Farm to tech to table: farming start-ups looking for their day in the sun
The business of farming has attracted a growing number of start-ups trying their hand in the agri-food industry. Many of them are backed by investors, as the underlying theme of meeting consumption demand becomes a sound business case.
Some of these start-ups focus on growing crops more efficiently, but others are staking out what they believe are key pieces of the value chain. For example, cafes and restaurants that highlight fresh produce often wax lyrical about the “farm to table” concept, but the mantra trivialises the complex supply chain of vegetables.
What is left out from the catchy phrase — hidden within the inconspicuous “to” — are multiple levels of middlemen; ranging from exporters to importers, wholesalers and even packaging companies. With each level of middlemen, however, the final sticker price of the produce rises.
Glife Technologies was founded to bypass these middlemen, connecting farmers to restaurants while ensuring fair prices and quicker deliveries for all.
Established in 2018, Glife serves more than 2,500 customers and 1,000 farmers. The vertically integrated food solution provider boasts one of the largest customer bases here, says co-founder Caleb Wu.
“We started in the supply chain space because we see a lot of inefficiency in this area,” Wu tells The Edge Singapore. “A lot of new middlemen, we feel, unfairly increase the price for end-customers, which are restaurants and hotels, but never really pass down a good amount of margin to the farmers.”
When the circuit breaker halted dining islandwide, the B2B agritech company turned B2C for a short period, selling produce directly to consumers. “It was a very tough time; our revenue dove by 75%,” says Wu. “But we pivoted quite swiftly, and Covid-19 actually made for our best year, compared to many other suppliers who shut down.”
Wu claims that this tenacity was what attracted Temasek Holdings, whose wholly-owned investment subsidiary Heliconia Capital led an $11 million Series A round in Glife last year. “They were interested in our ability to execute and be ready, to be agile and nimble in a crisis.”
The funding round was joined by the Hibiscus Fund, a venture capital fund managed by Malaysia’s RHL Ventures and South Korea’s KB Investment, as part of the Dana Penjana Nasional (DPN) Programme by the Malaysian Government.
Glife had previously raised a seed funding round of $3 million, led by Global Founders Capital.
Wu first met fellow co-founder Justin Chou on his school basketball team. “We stayed in touch and Glife was born out of an initial idea to become the GrabFood for plant-based meals,” says Wu.
Chou is also the co-founder of Green Dot, a local plant-based restaurant chain; and executive director of Growthwell Foods, an alternative protein start-up. “With Justin’s understanding of the F&B space, we realised there are more issues to be solved from the fundamentals,” Wu adds.
Starting out with a unit at Pasir Panjang Wholesale Centre was a no-brainer, as 95% of Singapore’s fresh produce comes from
the 24-hour facility, says Wu. He remembers the funny looks his team received there, as they were arguably the youngest people in the building.
“When we were at Pasir Panjang, it was unusual to see a few youngsters, and we got weird looks. They were thinking: ‘These young people won’t make it.’ But we moved into bigger and bigger warehouses, we got more vehicles and a few of them came to us and said: ‘My children are not taking over. Do you guys want to take over my business?’”
Today, Glife operates a processing facility in Johor Bahru that pre-cuts and packs produce before it is transported to the company’s warehouse in Buroh Lane. The company also recently announced its expansion into Malaysia and Indonesia.
Technology has a “whitespace” in the food supply chain, says Wu. “You see a lot of tech solutions out there, all the way from restaurants to suppliers to farmers. We think the supply chain side is where there is a serious lack of technology.”
He adds: “What was the story behind Glife? We started off trying to support underdogs; in our mission, we call it uplifting small farmers and businesses. So, I think it’s the same idea where we see the need to collectively move towards digital solutions.”
Stacking growth
As Singapore enters the third year of its “30 by 30” plan, the 2030 goal is beginning to look less like an ambition and more like a deadline. By that year, Singapore aims to produce 30% of its nutritional needs locally.
Wu thinks this is a feasible timeline. “It just requires more investment, more skill,
more volume and definitely more support from consumers to choose locally produced food.”
Wu adds: “One reason why the supply chain isn’t innovating as fast as the restaurant space is because of the talent; you don’t see a lot of young talents willing to be in this space. Only when you do, will you see a lot of innovation.”
With Glife facilitating the supply chain of produce, other start-ups populate either ends of the line. Just down the road from Glife’s warehouse is Archisen, a local agritech company with a 7,000 sq ft indoor vertical farm.
Founded in 2015, Archisen has grown to produce about 100 tonnes — or about 1% — of locally grown leafy vegetables a year.
The “30 by 30” goal is a “necessary endeavour”, says Dickson Ng, farm technologist at Archisen. “It’s something that we definitely need to strive for.”
Archisen’s flagship brand, Just Produce, carries a line of salads and speciality herbs, free of chemical pesticides or GMOs. Just Produce retails at various online and physical stores, including RedMart, Shopee and FairPrice Finest.
For the recent Lunar New Year, Just Produce launched a yusheng product as a collaboration with two other local companies: a fish farm and a sauce manufacturer.
“As much as we are seeing positive signs now that consumers are moving towards buying local produce, there are definitely some challenges. It will not be extremely smooth-sailing from A to Z,” says Ng to The Edge Singapore.
He lists three challenges Singapore must overcome. “The first one is the state
of technology. The state of agritech needs to get better in order to produce higher yield at lower cost.”
Ng adds: “The second one is that more consumers will need to be convinced that buying local, buying a higher value crop, is a good thing, both for their health and for food security.”
Finally, Ng hopes more investments can be made in Singapore’s agritech space. Vertical farming has unusual building requirements. “The surprising thing is that a lot of facilities in Singapore do not have the height that we require,” says Ng. “In addition to that, vertical farming is a rather energy-intensive endeavour. We need the facility to support our electricity use,” he adds.
Archisen says it has tested on more than 50 crop types and achieved over 100 times more yield per unit area than conventional farming. “One of the main things that we’re working on is to be able to confidently make more varieties commercially available and for it to be viable as a business,” says co-founder Vincent Wei. “So, that would require us to constantly work on crop science, to increase yields to reduce costs, so that we can provide the crops at an affordable price.”
On Shopee, a 60g box of fresh wasabi mustard greens by Just Produce retails for $7. While some may baulk at the price, Wei sees a shift in Singaporeans’ understanding of local produce. “It’s not just about buying the cheapest vegetable but buying the vegetable that is healthy and nutritious, supporting the local community and supporting food resilience. Many developed countries also support local pro
making it the 49th largest exporter of the product in the world. Now, bigger problems are coming home to roost for the nearly 50 exporters ahead of it.
For starters, suppliers cite soaring costs of raw materials, namely corn and soybean, which form the main ingredients in poultry feed.
Russia and Ukraine supply 28% of globally traded wheat and 15% of the world’s maize. Damaged grain elevators and fertiliser plants — not to mention the ongoing war — have slowed the sowing of new crops, while 25 million tonnes of grain — mostly maize — remain stuck in the Ukrainian port of Odessa.
Before the war, the major seaport located southwest in the besieged country facilitated 98% of Ukraine’s grain exports. Minister for Agriculture Mykola Solskiy says grain exports fell to 1.1 million tonnes in April, just a fifth of the 5 million tonnes exported monthly before the war.
Russia is also the largest exporter of fertilisers, including 23% of global ammonia exports, 14% of urea and 10% of processed phosphorus and 21% of potash exports. Major buyers include Brazil, China, the US and India. “Global food systems were challenged during the pandemic in 2020-2021, but the war in Ukraine will likely create additional wide-ranging effects,” says BofA.
Rising fertiliser costs also present a feedback loop in the food crisis, contributing to lower crop yields and higher food costs.
The United States Department of Agriculture (USDA) expects fertiliser bills to jump 12% this year after rising 17% in 2021. This could cause growers to plant fewer acres or switch to less fertiliser-intensive crops, say BofA analysts.
One such option is soybeans. A USDA survey in March found that
American growers may move from maize to soybeans this season. Producers surveyed intend to plant a record-high 91.0 million acres of the legume in 2022, up 4% from last year.
Widening the gap
Food inflation could headline hyper-inflation fears this year. Ronald Kers, CEO of the UK’s largest poultry manufacturing company 2 Sisters Food Group, says food inflation could rocket to 15% in the UK by the middle of this year.
Speaking in the BBC’s “Today in March” programme, Kers claims his company had paid 50% more y-o-y for farm chickens, significantly higher than the 12% increase in retail prices from official data.
2 Sisters employs more than 14,000 people in the UK. “[The Russia-Ukraine] conflict brings a major threat to food security in the UK and there is no doubt the outcome of this is that consumers will suffer as a result. War disrupts the free flow of trade and the impacts for us are severe. For example, the input costs of producing chicken — with feed being the biggest component — have rocketed,” says Kers.
He adds: “Before this war began, 4%-5% food inflation was being forecast by mid-2022. But we could now see a hyper-inflationary environment closer to 10%-15% if this conflict isn’t resolved quickly.”
On May 18, the UK reported inflation of 9% for April — its highest level in four decades. The US, meanwhile, reported a corresponding figure of 8.3% — slightly easing off March’s 8.5%. Naturally, with wages yet to catch up, the squeeze is keenly felt.
At home, Singapore’s April core inflation hit 3.3% — the highest in more than a decade and probably higher, if not for pre-emptive adjustments by the Monetary Authority of Singapore (MAS) to make the Singdollar stronger.
While this may ease off towards the end of the year, “there remain upside risks to inflation from geopolitical and pandemic-related shocks,” according to the MAS and the Ministry of Trade and Industry on May 23.
“We think monetary policy may not be sufficient to contain the intensifying inflationary pressures, nor ease the tightness in the labour market,” state Maybank economists Chua Hak Bin and Lee Ju Ye, who expect MAS to maintain its current tightening stance at the next policy review in October. “The government may have to provide a supplementary budget to ease the burden from the rising costs of living (especially food and utilities costs),” they add.
Unfortunately, the inflationary pressures — including the looming chicken shortage — are something that will widen the income and wealth divide, already accentuated further during the pandemic.
Some countries are better equipped to deal with this problem than others. BofA warns that food price shocks hit lower-income countries the hardest and that the “lack of food security can lead to higher prices, acute shortages, and ultimately social unrest”.
Renowned hedge fund manager Ray Dalio has a similar perspective. In a Facebook post on May 24, he observes how the “problem of inflation” is one articulated by people complaining they have to pay more.
They do not realise how lucky they are, says Dalio, because “they are still getting what they want by bidding it away from those who can’t get it, which is a much worse problem”.