to five times more than those that are imported from Malaysia. 

Sherman wholly agrees with this sentiment. He shared that new technologies in farming would have significant costs at an early stage, and it would “take awhile” before businesses can scale sufficiently to bring costs down. 

“The question is whether these high-tech farms can sustain long enough,” he said.  

This will make it difficult for consumers to come onboard and support local agritech companies, especially when Singapore still has a myriad of cheaper options available in the market. 

The education of consumers and potential investors is also another significant challenge. According to Sherman, “the food industry has traditionally depended very much on experience and passed-down knowledge.”

Novel ingredients used by foodtech startups “need some introduction to improve their uptake and acceptance”.

Furthermore, many consumers are still heavily skeptical about consuming lab-grown or alternative protein products. Some consumers might still exhibit an element of suspicion towards genetically modified foods, and even more so for lab-grown food. 

“I try not to eat genetically modified food as we are not too sure what the negative effects of these foods on the human body is like,” said 55-year-old Sharon Lee. 

Other consumers might be more price sensitive. Jason Tan, 28, said that he would purchase locally-grown fruits and vegetables if they were priced the same, or are cheaper than imports. 

30 By 30: An Ambitious Stance?

singapore 30 by 30 supermarket
Image Credit: SBR

30 by 30 is no doubt an extremely ambitious goal for Singapore — nearly tripling Singapore’s local food production in 10 years seems like a daunting task.

The country has made leaps and bounds in the past few years, with more agri-food tech startups popping up across the island, and huge investor and government support in the industry. 

Raavee holds an optimistic view on this goal and takes inspiration from Singapore’s ‘water story’.

“10 years ago, if we were to be told that supplying the bulk of Singapore’s water consumption is going to be achieved by local efforts, that target would have seemed unrealistic. But fast forward to 2020, this is already a reality,” he said. 

He believes that the government has already put in strong support into this area, and there will be even more in the years to come. 

It is definite that more support needs to be given to startups to harness the technology, and have an infrastructure in place to create a well-versed urban farming and food production industry. 

As Sherman aptly puts it, the government has to play an active role in defraying land rental costs, utilities, and other spending to assist these startups in becoming a sustainable business. 

Most importantly, Singaporean consumers have to be on board with the idea of purchasing local, as said by Minister Masagos Zulkifli, Minister for the Environment and Water Resources.

Without a strong demand for locally sourced and produced food, most of the efforts will be for naught. 

“Given the city-state’s physical limitations – with extremely little in the way of traditional agricultural land, this 30 by 30 vision will only be achieved by enhancing traditional production methods with modern technology,” said Vandana. 

Featured Image Credit: Enterprise Singapore

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