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Econ 4.0: Why focus on farming?

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Here’s a funny farming fable: An officer from the income tax department pays a visit to an old farmer in a rural community. “Show me the list of all your employees and how much you pay them,” he demands.

“There are four employees,” the farmer says. “One is a plant picker and cleaner; he gets RM4,000 plus free room and food. Another is a sorter and packer who gets RM3,000 and free food. The third is a cook who gets RM2,000 and all the food he can eat. The fourth is an idiot who works 15 hours a day, does all the other work around here, gets paid only RM1,000 and has to pay for the room and food.”

The officer is incensed. “Who’s this idiot and why is he paid so much less? I want to meet him right now.”

The farmer sighs. “You’re talking to him.”

If that joke sounds far-fetched, it isn’t. Our farmers and farm labourers work long hours, in blistering heat and mushy farms, earn low wages and have uncertain, if not bleak, prospects. Yet, we expect them to deliver good-quality produce every time at low prices on set schedules.

The poor farmer faces a multitude of risks, including climate change, conflicts, pests, infectious crop diseases, a broken supply chain, and unreliable access to quality seeds and environment-friendly fertilisers. Yet, agriculture is crucial for economic growth. In 2014, it accounted for 33% of global gross domestic product (GDP).

“Agricultural development is one of the most powerful tools to end extreme poverty, boost shared prosperity and feed a projected 9.7 billion people by 2050,” says a World Bank report published in April. “Growth in the agriculture sector is two to four times more effective in raising incomes among the poorest compared to other industries. Our 2016 analysis found that 65% of poor working adults made a living through agriculture.”

On the flip side, the current food system threatens the health of people and the planet. Farming accounts for 70% of water use and generates unsustainable levels of pollution and waste. “Millions of people are either not eating enough or eating the wrong types of food, resulting in a double burden of malnutrition that can lead to illnesses and health crises,” the World Bank reports. “The absolute number of hungry and undernourished people increased to a little over 820 million in 2018, equivalent to around one in nine people. In 2018, an estimated 40 million children under five were overweight.”

MALAYSIAN AGRICULTURE
Agriculture is vital to Malaysia’s economy. It contributes 7% to 12% to the nation’s GDP and employs about 16% of the workforce. Large-scale plantations were introduced for cash crops — rubber in 1876, palm oil in 1917 and cocoa beans in 1950. Malaysia is also a significant producer of bananas, coconuts, durians, pineapples, rice and rambutans.

In 2018, the agriculture sector contributed 7.3% (RM99.5 billion) to Malaysia’s GDP, with oil palm accounting for 38% of that. On the other hand, most farmers do not own mechanical equipment, so they need to hire an army of contractual seasonal labour.

“Due to the shariah law on inheritance, land holdings continue to be broken up between families, making padi farming even more difficult,” the Asia Sentinel reported last December. “Large belts of idle land, estimated at 119,273ha, can be seen across the country partly due to family land disputes. Farmers have no involvement through the supply chain, so opportunities to add value to rice are non-existent. Under the present padi farming system, there is no way farmers will be able to improve their incomes.”

The problem is insidious. “The local agriculture sector is too convoluted owing to bureaucracy,” Tun Daim Zainuddin, Malaysia’s former finance minister, wrote in an article in The Edge on Jan 11, 2020. “It is hard to break into the sector unless you have experience and contacts, which holds back many aspiring young farmers. I hope the relevant authorities will review their practices to ensure a simpler and more efficient process. Sometimes, people tend to forget that time is also a resource, and agriculture in Malaysia currently demands far too much time to jump through various hoops.”

The market for food is enormous, even within Asia. Asia’s current expenditure on food is set to more than double to US$8 trillion by 2030. “It is estimated that US$800 billion cumulative investment above existing levels will be required over the next decade to meet the region’s agri-needs for the future,” Tun Daim wrote. “New and emerging technologies will be needed to increase agricultural yields and nutritional value while addressing the effects of climate change.”

This burgeoning market has enticed the corporate sector. Many conglomerates have stepped in to revolutionise agriculture quietly. The Sunway Group, for example, is building a 50,000 sq ft urban farming innovation hub at Sunway City Kuala Lumpur. Called “Sunway FutureX”, it will bring together urban farming enthusiasts, tech firms, researchers and young talent to create solutions for food and agritech.

“We hope to build innovations, which will contribute to improved long-term food security and sustainability in our nation,” says Matt Van Leeuwen, Sunway Group’s chief innovation officer and Sunway iLabs director. “We aim to nourish our communities with the fresh produce grown at our farms and educate them on sustainable living and urban farming.”

The farming bug has also bitten companies in farm-free Singapore. “Singapore is a hymn to concrete and metal. But look closely, and you can see farms mushrooming across the city-state: on the roofs of malls and car parks, in schools, warehouses and even the site of a former prison,” The Economist reported on July 4. “This is new. Commercial farming in the land-scarce city was phased out in the 1970s and 1980s.”

Unlike virtually any other country on earth, Singapore has lost a generation of farmers, the magazine quoted Bradley Busetto, head of the Global Centre for Technology, Innovation and Sustainable Agriculture, a United Nations unit based in Singapore, as saying. “Less than 1% of Singapore’s 720 sq km land mass is set aside for farms,” the article noted. “But a new crop of entrepreneurs are betting on rewards from finding idle spaces where lettuces may be coaxed to life. Since 2014, 31 commercial urban farms have sprouted.”

FOOD TECH
Food production and distribution are undergoing tectonic shifts, thanks to technology. The most significant changes are in the meat market. More people are turning towards healthy diets, owing to a growing outrage over how animals are treated and the negative effect of livestock on climate change.

Dubbed “meat 2.0”, it includes, for example, “cultured meats” or lab-grown meat, the price of which dropped 99% from 2013 to 2017. “Before cultured meats hit the market, an even more significant piece of the meat-consumption market is rapidly growing: meat-replacement products made of, for example, soybean protein, potatoes, sunflower oil and pea protein,” says a McKinsey study. “Surveys suggest that a majority of the population would be inclined to try meat-replacement products or ‘vegetal’ meat. This fast-growing segment is attracting funding from VC (venture capital) firms as well as established companies, and IPOs of alternative-meat companies have begun.”

The most prominent is California-based Impossible Foods, founded in 2011. It reverse-engineers animal products at the molecular level, then selects proteins and nutrients from plants to recreate the experience and nutrition of meat products. Its signature product, the “Impossible Burger”, was launched in July 2016. It now also makes plant-based sausages, and early this year debuted its plant-based pork.

In March 2020, Impossible raised US$500 million (RM2.1 billion) in its latest series F funding round, led by South Korea’s Mirae Asset Global Investments. The company has so far raised US$1.3 billion; other investors include Khosla Ventures, Horizons Ventures and Singapore’s Temasek Holdings.

“We designed our supply chain to be scaled globally,” David Lee, Impossible’s chief financial officer, told Forbes. “Unlike many companies, our technology can be dropped into any factory and can scale because we don’t have a lot of the problems the meat industry struggles with. We don’t grow animals over the years; we don’t ship cows and pigs to slaughterhouses and then process the meat. We make our product from plants, and it’s given us an advantage to quickly scale with co-manufacturers as well as with our own plant.”

The plant-based meat trend has caught on. Nuggs, a plant-based chicken nugget firm, began operations last year with a US$7 million investment round led by McCain Foods; it calls itself the “Tesla of chicken”.

Rebellyous Foods focuses on plant-based chicken nuggets, patties and strips. Founder Christie Lagally is a mechanical engineer with 15 years’ experience and holds five patents in manufacturing technology.

Kellogg’s MorningStar Farms will launch vegan “Incogmeato Chik’n” nuggets and tenders this year. “Burgers to bacon, pulled pork to corn dogs, vegetarian to vegan, MorningStar Farms is plant-based goodness made for everyone,” the firm advertises.

Beyond Meat makes burgers, sausages and beef products — all without animal protein. “Our quarter-pound beef burger uses 99% less water, 93% less land, 46% less energy and emits 90% less carbon dioxide compared to animal-based beef products,” the company claims.

So where is the future of food? Literally underground. South Korean start-up Farm8 has built a thriving underground farm next to the Sangdo metro underground station. The farm has been in operation since last September and grows an array of vegetables under bright LED lights.

Called the Metro Farm, it uses high-tech hydroponics to produces 30kg of vegetables a day and is 40 times more efficient than traditional farming. “Farm8 is hoping to expand its flagship farm to three more Seoul metro stations later this year,” the BBC reported on July 24. “If successful, the innovative venture may not only offer a more sustainable solution to urban farming but also has the potential to be rolled out in environments where traditional farming isn’t feasible, such as deserts and Arctic climates.”

The bottom line: The future of humanity depends on our ability to grow enough food to feed a surging global population. The future of food depends on sharpening our focus on farming, whether we use technology or not, whether we farm on horizontal acres of land or on vertical concrete farms. In the future, it is likely that every high-tech engineer will be proud also to call himself or herself a farmer.

Source: https://www.theedgemarkets.com/article/econ-40-why-focus-farming

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